The credit will never be more than what New Jersey (NJ) would charge on the same income. The credit NJ allows for the city wage taxes is calculated as follows so be sure to enter the appropriate figures in your NJ tax return.
Wages From Philadelphia
New Jersey residents earning wages in Philadelphia can determine the income to enter on line 1 of Schedule NJCOJ by dividing the wage tax deducted (as reported in the “Local income tax” box on the W-2) by the Philadelphia nonresident tax rate as follows:
- Philadelphia Wage Tax Paid
- Philadelphia Wage Tax Rate = Line 1, Schedule NJ-COJ (You can calculate the rate by taking the Philadelphia Tax on W-2 divided by the Philadelphia Wages)
The amount reported on line 1 cannot be more than the amount of Philadelphia wages included on line 15, Form NJ-1040. You must use the exact amount of Philadelphia wage tax reported on the W-2 when doing this calculation. Do not round the figure either up or down.
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