I live in NJ but work in Philadelphia. My w2 has no state tax info, but a Philadelphia wage tax. Is this normal, and how does this affect my nj state return?

Yes, you claim a credit for taxes paid to Philadelphia on your NJ return. However, you should have a W2 showing NJ taxes withheld. NJ and PA have reciprocity, so residents only pay state tax to their home state. Cities aren't covered by reciprocity, which is why Philadelphia was withheld.

To input the credit for taxes paid to Philadelphia, you need to access the Credit For Taxes Paid section of the New Jersey interview under State Taxes.

• Skip to New Jersey return, and Update or Continue (the screens may vary slightly depending on how far you got in the NJ interview before)
• If you have been through most of the screens before, you will land at a summary page "You've Finished Your New Jersey Return"
• Update next to Taxes and Credits
• continue to Summary of Taxes Paid to Other States screen.
• Add State or Jurisdiction
• Select Pennsylvania
• On the Pennsylvania Credit screen, check the first box about Philadelphia and say NO.
• Enter the local wages (double-taxed income) and taxes paid to Philadelphia from your W2.

This will calculate your credit. Click PDF below for images.

No matter where you are in the interview, you can also go forward or back to find the Summary of Taxes Paid to Other States screen.

When I do that, I go from oweing money to getting a little back. I file jointly and my spouse has income from nj that is on that w2. Does that sound normal?

I don't know what normal means, but obviously you are now benefiting from a tax credit. It should improve your NJ return. Going from owing to not owing doesn't really mean anything.

We live in NJ, but my wife works in Philadelphia. Her employer did not withhold NJ state taxes. They only withheld PA income taxes. I am going to file a PA return to request a refund for all of the state taxes paid to PA. I also added her state wages to our NJ return to pay taxes that are owed to NJ. She also paid Philadelphia wage tax. How do I go about getting credit for these taxes? I believe I can add it to the NJ state tax return. Do I include anything in "Double-taxed income while a resident of NJ"? I believe the answer is no in this situation.

I have a similar situation. My husband had tax withheld for state and Philadelphia so I entered the credit. For some reason I had no NJ tax withheld just Philly tax. Does that mean that I can not get credit for taxes that I paid to Philadelphia? Technically, I was not double taxed, but Philadelphia tax is high and if I don't enter it we owe a lot to NJ (much more than I paid to NJ on last years W-2).

There had to have been state tax withholding form your employer. There wasn’t any NJ or PA state taxes withheld on your W-2?

@thiggins002  When the taxpayer live sin NJ and works in Philadelphia, only Philly wage tax is withheld.  No NJ or PA state tax is/

That’s not correct. If you live in NJ and work in PA, your PA based employer should be taking NJ state income taxes out of your paycheck and remitting them to NJ.

<a rel="nofollow" target="_blank" href="https://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/PIT/Pages/PA-NJ-Tax-Agreement.aspx">https://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/PIT/Pages/PA-NJ-Tax-Agreement.aspx</a>

PA state tax should not have been withheld if Hubby worked in Phila all year.

You must file a nonresident PA state tax return to get that back, and then a NJ resident return.

NJ will give you at least partial credit for the Phila wage tax. depending upon the respective tax rates.  Any other income that you had (such as investments) is still taxable for NJ.

https://www.state.nj.us/treasury/taxation/njit14.shtml

I have a small withholding of Income Taxes for Philadelphia as the majority of my W-2 income is from New Jersey.  Do I need to file any return in Pennsylvania or Philadelphia?

i’m in similiar situation. I have a w2 which shows box 15 (PA), box 19(local income tax)$1201,( box 18 local wages) 34896, and on box 20(locality)Philadelphia. I live in NJ and work in Philadelphia. I understand that i do not have to file a PA return but must for NJ. Now when i do my NJ return do i get that amount back as a credit when i add (other state taxes paid)? My gross income for NJ is above 34896

If your employer withheld the PA taxes, you must file a nonresident return for the state taxes.  At this point, if you report the income on the PA NR return, you will get the credit on the NJ return, or you can file with zero PA income get the PA taxes refunded, but then pay on all the income in NJ.  If you have not already done so, you must file a Form REV-419EX to stop the PA withholding. 

Regardless, you do get the credit for the Philadelphia City tax on your NJ return. 

See NJ Income Tax – PA/NJ Reciprocal Income Tax Agreement.

@amyT1

thanks for the reply. i’m a bit confused. My employer did not withhold any PA state just NJ state and Philadelphia local income tax. I thought i didn’t have to file with PA if i’m filing and reporting with NJ. Then i can claim the Philadelphia local income tax as a credit(under other state taxes paid) on my NJ return?

Sorry I must have been looking at a different post.  Yes, you can claim Philadelphia Wage tax as credit.

@amyT1

I did this and it still says the tax credit is 0 in nj

Yes, if you file a New Jersey resident tax return and you pay state tax to a different state for the same income, (not the amount withheld, the amount of the tax liability) you will see a credit for that double taxation on your New Jersey return. 

To have the numbers flow properly in TurboTax, the non-resident return must be done first, then the tax on the income claimed a second time on the New Jersey return will be credited, up to the same amount New Jersey would assess. 

i need a nj 2019 form nj-coj for wages in pd=hiledelpia of 42,000 and city wage of 1200 dollars takes out- 

First of all, I must be the bearer of bad news.  Turbo Tax does not support filing Philadelphia City Taxes and you will need to file a Philadelphia City Tax return to get some of that money you paid for taxes. Here is a city of Philadelphia website to file a free tax return for the city of Philadelphia.

What you will need to do in Turbo Tax is file a PA non-resident return and file a resident NJ return in that order. When you file your PA return first, the taxes you paid to PA will credit to your NJ return. 

Philadelphia local wage tax is separate from your PA state return and there is no available deduction for these taxes on your state return. However, this amount would be a deduction from your federal return as a local income tax paid on Schedule A if you are itemizing your deductions.

Hi Dave

This was helpful as I work in the City of Philadelphia and live in NJ.  My W2 shows small portion collected by State of NJ, but a larger portion collected by City of Philadelphia.  However, no tax is collected by State of PA, only the City.  
According to your resolution, we would have to file non-resident return for PA, then NJ (in that order).  Challenge is we did not have any taxes collected by State of PA.  Since Turbo Tax does not support (which we were not aware), what do we do?  Its been this way for several years in which we have filed using Turbo Tax, but continue to owe NJ every year (double taxed).

How can we resolve?

@ecrens2020 

No, you've been doing it right all along  (the post/answer just above yours appears to need some major modification). 

As a NJ resident, you would only file a PA non-resident tax return if, as a W-2 employee, your PA employer withheld PA state taxes, and then you would only do that to get the improper PA withholding refunded (effectively you have zero PA income)

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Back in late 2016, NJ was going to eliminate tax reciprocity between NJ and PA, but then it was rescinded before 2017 started.  So NJ-PA tax reciprocity is still in effect.

Read the "NJ/PA Reciprocal Agreement" at:

https://www.state.nj.us/treasury/taxation/njit14.shtml

___________________________________________

Since that NJ-PA reciprocity agreement  is still in effect, you only file a NJ resident tax return, as long as no PA state taxes were withheld for that W-2 job in Philadelphia, and you get to take a credit on the NJ tax return for the taxes withheld for Philadelphia.  (Philadelphia and PA are entirely different tax authorities, i.e. there is no NJ-Phila. reciprocity)  

No Philadelphia tax return is required for you as a NJ resident, since your employer handled it on your W-2 withholding ( I think this is correct..?   @maglib    @re2boys  @rjs     @retiree     one of you knows for sure ). 

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And to be clear, TTX software does allow -preparation of PA-State tax returns (not that you need it ) ... but TTX  maybe/probably does not prepare Philadelphia tax returns...those are two different tax authorities.

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IF you end up owing NJ a lot every year, talk to your employer/payroll/HR about preparing and giving them a new form to have NJ withholding increased.  Probably an NJ-W4, with fewer allowances than you are using now, or an additional $$ amount on line 5 of the form:

https://www.state.nj.us/treasury/taxation/pdf/current/njw4.pdf

Hey! @SteamTrain  Thank you for the information provided, I will go ahead and close this thread to make sure that any other comments are up to date with the correct information. Thanks!