Make sure you didn't add your full income in each state slot when entering your W-2 forms in the federal section.
Pennsylvania (PA) does not have a reciprocal agreement with Delaware (DE). You will pay tax in DE for the income that was derived from that state. PA will give you a credit for taxes paid to DE on the same income because as a resident, all worldwide income must be included and taxed on your PA return. See the information below for the details.
State Returns - Your resident state requires you to include all worldwide income. Assume both states require income tax returns to be filed:
- Report the income on each state return that is from the nonresident state
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
In most cases complete your nonresident state first.
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