I live in pa and work in nj. held taxes and showed wages in/as nj. I have had this happen before and filed nj as non resident and receive all $ back. not this year

[mcgurtey]

this year it shows me only getting a credit of $122 out of $1991 withheld

[TomD8 · Accepted solution]

If you are a W-2 employee, your employer should not be withholding NJ taxes at all.  NJ and PA have tax reciprocity.  If all your NJ income is W-2 wages, it is taxable only in your home state of PA. 

If your employer did incorrectly withhold NJ taxes in 2016, you would have to file a non-resident NJ return (showing zero NJ income), if you wanted those taxes refunded.

If this is your situation, you should file Form NJ-165 with your employer, to certify your non-residence in NJ.  Here's a link to that form: http://www.state.nj.us/treasury/taxation/pdf/current/nj165.pdf

The tax reciprocity applies to W-2 wages only.  If you have other types of NJ income, such as rental income from a property located in NJ, you'd have to file a non-resident NJ return.

[mcgurtey]

Would this mean that I cannot use TurboTax to file the New Jersey return?

[TomD8]

You can use TT  to file a non-resident NJ return.  In the Personal Info, section, just answer Yes to the question about Other State Income, and select NJ.  But when you do the NJ return, show zero NJ income (assuming all your income is W-2).  And in TurboTax be sure to complete the non-resident NJ return BEFORE you do your resident PA return.

[mcgurtey]

Got it!  Thanks for your help!