Is the NJ Homestead Rebate considered as taxable income on a NY IT-203 Non-Resident Return?

I understand that the NJ Homestead Rebate is considered to be taxable income on the Federal 1040 (reported as Miscellaneous Income) since it is a propery "Recovery" per IRS Publication 525. However, I am a full-year NJ resident and work full-time in NY state. When filing my NY return, do I need to report this NJ Homestead Rebate as income in NY? If so, is it derived from a NY source and needs to be allocated as such?

Public Comments

1. I'd argue the taxability of it on a Federal return. A homestead tax credit or rebate is a reduction of a deductible expense. If you itemize it will reduce the amount of property taxes that you can claim but it is not a taxable recovery if you don't itemize. It would be a reduction in a non-deductible expense if you don't itemize and reductions of non-deductible expenses are NOT taxable income. That would be like trying to tax you on a price reduction on a sale at a store. It's NOT taxable income. At any rate, the NY treatment is clear and convincing. If you are not a NY resident when you receive it, NY may NOT tax it under any circumstances. Just like NY cannot tax your earned income earned in any other state unless you're a NY resident.