Philadelphia doesn't generally refund the taxes you paid while working in Philadelphia. However, you can claim a credit on your NJ resident tax return for these taxes paid to an out of state jurisdiction.
Here's how you can handle your Philadelphia (PA) taxes while living in NJ using TurboTax:
1. Enter Philadelphia Wage Tax in TurboTax:
- Go to the Personal Profile screen.
- Scroll down to Other State Income and select Edit.
- On the Did you make money in any other states? question, answer Yes and make sure your non-resident state(PA) is selected from the drop-down[3].
- Select Continue to return to the Personal Profile screen.
- After you finish your federal return, you'll automatically move to the State Taxes section, where you'll see your non-resident state(s) listed in addition to your resident state[3].
2. File a Philadelphia (PA) Return First:
- You need to file a Philadelphia (PA) return to report and pay the local wage tax and eventually receive credit for taxes paid.[1][2].
- This step is crucial because TurboTax requires you to complete the non-resident return first to properly credit the taxes paid to Philadelphia on your New Jersey return[
Additional Tips:
- Select the long form (if the option is available) even if TurboTax defaults to the short form.
- Only report the income attributable to the nonresident state.
- If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.
- If you live in a reciprocal state, consider submitting an exemption form to your employer so you don't have to file a nonresident return next year.
References TurboTax Community
[1] I live in NJ, but work in PA. I paid Philadelphia's Local Tax. Do I file ...
[2] Solved: I live in NJ and work in Philadelphia. I am getting a tax credit ...
[3] Should TurboTax Deluxe automatically have credited taxes paid to ...
