I work in ny and live in pa. i am taxed in ny but not in pa. which state is cheaper? can i just pay the cheaper state? I have heard very differing opinions.

[JosephF8]

On your PA return you should be receiving a credit for taxes paid to NY State.  This credit will show up on your PA-40 on line 22 as Resident Credit. Generally NYC does not tax non residents except if they are NYC Employees. Please work all the way through the NY return (non resident) prior to completing your PA return. 

[Shahzad5]

U looking to do mutuAL swap i live in central pa n wrk in manhattan

[dissapointedWithTurbT]

I wish Turbo Tax knew as much as you do. I've filed for years via Turbo Tax with no Schedule G, amazed that they never suggested it. Thank YOU.

[amber_isom]

Will Net York tax the entire income earned, regardless if all of it was earned in NY? My W2 has NY taxing all of earned income and PA only taxing a part of it (earned in PA). 

Because of this, do I say all wages were earned in NY? Then still do a schedule G? 

[TomD8]

@amber_isom --  If you are a resident of New York, New York can tax ALL your income, regardless of where you earned it.   A non-resident state can tax you on income you earn from working within that state.  But NY will give you a credit for tax you pay to the non-resident state, so that you won't be double-taxed.

In TurboTax, be sure to complete the non-resident state return first, before your home state return, so that the program can calculate the credit and apply it correctly.

[ccm3185]

Additional question on this same situation. I live in PA ( Bucks County) and work in NYC for about 8 years now. One thing I never figured out is the local earned income tax which here is ( 0.5% of your wages). For the most part my company never withheld this and i just never filed anything for this because I thought it was only for peiple living and working in Bucks County but now I am hearing mixed messages on this. Also if I am liable to pay the local country tax, can the NY state taxes I pay ALSO be applied as a credit towards this local tax in addition to the credit i get towards the PA state tax?

[TomD8]

@ccm3185 -- See this as to whether or not you must file a local income tax return:

https://www.keystonecollects.com/forms/download/I110a.pdf

And see the instructions for Line 12 on Page 3 of this reference, regarding taking an out of state credit:  

https://www.keystonecollects.com/forms/download/ITRInstructions.pdf

A tip: next time you have a question, it's better to post it as a new question rather than tacking it on to a old thread that may have started many months ago.  

[Khanahasan09]

What percentage will be deduct compare to NY? If someone live in PA and work at NY? Also, just out of curiosity, is there any one do car pool PA to NYC ? Or help me to find best route ? I’m moving in next month (September2020). Thanks in advance 

[Cart0910]

Hi, I have question with respect to your state tax (PA) return. I live in NJ but work in NYC. The way my taxes work are pretty simple. I pay state taxes at the NY State rate and at the end of year when I do my taxes I somehow get a credit from NY for  essentially  the difference between NY and NJ rates. for example, NY withholds 10K, but in NJ that income tax would have been 7K, then I end up getting 3K back from NY State ( an actual check). Income tax rates are slightly higher in NY than in NJ. Given everything that's going on now and with working from home now more of an option than 8 months ago, I am entertaining a move to Doylestown PA. and I am just wondering how the state tax aspect works. From what I have read income taxes are even cheaper in PA compared to NJ and obviously NY, so going back to my example, if say I move to PA, would I get back say 4-5K from NY State at the end of the year? 

[TomD8]

@Cart0910 :

Once you move to PA, ALL your income becomes taxable by PA, regardless of its source.

If you continue to work in NY after moving to PA, your income from working in NY (or from working remotely in PA for your own convenience for a NY employer) will also be taxable by NY.  In that circumstance you'd file a non-resident NY tax return in addition to your home state PA tax return.  You'd be able to take a credit on your PA return for the taxes paid to NY on the income taxed by both states, so you wouldn't be double-taxed.  But the amount of the credit would not exceed what your PA tax bill would have been if the entire amount had been taxed only by PA.

In the year that you move, you'd file as a part-year resident of each of the two states.

[thespacecaptain]

I still don't understand what happens with the difference if the NYS tax credit is larger than whatever the PA tax liability ends up being. Does NY send you a check? 

[LenaH]

No. If you are a part year or full year resident, NYS will only give you a credit of taxes paid up to the amount of tax paid to another state. In addition, the resident credit may not decrease your New York State tax payable to an amount less than would have been due if the income sourced to and taxed by the other state was excluded from your New York income.

IT-112-R-I Instructions

@thespacecaptain

[thespacecaptain]

Wow! So there's really no tax benefit to living in PA and commuting/working in NY. 

[DanielV01]

Almost no benefit.  If you were living and working in New York City, you are no longer paying the NYC tax, because New York City tax is for NYC residents only.

[thespacecaptain]

That's actually what I'm curious about. I worked in NYC in 2020, and city taxes were deducted from my W2. But from what I'm reading here, I wouldn't be able to recoup them (or any state tax differential) because the NYS credit would only apply to what I owe in PA taxes (i.e., no refund of the difference in state/city tax rates). Which is kinda crazy!