I live in PA and work remotely from home as a consultant for a company out of NC. They are taking NC state taxes out of my paychecks. Am I required to pay PA and NC taxes or how does that work?
You will need to file a non-resident tax return for North Carolina so that you can get a state tax refund for the NC taxes that were withheld from your wages.
You file a resident tax return for PA reporting all income that you received while a PA resident. You will be required to pay PA state taxes on that income.
See this TurboTax support FAQ for a non-resident state tax return - https://ttlc.intuit.com/community/state-taxes/help/how-do-i-file-a-nonresident-state-return/00/26066
Up until recently, you would only be subject to state income tax for the state where you physically performed the work (where you live). Currently, only New York, Delaware, Pennsylvania, Nebraska, and New Jersey tax nonresident remote employees that work for a company headquartered in those states. North Carolina says, " A nonresident employee is subject to N. C. withholding tax on any part of his wages paid for services performed in this State."
As DoninGA stated, you will need to file a nonresident NC return to get your withholding refunded. But you should also contact your employer to make sure that for future paychecks you have PA taxes withheld instead of NC.
With the continued increase in remote workers, expect that states may change their rules in the future.
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And when you file your non-resident NC return, be sure you show your NC-source income as zero.