W2 missing state tax information for resident state. How should I enter it while filing taxes?

[aditi-a2588]

My husband and I live in New Jersey. My husband changed jobs last year and has 2 W-2s - one from the employer in NYC and other from the employer in Philadelphia. Both his W2s do not have any NJ tax withheld even though NJ is his resident state. Should I include both the wages as taxable in NJ along with the respective states?

[DanielV01 · Accepted solution]

It depends.  New Jersey will tax all of your income because that is where you live.  If you do not have any "box 15" information on your W-2 that says NJ, NJ will automatically include the income into the NJ return.  If you do see a box 15 of NJ, even though NJ tax was not withheld, pay attention to the following points:

When you prepare the state returns, you will want to prepare your nonresident state (in this case, NY and PA) first.  On the NJ return, you will see a screen titled About Your W-2 State Wage Information.  Because of state programming requirements, TurboTax includes both income lines as part of the NJ income.  The next screen is titled Let's Confirm Your Taxable State Wages from (Employer).  Click on the NY box, and the PA box if there is one,  so that those reported wages are not included on New Jersey's return.  This will prevent your double-reported income form being added together on the PA return.

NJ has a reciprocal agreement with PA state.  If you did have taxes withheld by PA state (box 17), you want to file a PA return with zero income (there is a check box in the PA return to remove all income from PA), so that you can have any PA tax refunded to you.  If you were taxed in Philadelphia, you may claim a credit for the Philly taxes on your NJ return.  (In the Taxes to Another State Section, select Pennsylvania, answer that you had taxes withheld to Philly, and enter the amount of income earned in Philly and tax withheld).

You also want to make sure you have claimed a credit for taxes paid to NY on that same "double-taxed" income.  Even though no NJ tax was withheld, between removing doubled-up income and the tax credits for taxes paid to another state bring the NJ tax due down to zero or a very small amount.

[aditi-a2588]

In the above scenario describes, there is no PA tax withheld in my husband's W2, just Philly tax. Does that mean I can skip filing PA tax return?

[DanielV01]

Correct.  Follow the instructions above to get a credit on the NJ return for the Philly tax, though.

[SweetieJean]

Correct. The reciprocal agreement does not apply to work in Philadelphia.