topic Live in one state, work in another in State tax filing

Live in one state, work in another

occhy4 — Mon, 08 Feb 2021 18:14:52 GMT

Hi, I lived in PA and worked from home for a company based in NJ (never went to office). I know the states have reciprocity. I have 2 questions:

- I assume I need to file in each state? It looks like state taxes were withheld in PA. Do I owe in NJ? If so, the taxes I paid in PA are applied to NJ taxes owed?

- which state do I file unemployment? PA said to call NJ so I did. Is that correct?

Thanks

Re: Live in one state, work in another

LenaH — Mon, 08 Feb 2021 18:39:07 GMT

You do not have to file a return for New Jersey unless their payroll department accidentally withheld taxes for their state instead of your resident state of Pennsylvania. What matters is where you earned the income - not where your employer is located. In your case, if they only withheld PA state income taxes, you do not have to file a NJ return.

For more information, please see Do I need to file a nonresident return for an out-of-state employer?.

Secondly, you should file your unemployment claim with the state where you worked, which would be Pennsylvania. Per the Pennsylvania Office of Unemployment Compensation, you will need to file an interstate claim in another state only if you worked in a different state.

Re: Live in one state, work in another

occhy4 — Mon, 08 Feb 2021 20:34:15 GMT

thanks, does it matter if my company didn't pay UE insurance into PA (since it is based in NJ)? I am not even sure whether that is the case.

Re: Live in one state, work in another

ToddL99 — Mon, 08 Feb 2021 20:49:10 GMT

From a tax perspective, it does not matter if your company paid UE insurance into PA or NJ.

Unemployment benefits are taxable income no matter what state they derive from.

In the process of applying for unemployment compensation, go first to the unemployment office where you you live and follow their instructions (it appears you have already done so).