PA/NJ State Taxes

[deetaxed]

Live in PA, worked in NJ. I understand there is some kind of agreement. I'm not understanding how it works. NJ is saying I will be refunded xxx. PA is saying I need to pay xxx. Do I actually need to pay PA with essentially the cash I get back from NJ? 

Everyone mentions to process non-resident form first before resident form and there will be credits and such, but no one has mentioned what this actually entails. So I'm not sure if I have done something wrong and I shouldn't have to do anything else OR if this is correct and I can expect to PHYSICALLY pay PA with the refund Jersey sends me. 

Also being charged a PA penalty fee which makes me feel something is wrong.

Thanks 

[deetaxed]

Help

[KrisD15]

If you live in PA and work in NJ, you need to let your employer know this. 

Yes, those states have an agreement that if you live in one state and work in the other, you only pay tax to the state in which you live. 

Your NJ employer should have been withholding PA tax.  You should have given your employer Form  NJ-165

If this is not what happened, and you had NJ tax withheld, you need to file a NON-RESIDENT state return for New Jersey, allocate NO income and get the tax that was withheld refunded. 

Next you file your RESIDENT state return for Pennsylvania. You claim ALL your income and pay the tax on that income. 

Since you should have been paying PA tax throughout the year, you may get a penalty from PA.

The employer SHOULD withhold and submit taxes to PA on your behalf (through payroll) but if they don't, you would need to make estimated payments to the state on your own. 

Since it's April 2024, if you have not submitted any PA tax this year through withholding, you might want to send PA a payment for the first quarter of tax year 2024 to avoid a penalty next year. 

HERE is more on the reciprocal agreement.  

HERE is a link for making estimated tax payments to PA

[deetaxed]

Thanks for responding. 

So I physically write a check out to PA? And wait for my NJ refund. This is what I need to know. 

I guess I was under assumption filing online meant it would be handled on the backend without me getting a refund and going through the process of making a payment. 

Don't work in NJ any longer, but will remember the form for next time if it happens again. 

Thanks  

[KrisD15 · Accepted solution]

Yes, you make the payment to PA and NJ sends you the NJ refund. 

Refunds do not offset tax payments behind the scenes, states (and the Federal) do not interact with one-another as far as refunds/tax due is concerned.