How to claim a PA local taxes refund for NJ resident from previous year (2016)?

[yevgof]

I am a resident of NJ, but worked in PA in 2016; and local tax was charged according to my W2. I forgot to enter tax credit for tax paid to another state in 2016. Is there any possible ways to get refund of PA local taxes?

[yevgof]

My local income more then my NJ income as per my w2(2016). What income should i enter as a double income?

[maglib · Accepted solution]

If there were local taxes withheld you can file an amended 2016 NJ state return to claim the credit only for local taxes, not state taxes withheld (No PA state taxes should be withheld).

The Reciprocal Personal Income Tax Agreement between Pennsylvania and New Jersey means compensation paid to New Jersey residents employed in Pennsylvania is not subject to Pennsylvania income tax. Therefore, you cannot claim a credit on Schedule A for taxes paid to Pennsylvania on those earnings. New Jersey residents can claim a credit for taxes paid to Pennsylvania on other types of income (for example, business income) that are taxable in both states by completing Schedule A.

The New Jersey/Pennsylvania Reciprocal Agreement does not apply to income or wage tax imposed and collected by the City of Philadelphia or any other municipality in Pennsylvania. That means a New Jersey resident who works in Philadelphia and pays city wage taxes can claim a credit for the taxes paid to Philadelphia.

Do note there will NOT be a full refund as PA and NJ taxes are computed differently and you only get a credit on double taxed income.

To amend a NJ state return. see comment link.

[maglib]

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/4643391">https://ttlc.intuit.com/replies/4643391</a>  to amend state return

[TomD8]

In other words, you cannot get a refund of those local taxes from 2016.  Your only option is to file an amended 2016 NJ return, and claim the credit for them, as maglib described.

[yevgof]

My local income more then my NJ income as per my w2(2016). What income should i enter as a double income?

[TomD8]

The income that was subject to the local PA tax was double-taxed.  Remember that on your amended 2016 NJ return, you can only take a credit for the LOCAL taxes you paid in PA, not for the PA state tax.

[yevgof]

TT said that credit percentage is more then 100% sch A line 3, because my state wages is 65K, and local is 68K... and it is not eligible for e-file.

[maglib]

Either you changed something else and didn't start with your NJ return that you originally filed or you made an error inputting.  When you did your NJ return, you had to remove the PA wages..... You also had to report the wages actually subject to tax by both states which you put $65k (you can not have higher than the NJ amount entered)  The amount on NJ SCH A & B (the form that calculates the credit for taxes paid to others) The amount in Column A line A can not exceed the amount on line 2. Line 2 is all your GROSS wages subject to NJ taxes including interest and dividends and other income, .  The amount in Column A line A can not exceed the amount of NJ w-2 taxable wages as that's the double taxed income.   SCH A & B Column A line B should only have the taxes withheld for Local taxes in PA.    your credit for taxes paid to other states in no way can be more than the amount paid or you did something wrong on input.  The SCH A &B will take the double taxed wages over NJ Gross wages and create a % that must be less than 100%. Then the formula further limits by the deductions allowed to get to common AGI.  You need to go back and review your entries and review SCH A & B on NJ.