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posted Jun 6, 2019 8:47:22 AM

Are 401k contributions earned in New York State taxable in pa? I live in pa ...work in nys.

Live in pa but work only in nys.  W 2 has d code with an amt contributed to 401 k plan at nys employer.  No pa withholdings...only nys.   Do I have to add this 401 k amt to  wages on pa return

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1 Best answer
Level 7
Jun 6, 2019 8:47:24 AM

Yes, you will need to add back in the amounts that were deferred on your W2 - PA does not allow these contributions to be pre-tax.  


Here is how you can add back these amounts:
  • Proceed through your PA resident return
  • When you get to the Compensation Summary screen, select Edit next to your NY W2
  • The next screen will ask you to Verify this Income** - select the box next to "I need to make an adjustment to the taxable amount of this income" (Note:  if you get a different screen here with only one option to make the entire amount taxable - you will need to first make the entire amount taxable and then loop back through this screen and you will get the option to adjust)
  • On the next screen, you will need to include the entire PA taxable amount - this will include your reported federal wages plus any amounts deferred with code D in box 12.
**If you click the More Info tab on this screen, you will get the following information:  "Some out of state employers don't always know the taxation rules for PA. You should review these W-2s and include as taxable any deferred compensation, such as contributions to a 401(k) or 403(b) plans which are not deductible in PA"

1 Replies
Level 7
Jun 6, 2019 8:47:24 AM

Yes, you will need to add back in the amounts that were deferred on your W2 - PA does not allow these contributions to be pre-tax.  


Here is how you can add back these amounts:
  • Proceed through your PA resident return
  • When you get to the Compensation Summary screen, select Edit next to your NY W2
  • The next screen will ask you to Verify this Income** - select the box next to "I need to make an adjustment to the taxable amount of this income" (Note:  if you get a different screen here with only one option to make the entire amount taxable - you will need to first make the entire amount taxable and then loop back through this screen and you will get the option to adjust)
  • On the next screen, you will need to include the entire PA taxable amount - this will include your reported federal wages plus any amounts deferred with code D in box 12.
**If you click the More Info tab on this screen, you will get the following information:  "Some out of state employers don't always know the taxation rules for PA. You should review these W-2s and include as taxable any deferred compensation, such as contributions to a 401(k) or 403(b) plans which are not deductible in PA"