I live in Ohio and work in Pennsylvania. My company mistakenly has me paying PA state income tax and I am a resident of Ohio. My state taxes will be incorrect right?

[rbrichant]

My state income tax was paid to Pennsylvania instead of Ohio....When preparing my Ohio state income tax return it now shows like I have not paid all year....how can I fix this?

[DS30]

Since the withholdings were taken out for PA instead of OH, you will owe state income taxes on your OH resident state income tax return. Also since the PA taxes were already sent to the PA Department of Revenue, your employer will not be able to refund your PA withholdings.

OH and PA have what is called a state reciprocal agreement. This allows nonresidents to not have nonresident state withholding taxes taken out for wages earned in the reciprocal state.

If PA withholding were taken out of your wages, you will not be able to claim a state tax credit in OH for these PA withholdings. Instead, you will need to file a PA nonresident state income tax return to claim a refund.

In order to get the full refund of your PA state income tax withholdings, you will need to file a nonresident PA return but report zero "0" income from PA (even though you do have PA wage income). You need to file your PA return this way because OH does not allow a credit for tax paid to a reciprocal state on wages, salaries and commissions. If tax was withheld by a reciprocal state (PA), you must file directly with the state for a refund of those taxes. You must mail in this PA nonresident state income tax return and include your state W-2 information. You will want to include an explanatory statement with your PA return stating your situation (that your PA employer withheld PA taxes from your wages in error due to a reciprocal agreement with OH).

To receive an PA exemption, a nonresident employee must file Form REV-420, Employee's Statement of Nonresidence in Pennsylvania and Authorization to Withhold Other States' Income Tax.

Here is additional information about filing in multiple states (select "see more answer" to view the entire attachment)

https://ttlc.intuit.com/replies/3300797

[Lyssa5895]

I have a similar situation. I just filed my taxes and for my ohio state return it says I owe $3000. I live in pa and paid my income tax. I work in ohio and paid my city taxes where I work. Shouldnt I not have to pay the income tax to ohio because of the reciprocal agreement? My federal and both state returns have been accepted by the IRS already. Will I just have to amend, if so how long do I have to wait?

[Hal_Al]

@Lyssa5895 - 

Q. Should I not have to pay the income tax to ohio because of the reciprocal agreement?

A. Yes. If you have already made payment, you will have to file an amended return to get it all back. You can amend as soon as the check clears the bank. If you have not made payment, you will probably  still have to file an amended return.  But, you might try calling ODT first, to see if there's a simpler way to "undo" your filing.

You should not have filed an OH return. In the personal info section, when it asks if you made money in another state, answer NO, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file an OH return.

 Ohio has a reciprocal agreement, on wages, with all neighboring states. No Ohio state taxes are withheld or due and you do not need to file an OH return.  However the reciprocity agreement does not apply to local city taxes. You are not required to file a local city return, but you are also not entitled to a refund of the city withholding (box19 on your W-2), unless there was an error in the amount.  You can use the city taxes paid in OH to offset the local municipal taxes that will be due on your local PA return, if you are subject to one.

[TomD8]

@Lyssa5895 -- If your employer is withholding OH taxes, file Ohio Form IT-4NR with them to certify that you are a resident of a reciprocal state.  This should stop the OH withholding.  Here's a link to that form:  https://www.tax.ohio.gov/portals/0/forms/employer_withholding/generic/wth_it4nr.pdf

[Lyssa5895]

Sorry I should have been more clear. So I work in ohio but I live in Pennsylvania. I have already paid my PA income tax but I must have messed something up when filing through turbotax because it had me file with Ohio also. I appreciate everyone's help!

[TomD8]

@Lyssa5895   When you work in a reciprocal state, and your only income from that state is W-2 wages or salary, you answer No in the personal info section of TT to having had "other state income." 

[asl5319]

So, how does one go about using the local taxes to credit a different municipality? I live in PA, worked in OH for the summer, and paid OH taxes. I figured out the state part (I think - I'm getting a refund from OH and paying PA but that seems to work out). How do I handle the local tax return to PA? 

[Hal_Al]

Contact your local tax agency. Some cities have a tax dept; others use a regional agency e.g. Berkheimer or Keystone Collections.  There is usually a tax form you file.

[abDC]

I live in DC. I had some income in PA. The address on my W2 is DC and my employer withheld DC state taxes, not PA state taxes. TT shows I owe $0 PA taxes.

I called PA tax office to ask whether I still needed to file a return showing $0 PA taxes (since they seem to require a return to be filed if any income was earned in the state), and I was told I should have had PA state income tax withheld, not DC, and now need to pay PA state tax. (Further, I should amend my DC return if I want to get refund for PA taxes paid.)

Which is correct??

Thanks for any insight here.

[TomD8]

@abDC  --  The PA tax office is correct.  If you live in any other state and work in DC, you don't have to file a DC tax return.  But that only works in reverse for DC residents who work in Maryland or Virginia.

Therefore DC residents with PA-source income must file a non-resident PA return in addition to their DC return.  Those taxpayers will be able to take a credit on their DC return for the taxes paid to PA, so they won't be double-taxed.

[abDC]

Thank you for the clarification. I wonder why TT shows my PA tax liability as $0.

[TomD8]

Did you allocate your PA income to your PA return?

Also,  in TT it’s important to complete your non-resident return first, before you do your home state return, in order for the numbers to work out correctly.  

[abDC]

For PA income i indicated 'non-resident' and it calculated $0

Good to know about doing non resident return before home state....

thank you