The Reciprocal Personal Income Tax Agreement between Pennsylvania and New Jersey means compensation paid to New Jersey residents employed in Pennsylvania is not subject to Pennsylvania income tax. Therefore, you cannot claim a credit on Schedule NJ-COJ for taxes paid to Pennsylvania on those earnings. New Jersey residents can claim a credit for taxes paid to Pennsylvania on other types of income (for example, business income) that are taxable in both states by completing Schedule NJ-COJ.
The New Jersey/Pennsylvania Reciprocal Agreement does not apply to income or wage tax imposed and collected by the City of Philadelphia or any other municipality in Pennsylvania. That means a New Jersey resident who works in Philadelphia and pays city wage taxes can claim a credit for the taxes paid to Philadelphia.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
