I am a Delaware resident n my employer is in PA. my employer is withholding taxes for Delaware and PA. Any help on this how I can avoid getting double state taxed?

[ketanmshah]

Hi All, I am a Delaware resident and my employer is in PA. I received my first pay and to my surprise my employer is withholding taxes for Delaware and PA. I am confused to why double withholdings for states since I am resident of Delaware. Any help on this how I can avoid getting double taxed?

[CarolynM · Accepted solution]

Unfortunately, you are subject to taxation in both states. 

While Pennsylvania does have tax reciprocity agreements with several states, Delaware does not participate in any of these agreements. Delaware taxes residents on the income they earn in Pennsylvania. Pennsylvania taxes non-residents on the income they earn in the state.

So you are not taxed twice, you are allowed a credit for the taxes paid to Pennsylvania. The net effect is that your overall state tax rate will be at the higher rate between the two states. 

When you prepare your tax returns, you will need to prepare your PA return before you prepare your DE return

For more information, follow these links:

Delaware on Out of State Income

PA Who Must File 

[ketanmshah1]

Thank you Carolyn, so does it mean my employer will cut taxes for both states and at the end I will get credit from other state (PA since I am DE resident). But all this only at the end of the year basically when I am filing returns for 2019 (in 2020)? is my understanding correct here?

[CarolynM]

Yes. That is correct. If you did not earn this income until 2019, you will report on the tax returns you are filing next spring. You will get credit for the taxes paid to to PA on your DE tax return. You will also get credit for the taxes already paid to your home state, so your chances of owing DE income tax next spring are greatly reduced.

[ketanmshah1]

Thank you again Carolyn for super prompt response. Can you tell me is their a way some form or something that I can submit to my employer and avoid him cutting taxes for either of the states? As I do see some employers only cut taxes for DE even when their employees work in PA. Is their any form I can submit so only 1 state tax is cut? As with this situation I am giving lot of my money in taxes to two states only to claim after 12 months :(.