Wednesday, December 5, 2007


Q. My husband just started a new job in NYC. We live in NJ. The company gave him $5000 additional in salary to be based out of the NY office rather than NJ. If we were to be based out of NJ they would reduce his salary by that amount. What is the best way for us to figure out if it is worth the additional money or should he simply request to be based out of the NJ office and give up the $5000.”

A. Your first step is to go to your tax professional and provide more detailed information on anticipated salaries, income and deductions for the year so that the tax pro can prepare two separate sets of estimated tax returns and provide a comparison.

I must point out -

(1) It is not necessarily where your husband’s office is located but where he actually does his work that determines “nexus” or non-resident state tax liability. If you husband is “based” out of the NJ office, but spends his time visiting or selling products to clients located in NYC, and/or spends time physically working in the NYC office, say 1 or 2 days a week, he could be subject to New York state non-resident income tax on at least some of his wages.

(2) State income tax is not the only cost to consider in this case. What about the commuting costs? Will your husband be able commute to the NJ office via a short drive, but need to take public transportation to get to NYC each day (i.e. train, bus, subway)?

(3) As a general rule, just about everything is more expensive in NYC than in NJ (although NJ is not cheap). This includes meals. Unless he “brown bags” it every day, working in NYC will add to his daily lunch bill.

(4) There are also things to consider that do not involve out-of-pocket expenses:
* Will working in NYC add a half-hour or more each way to his commute? We had a client who lived in Lincroft NJ (Exit 109 on the GSP) but worked on Wall Street. His door-to-door work day ended up being almost 12 hours!
* Will working in NYC provide greater exposure and perhaps a better chance for advancement up the ladder?
* Does he work better with the employees of, or does the work atmosphere provide less stress or “agita” at, the NJ location?

I hope I have been of help.

FYI, I will be off to Atlantic City Thursday and Friday to attend the year-end tax update seminar of the National Society of Tax Professionals, retuning to Resorts after a long absence. So there will be no posts until my WHAT’S THE BUZZ installment on Saturday. I will be sure to report on any new developments and other items of interest from the seminar next week.


1 comment:

Anonymous said...

Thank you so much for reading and answering my question. I guess part of me was hoping that it was a simple calculation. You have however, provided quite a few other things to consider as part of the solution.

Thank you again for your time and advice.