Multiple State Deductions?

[bk13de]

I recently accepted a new position w/ in my agency that is currently 100% telework but eventually I'll have to commute to Philadelphia 1-2 days a week. 

I live in Delaware but the office is in Pennsylvania. I anticipated that I'd now be paying the city wage tax because of where the office is located. When I checked my recent pay check they are withholding: Delaware state income tax, Pennsylvania state income tax, and the city wage tax. I was under the impression that I would now be paying the Pennsylvania tax and then I have to file a DE tax return and apply for a credit at the end of the year. 

Should I be getting all 3 deductions on each check? I'm a federal employee if that matters but I don't think that would make a difference here. 

[TomD8]

It works like this:

PA non-residents who work in Philadelphia are subject to the Philadelphia wage tax.

Income you earn from work actually (physically) performed within PA is subject to PA state income tax.

ALL your income is subject to DE state income tax, regardless of where you earn it.

You'll be able to claim a credit on your DE tax return for the state income tax you pay to PA (although the credit cannot lower your DE tax below zero - it is not a refundable credit).  DE will not allow a credit for the Philadelphia wage tax.

So at year's end you'll be liable for:

100% of the Philadelphia wage tax

100% of the PA state income tax

100% of the DE state income tax, less the credit allowed for PA state income tax

DE has a graduated income tax rate from 2.2 to 6.6%.  PA has a fixed rate of 3.07%.  So you are likely to have a DE tax bill even after applying the credit.  Therefore I think your employer is withholding correctly.

[bk13de]

Thank you for clarifying it, didn’t realize it’d all be taken out week to week. Figured I’d be paying the PA tax and then either paying the difference or getting a refund when I file at the end of the year. 

[Hal_Al]

Q.  Should I be getting all 3 deductions on each check? 

A. Simple answer: Yes.  Ideally, your employer would only withhold PA & Philly tax for the days you actually worked there.  But, with an irregular  work schedule, that's probably not gonna happen.

Q.  Figured I’d be paying the PA tax and then either paying the difference or getting a refund when I file at the end of the year?

A. Yes, that's what will happen. You have to file a PA state return, regardless of the amount of withholding.  If your employer withheld Philly tax correctly, you would not be required to file a city return.  But, in your situation, you will have to file a city return for a refund of over withholding. 

DE allows a credit for PA tax paid, but not the Philadelphia city tax.  Reference: https://ttlc.intuit.com/community/state-taxes/discussion/can-i-get-a-philadelphia-income-tax-credit-...