It is fine either way. If you have withholding for local tax for both NY and PA, then enter wages in both states. If you have no local withholding you really don't need to enter anything in those boxes for your state tax returns.
Your employer doesn't need to change your W-2 for this reason.
NY will tax the income you earn there. PA will tax the income as a resident. Be sure to follow the instructions below for a credit on your resident state.
State Returns - Your resident state requires you to include all worldwide income. Assume both states require income tax returns to be filed:
- Report the income on each state return that is from the nonresident state
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
In most cases complete your nonresident state first.
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