I work in ny and live in pa. i am taxed in ny but not in pa. which state is cheaper? can i just pay the cheaper state? I have heard very differing opinions.

[DanielV01]

There's no "credit" that you will claim on the New York return itself.  Rather, in the New York interview you will be asked if you were a resident of New York City.  When you say "no", the NYC tax withholdings are counted as part of your NYS payments, but NYS will not calculate NYC tax on the income, so it should increase your New York refund by the amount of NYC tax withheld.  (By the way, make sure your employer knows you are no longer a NYC resident to stop withholding this tax).

This process could look very invisible in TurboTax, because it may be pre-calculated.  But if you put in some fake entry that you were a New York City resident, you will see your refund decrease because now NYC tax is getting calculated.

[dissapointedWithTurbT]

If you fill out the tax forms yourself, you'll get a credit for your taxes paid to NY state on PA-40 line 22. I used Turbotax for several years and it left this line blank. When I started doing taxes myself I realized the mistake, and filed amended taxes in PA, which netted huge refunds. Needless to say, I did not get a refund for my money wasted on the nonfunctioning tax prep software. 

[TomD8]

@dissapointedWithTurbT wrote: "I used Turbotax for several years and it left this line blank. "

In order for an "other state credit" to appear on your home state tax return, you must complete the non-resident state tax return first, before you do your home state return.  That's because the software cannot calculate the credit unless it "knows" the amount of tax due to the non-resident state, which it cannot "know" until you've completed the non-resident state return.