Hi so I recently started working in NJ, but am a resident in PA. I had been informed about the reciprocal agreement between the two states (NJ-165) form. From what I understood is that I am exempt from paying taxes in NJ and only pay income tax in PA.
today I had looked in my paycheck and saw that my social security and federal taxes went up ALOT like mind boggling a lot . But .
My main question is , why am I paying more ? And because I depend on my pay check so much would you recommend filling out a new W-4 form? If this is the case if I made it to where I got almost nothing back at the end of the year would it be beneficial?
also when I saw this I contacted my HR and tried having it reversed to how it was before signing the NJ-165 for…but they told me I can’t because I have to pay taxes to the state I live in as well.. number one … I don’t think they can deny a reversal on this ! Number two … what difference does it truly make ? If it wasent for me finding this form and submitting it to HR then they never would have been a change or reached out about it at all.. plus to top it off and Plese correct me if I’m wrong . But let’s say I didn’t sign this form . Could I just file for a non resident refund from NJ and simply pay PA back the money I got refunded from NJ with? Because if that’s the case I’ll make sure it gets switched back.
tge reason why I’m so stressed about this is because when I filed my taxes the other day .. the guy said I don’t owe anything to the state of PA.
i was expecting too scince throughout the year of 2021 NJ was withholding my taxes . And it wasn’t untill 2022 the PA withholding went into effect on my pay check . Which means I didn’t pay a dime to my state.. so either he did my taxes wrong or there is something that I’m completely confused about and if he didn’t file them wrong then I see no point with this form and then only ask if it’s legal for me to reverse the form I signed
PA and NJ do have a reciprocity agreement. This means you can pay taxes in your home state of PA and not have to pay NJ. The PA tax rate is about 1/2 of NJ.
Social Security and Medicare tax will not be affected by any forms that you changed, but you may have inadvertently entered something to increase your Federal withholdings.
It may not be a bad idea to submit a W-4. You will have to decide if you want a bigger refund, but I strongly recommend that you don't plan to owe on your Federal taxes.
With the reciprocal agreement, you should only be paying taxes to the state that you live in. You should not be paying to NJ at all.
Your HR department can refuse to take a form that is knowingly incorrect, but if you want to make a legitimate change you should be able to.
The state of your residence will always tax all of your income. Since you had been paying into NJ you should have gotten a credit on your PA taxes. Since the NJ tax rate is 6.25% and PA's is 3.07% you should not have owed PA taxes. Go back over your tax return and be sure you got the credit for taxes paid in another state.