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I am a US citizen (and also a British citizen, incidentally), but I live permanently in Japan. I work (sitting in front of a computer in Japan) for a company that’s based in New York. They pay me in US dollars deposited into a US bank account. I have an address (a mailbox) in New Jersey that I use for mail forwarding purposes, and this is the address listed on my W-2 forms.

My company does not withhold NJ taxes from my paychecks. Since none of my income is derived from work performed in New Jersey, I believe I am not required to pay NJ any taxes based on my wages. Is that correct? Should I simply not file a NJ state tax return, or should I do something different?

What about state taxes on interest income?

Would it be better to just find another mail forwarding service in a state that has no income taxes. Like Texas, for example.

Edit: Added some info requested in comments

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    I don't have a complete answer, but one thing you should check is whether your employer is withholding state tax from your salary. If so, you will have to file a state tax return to get it back. Dec 10, 2021 at 14:43
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    I would go a step farther than @GerardAshton and ask what taxes the employer is withholding. Also, have you considered your income tax liability in Japan? I don't know Japanese tax law, but in the reverse situation, someone living permanently in New Jersey is liable for US and New Jersey income tax on worldwide income, including for salary paid by a foreign employer for work done in New Jersey (or done anywhere else, for that matter).
    – phoog
    Dec 10, 2021 at 16:39
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    New York also has some weird rules where nonresidents who telecommute from outside New York for a company in New York may still be subject to New York taxes. I am not sure how it would apply to your situation.
    – user102008
    Dec 10, 2021 at 17:52
  • The answer will depend on whether you are legally a permanent resident or citizen of Japan, how long you resided there in 2021, and your citizenship status in the US.
    – rtaft
    Dec 10, 2021 at 23:06
  • Added some info to the question
    – bubba
    Dec 11, 2021 at 8:10

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So your company simply does not withhold any state income tax or state payroll tax? Since you are a nonresident of New Jersey without income sourced in New Jersey, you don't have any income taxable by New Jersey, and you are not required to file a New Jersey tax return. Since you do not have any New Jersey tax withheld, there is no tax to be refunded, so there is no point for you to file a New Jersey tax return.

You might want to do some research on whether New York's "convenience rule" might make you liable for New York taxes.

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  • You might also want to look into how to handle the taxes in Japan first, since you are living there and have an income. From there you should be able to get back most of your US federal taxes through foreign tax credits.
    – rtaft
    Dec 13, 2021 at 0:21
  • @rtaft: You mean the US foreign tax credit, right?
    – user102008
    Dec 13, 2021 at 0:34
  • correct, they didn't mention federal taxes, not sure if they are aware that their tax liability may prioritize Japan first.
    – rtaft
    Dec 13, 2021 at 13:10

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