Live in PA and work in NJ but my employer withheld NJ taxes

[jdellis19]

I worked from home and lived in PA all year in 2020. My employer withheld taxes in NJ and PA all of 2020. How do I go about filing and getting my NJ withheld taxes back? I continue to get a "fix this issue" notification in my final review because my withholdings are greater than my NJ income. Can someone please help?

[AmyC]

You need to have your NJ income showing on the NJ return. You will file the NJ and pay the tax liability for having a job based in NJ. Then PA will give you a credit.

You will need to prepare the states in a special order. You may need to delete both states and begin again.

1. First, prepare your non-resident  return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. THEN prepare your resident state return and it will generate a credit for your income already being taxed in the non-resident state.
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.

[SundayInSalem]

The post is incorrect. There is no tax credit and you are entitled to a refund of your entire NJ withholding. Pennsylvania residents employed in New Jersey are not subject to New Jersey Income Tax.

If New Jersey Income Tax was withheld by mistake from your wages, you must file a New Jersey nonresident return to get a refund. Adjust your NJ income to $0 on the NJ tax form to get the full amount back.

Enclose a signed Statement of New Jersey Nonresidency, which is available on at njtaxation.org. See “Employee’s Certificate of Nonresidence in New Jersey” under Individual Income Tax Forms.

To stop the withholding of New Jersey Income Tax, complete a New Jersey Employee’s Certificate of Nonresidence in New Jersey (Form NJ‑165) and give it to your employer.

For detailed instructions see Pennsylvania Residents on page 31.

[t22g]

Thank you - this was VERY helpful info!!! 

[pointlobos]

Problem is Review says you can not efile if withholding is more than wages, which would be zero. So seems like you have to file paper return.

[ErnieS0]

You will want to file a paper return because your $0 wages will not match what's on the W-2 @pointobos. You must attach a signed statement with your return.

New Jersey says: "You must enclose a signed statement with your New Jersey nonresident returns indicating you are a resident of the Commonwealth of Pennsylvania." Click on the link to fill out and print the statement that you need with your return.