In order to alleviate double taxation, most states allow their residents to claim a credit for the taxes paid to a non-resident state on income that is taxed by both the resident and non-resident states.
The New Jersey Division of Taxation has provided guidance to taxpayers who claimed credits on their 2021 New Jersey resident income tax return (NJ-1040) for taxes paid to certain states that issued specific payments in 2022. 1
Special payments or rebates issued by Massachusetts, South Carolina, Georgia, and Virginia in 2022 to New Jersey residents are considered refunds of state taxes paid to that state.2 These refunds may impact the credit for taxes paid to other jurisdictions taxpayers claimed on the 2021 NJ-1040 and may require taxpayers to amend their New Jersey return and pay additional tax due, according to the New Jersey tax authorities.