If I live in Tennessee and work remotely for a company in Pennsylvania and got PA taxes taken out with each pay check, why do I not get any refund?

[Hal_Al]

Pennsylvania taxes telecommuters.  If you work outside the state as a job requirement, you are only subject to PA State income tax on the days you work in PA. But if you work outside PA for your own convenience, you are subject to PA income tax on all your PA source income. New York, Nebraska, Delaware and Arkansas have the same rule.  

[TomD8]

Here's a link to Pennsylvania's rule on taxation of telecommuters:

https://revenue-pa.custhelp.com/app/answers/detail/a_id/3599/related/1

[JamesG1]

This Pennsylvania Department of Revenue website addresses Pennsylvania's ruling on telecommuting.  It states:

If your employment agreement provides the employee with a physical workspace at the employer’s Pennsylvania location and the employee elects to perform their work outside of Pennsylvania, then the income for that employee is allocated to Pennsylvania.

I do not know whether you have an employment agreement or what the employment agreement says, but it sounds like Pennsylvania state income tax has been withheld on your W-2.

If 

• Your employment agreement allows you to work in Tennessee and not pay Pennsylvania state income tax, and
• You are a full-year resident of Tennessee, and 
• You file a nonresident Pennsylvania state income tax return, and 
• You claim no income earned in Pennsylvania on your nonresident Pennsylvania state income tax return, 

You may receive a refund of Pennsylvania state income taxes for the time that you worked in Tennessee.

As an example, you worked 52 weeks x 5 days per week = 260 days of employment.  

If you worked only two weeks in Pennsylvania for training purposes, you would report 10 days / 260 days or 3.85% of your pay as Pennsylvania income.  

Be prepared to justify your Pennsylvania nonresident state income tax return if Revenue questions your tax return.

[Stevenjwilliams0728]

I literally do not understand how states get away with this. 

"If your employment agreement provides the employee with a physical workspace at the employer’s Pennsylvania location and the employee elects to perform their work outside of Pennsylvania, then the income for that employee is allocated to Pennsylvania."

So my employer doesn't require me to work in PA, but allows me to work remotely in TN full time, I still have to pay taxes because its not a "requirement" that I work remotely. They justify I can relocate and work in the office. So in that case I'm paying tax to a state I don't reside in. TN doesn't have any state income tax so I guess that is nice otherwise it sounds like I would pay tax in both states. 

So I will not get tax credits or a full refund from PA and the city of philly because its not "required" by my employer that I work remotely?

[TomD8]

"So I will not get tax credits or a full refund from PA and the city of philly because its not "required" by my employer that I work remotely?"

Yes, that's correct.  PA state law was cited earlier in this thread; here's a link to the City of Philadelphia's stance on the issue:

https://www.phila.gov/media/20231024112123/UPDATED-Wage-Tax-policy-guidance-for-non-resident-employe...

It's interesting, and seemingly contradictory, that PA specifically does not require Pennsylvania employers to withhold PA income taxes from the pay of PA non-residents unless they perform work within PA.  See page 1 of the PA employer withholding guide here:

https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusin...

[Stevenjwilliams0728]

So I see this:

"Pennsylvania law requires the withholding of Pennsylvania personal income tax from compensation of resident employees for services performed within or outside Pennsylvania.
Pennsylvania personal income tax must also be withheld from compensation of nonresident employees for services performed within Pennsylvania, unless a nonresident lives in a state with which Pennsylvania has a reciprocal tax agreement"

TN is not listed on that Reciprocal list. So even though I live in a state that does not have state income tax I will pay PAs state tax because that's where my income comes from? 

[TomD8]

"...I will pay PAs state tax because that's where my income comes from?"

Not because your income comes from PA, but because you have an available workplace in PA and you instead elect (for your own convenience) to work remotely from a location outside PA.  The PA laws that apply to your situation have been referenced in previous posts on this thread.

There are a handful of states that have similar "convenience of the employer" laws.  PA is not the only such state.