I'm a PA resident whose primary job is in NJ. I received family bonding insurance from NJ as my employer withholds NJ SUI. Do I need to file a separate NJ return?

[Dm91982]

My confusion seems from the reciprocity agreement between NJ and PA that indicates I don't need to file a NJ return unless I was taxed using NJ tax rates.

[MaryK4]

The reciprocity agreement will cover your the family bonding because that is covered under the State Disability Insurance, which is treated and reported by your employer as Third Party Sick pay.  Your employer will report this on your W2 so the Pennsylvania state withholding and reporting applies.   Note: this is different than actual Unemployment that you would have collected from New Jersey, that would not have been under the reciprocity.

[Dm91982]

Thank you for clarifying! To confirm, I will not need to file a NJ state return in addition to my PA return as this type of pay is covered through the reciprocity agreement? Just wanted to make sure I'm understanding correctly. Thank you again. 

[GeorgeM777]

You are correct, you do not need to file a NJ return.  To follow-up on the response from @MaryK4, PA, your resident state, and NJ have a reciprocal tax agreement whereby PA residents working in NJ are not subject to NJ income tax.  Below is information copied from the NJ Division of Taxation webpage that discusses the issue of taxes and reciprocity.  The link to this page is listed below. 

"Compensation paid to Pennsylvania residents employed in New Jersey is not subject to New Jersey Income Tax under the terms of the Reciprocal Personal Income Tax Agreement between the states.

Similarly, New Jersey residents are not subject to Pennsylvania income tax either. Compensation means salaries, wages, tips, fees, commissions, bonuses, and other payments received for services rendered as an employee.

The Reciprocal Agreement covers compensation only. If you are self-employed or receive other income (ie., gain from the sale of property) that is taxable in both states, you must file a New Jersey nonresident return and report the income received."

NJ Division of Taxation