The following is from the instructions for Pennsylvania Form PA-40.
"A resident of one of these reciprocal states whose employer withheld PA income tax must file Form PA-40 reflecting no compensation on line 1a and the PA tax withheld on line 13. In addition, a signed copy of the other state's resident income tax return (without any supporting documents) along with a copy of the actual W-2 and a statement that the taxpayer was a resident of a reciprocal state must be submitted."
To avoid this in the future, you should fill out Form REV-419 EX and give it to your employer to tell them to stop withholding PA tax. Here is a link to the form.
The following is from the instructions for Pennsylvania Form PA-40.
"A resident of one of these reciprocal states whose employer withheld PA income tax must file Form PA-40 reflecting no compensation on line 1a and the PA tax withheld on line 13. In addition, a signed copy of the other state's resident income tax return (without any supporting documents) along with a copy of the actual W-2 and a statement that the taxpayer was a resident of a reciprocal state must be submitted."
To avoid this in the future, you should fill out Form REV-419 EX and give it to your employer to tell them to stop withholding PA tax. Here is a link to the form.
what should i do if the same situation happens between NJ and CA ( No reciprocity agreement) ?
If there's no reciprocal agreement, then it's not the same situation. If you live in NJ and worked in CA, you have to file a CA nonresident tax return, whether or not CA tax was withheld. Income that you earn for work that you do in CA is subject to CA tax, so you will have to pay some CA tax. You will not get a full refund of CA tax that was withheld. On your NJ resident tax return you will get a credit for part or all of the tax that you pay to CA.
Did you work in Philadelphia? If so, the NJ/PA reciprocall agreement does not apply,.
@SweetieJean......the NJ/PA state income tax reciprocal agreement absolutely does apply even if you work in Philadelphia. It does not apply for PA local tax purposes. A NJ resident working in Philadelphia must pay the Philly wage tax and it is not refundable. However the PA local taxes paid can be used as taxes paid to another state on a NJ income tax return (credit for taxes paid to another jurisdiction).
See <a rel="nofollow" target="_blank" href="http://www.state.nj.us/treasury/taxation/njit14.shtml">http://www.state.nj.us/treasury/taxation/njit14.shtml</a> for details.
I am in the same situation. Would I be able to efile the Pennsylvania return?
The way the reciprocal state agreement works, if you file a REV-419 with your Pa. employer, they will stop paying withholding tax to the state of PA. Instead, they will only withhold taxes and report to the state of NJ, thus eliminating the need to file a PA non-resident return. Please select this link to download a REV-419. Fill it out and submit to your employer so they will start withholding taxes for the state of NJ instead of PA.
In the meantime, you will need to first file a PA non-resident return and then a New Jersey resident tax return. You will get credit in NJ for the tax paid in PA.
Hi Dave
In your response, you stated "you will need to first file a PA non-resident return and then a New Jersey resident tax return. You will get credit in NJ for the tax paid in PA.".
Here is my example: I live in NJ and work in Pennsylvania. My employer withheld $1,800 PA Tax.
Assumption: I should file a PA-40 Non-resident tax return reflecting no compensation on line 1a and $1,800 PA Tax withheld on line 13; and then PA will REFUND the $1,800 to me? Is my assumption correct?
Question: Do I enter $1,800 on my NJ tax return on line 43 Credit for income taxes paid to other jurisdictions?
I'm looking forward to your response and appreciate your consideration
No. You can only claim a tax credit for actual tax paid @MJGARITO, not on tax withheld. If you are filing to get back all your Pennsylvania tax, then there is no credit on the New Jersey return.
You should also speak with your employer so this doesn't happen again.
Hi @SweetieJean
My circumstances are the reverse: lived in PA, but worked in NJ for a portion 2018 into 2019. Would my NJ employer have withheld my PA local taxes (evidently PA state taxes don't cover this)? Or would there be a PA local tax credit for local taxes withheld from NJ paycheck? I'm being informed that I might still owe PA local taxes for that time period, but I want to be certain that I actually owe them before paying.
Thanks in advance for any insight!