Question - Reciprocal Taxes

3 replies
29 views

Hello,

I live in Indiana and Work remotely for a company in Pennsylvania. There is a reciprocity agreement between the two states.

However, my employer (PA) withheld taxes for Pennsylvania (non-resident state) instead of for Indiana (resident state). What steps do I need to take to address this when filing with TurboTax? Do I need to request a refund or can the tax credit system automatically take care of it?

Thanks!

TurboTax Free Edition Online

KrisD15

Alumni - Intuit

File a non-resident Pennsylvania state return to get the tax refunded.

File a resident Indiana state return to pay the tax.

Tax paid to one state cannot be "forwarded" to another state.

If you are a remote worker, you would only pay tax to the state in which you live, regardless of reciprocal agreements.

All your income should be allocated to your resident state.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Hal_Al

Level 15

See this:

https://revenue-pa.custhelp.com/app/answers/detail/a_id/853/~/i-am-a-resident-of-a-reciprocal-state-working-in-pa.-how-do-i-receive-a-refund#:~:text=05%3A01%20AM-,I%20am%20a%20resident%20of%20a%20reciprocal%20state%20working%20in,residency%20status%20as%20%22nonresident%22.

Mike9241

Level 15

if your employment with this company is continuing you need to provide a corrected state w-4 so withholding is only for your resident state. if the company refuses to withhold for your resident state you'll need to pay estimated taxes to avoid penalties.

Mike9241