I and my husband live in PA. I work in PA, but he works in NJ.

[ematias7]

We decided to file federal and PA state taxes together. Turbo tax at the end of the PA taxes ask for * any special Pennsylvania W-2 situations?* in which we choose the option that says ( you were a resident of PA working in another state or country and your employer did not withhold PA income tax) because my husband's employer withhold taxes from NJ and not from PA. Then the page ask you to create a statement, I responded as follows:

Form or schedule related to the statement; W-2 

Statement information; My husband is a resident of PA who worked in NJ (a reciprocal state), and his employer mistakenly withheld the NJ taxes instead of PA taxes.

Is this correct?

 

[Vanessa A]

Yes, you will select that he earned income in another state and that they did not withhold PA taxes. 

Since your husband works in NJ, it is treated like he works in PA.  He should not pay any taxes to NJ, only to PA.

You will still need to file a NJ return with $0 in income and the full amount withheld to get a refund of the taxes held in error to NJ.

You should also have your husband contact his employer to make sure they are only withholding for PA from here on out to avoid underpayment penalties for PA. 

(Edited 4/4/24 @1:18PM PST) @ematias7

[ematias7]

 Ok, so what I put in form and statement information is correct ?

[Vanessa A · Accepted solution]

Yes, what you have entered is correct. 

[ematias7]

Can we fill out the federal and PA state taxes together, and can he fill out the NJ taxes as married filing separately, or do we have to fill them all together even if I did not work or live in NJ?

[Vanessa A]

Yes, you can.
 

In general, in NJ, you have to use the same filing status, however since you are both nonresidents, he can file a separate return because he is the only one with NJ income.