Tax benefit of working in manhattan but living outside city

No, if you live in CT, you pay the NY state 6.85% tax only, but you are unable to replace that with the CT 5% tax on days you work in CT (that you might otherwise in other 2-state situations) due to New York's unique taxation rules.

NJ's highest rate is 8.97% above 500,000 and 6.37% above 75,000, so little to no benefit there.

There is a very old thread on this, and the answer is that it depends on your personal situation. For example, in NJ you can't deduct 401(k) payments from your income tax, whereas in NYS and NYC you can. In NYC property taxes are very low on single-family homes and prewar co-ops. In CT, NYS, and NJ, property taxes are very high. NYS, NJ, CT do not tax S-Corporations or unincorporated businesses as corporations; NYC does. If you live in NYS at least 183 days a year, you are responsible for NY income tax. Thus if you live in NJ and work in NJ but have a summer home in the Catskills, you have to watch every day you are in NY. "In" NY includes even if you are at the airport, or cross the Tappan Zee to get to Connecticut. If you live in NJ, work in NYC but have a pied-a-terre here, you will likely be considered a NY resident even if you spend most nights in NJ.

I suggest consulting a tax expert on your particular situation.

thanks

If you will own your place then there is really no question, CT.
income taxes are generally lower but property taxes are half that of NY and NJ and they have great schools.

Steve, property taxes in CT are some of the lowest in the metro area. Whatever taxes you may save in NYC through property will more than be made up for in NYC income tax. For a 1 million dollar home in most nice CT towns you will pay less than $10,000 per year ... in westchester/Long Island the same home will cost you over $20,000 per year in taxes.

It's really no secret that the best tax shelter in the NY area is CT...where you get screwed is with the CT inheritance laws but that is something totally different. Just don't plan to die there.

The big part is getting rid of the 5-7% city tax. So even just moving to the NYS suburbs can help.

Also, BIG deal in this one... Jersey does not let you carry forward capital gains losses.

That brings up another good point- anyone thinking of moving states does not get to carry over capital losses to their new state - to realize them, they would have to realize gains as resident of the original state.

lobo, in NYC the tax on a $1 million single-family home is about $3,000.

Other than that, I don't know much about CT. Lived there once - lots of trees, nothing else.

Steve, you're undercutting it a bit... but lobo's point is still correct.

"Steve, property taxes in CT are some of the lowest in the metro area. Whatever taxes you may save in NYC through property will more than be made up for in NYC income tax."

Figuring you need to make $250k minimum to live in these places, you are talking about another $10k in taxes on income... that definitely gets you into CT taxes range.

And if you're going to use the cheaper example, then you can compare to cheaper parts of 1k. I know someone in fairfield with taxes of about $7k...

Thanks.

so you can buy a place in the hamptons/upstate as a primary -- lose the city tax -- keep the capital gains loss carry over ---

just stay out of the new commuter tax zones (Ravitch plan if it passes).

Of course, NYS is screwed, so those taxes will go up, too. As will property taxes.

Are there any other New Jersey Tax caveats? As a renter, the 2 brought up does cause some concern
- cannot deduct 401k from state tax
- cannot carry over losses in State tax

With the bad economy, as a renter in NYC I can save about
-800 dollars a month in city taxes
-600 dollars a month in cheaper rent. a 2,900 unit in Manhattan would be 2,300 in Jersey City

17k a year savings for a 40 mins commute and a drab life-style. Makes sense when times are tough no?

Moving mid-year should still yield these savings this year I hope.