When I put in the Philadelphia tax withheld from pay in NJ return, the credit is coming up $0. It should offset nj tax for total Phil tax paid.

[re2boys]

Are you attempting to claim a NJ credit for PA income tax or the Philadelphia Wage Tax, two separate issues.  ?

[vernimp]

Philadelphia Wage tax.  The instructions in turbotax said to select PA for the Philly wage tax.  

[re2boys]

Try and go back and de-select PA.  Then visit the section for taxes paid to another state, if given choices, select local.  I don't have the NJ program so can't see what you see.  What are the choices offered?
NJ will NOT give you a credit for PA state taxes but should give you a credit for local/Philadelphia taxes paid to another state's municipality.

[KrisD · Accepted solution]

It won't work that way for those two states because they have a reciprocal agreement. That means if you work in one state and work in the other, you only pay taxes for the state in which you live. 

If you live in New Jersey and work in Pennsylvania, fill out Form REV-419 and give it to your employer. They should only withhold NJ tax. 

If you live in Pennsylvania and work in New Jersey, fill out Form NJ-165 and give it to your employer. They should only withhold PA tax. 

This year, you will need to first file a non-resident state return for the state in which you worked to get the tax you paid refunded. Next, you need to file a resident state return and pay the tax on your earnings. 

https://ttlc.intuit.com/replies/4776822