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.

[p-lindsell]

I am looking for a straight cut answer of how to best proceed with my w2 for future. thanks!

[re2boys]

Mark that you earned income in another state.

Prepare a NY nonresident return first declaring your wages earned in NY.  Then prepare a PA resident return showing ALL income regardless of where earned.  Be sure the PA return contains a Schedule G giving you credit for taxes paid to the "other" state.  If you had little income other than your NY wages, you may show a zero balance on your PA return as NY has a higher tax rate.

Any unused portion of taxes paid to NY may be used to offset your local earned income tax that you also must file, TurboTax will not help you with the local.

[DanielV01]

It depends.  However, for your situation, both are allowed to tax your income.  New York taxes you as a nonresident, and PA taxes you as a resident.  When this is the case, your resident state (PA) will give you a credit for the tax you must pay to NY on your income.  NY does have a higher tax rate than PA, so it is likely you do not pay PA tax at the time you file your return.

However, you do not want to start having PA tax withheld instead of NY tax.  NY gets priority as far as who receives the tax first as long as you work there.  Your employer will be required to withhold and remit (send) your taxes to NY on that income unless you are a military spouse only present in NY because of your spouse's marching orders.  Otherwise, you are required to pay NY taxes.  If these are not withheld, you will owe a substantial amount and will likely face penalties and interest payments for not having paid in enough New York tax.  (Yes, you'd get a larger PA refund, but you'd end up losing in the exchange).

[Mothic4]

Does this hold true for the opposite? I'm a resident of NY working in PA. I'm a employee of the postal service and just moved to NY. The postal service says they wont withhold both state taxes from my paycheck even after begging them to but I'm fearful of the repercussions that may hold. Are they required to withhold these taxes?

[TomD8]

@Mothic4 :

If you live in NY and work in PA, your work income is taxable by both states.

If the postal service will only withhold taxes for your work location in PA, you may want to start making quarterly estimated tax payments to NY.  That's because NY's income tax rate is considerably higher than PA's.  So, although you'll be able to take a credit on your NY return for the taxes paid to PA on the income taxed by both states, the credit will only cover a portion of your NY tax obligation - leaving you with a balance due to NY.

You can find information about NY estimated taxes here:  https://www.tax.ny.gov/pit/estimated_tax/default.htm

[DanielV01]

As far as the state taxes is concerned, yes, the same rule does apply.  NY is allowed to tax all of your income as a resident of NY.  PA will tax all of your income earned in PA, and NY will apply a credit for the income tax you pay to PA for the income you earn there.  I cannot comment on whether the postal service is obligated to withhold NY tax, but you are correct in ensuring the consequences, because you are still responsible for the final result.

For argument's sake, let's assume that your NY tax liability is greater than your PA liability.  In that case, although NY provides you a credit for what your PA tax liability is (withholdings plus additional owed or minus PA refund), you still will owe NY the difference.  If that difference is large enough, you could owe underpayment penalties.  If this is the first time that you owe, there is a good chance that you can request NY to waive the penalty.  However, if the postal service cannot withhold the difference for NY, you will want to begin making quarterly (estimated) payments to close the gap.

The following website provides additonal information:  Who must make estimated tax payments? (NY).  (Wages, while not listed on this site, do qualify as qualifying taxable income.  Withholdings towards PA that are credited towards NY should count as if they were withheld to NY).  You will be safe from penalties if you owe less than $300 after reconciling your tax return.  If you find out that you should make estimated payments, NY allows you to do so at this website:  Making NY Estimated Payments

[Hal_Al]

"Are they required to withhold these taxes?"

No. They are only required to withhold for the work location state.   Many corporations, with employees in a similar situation, do it for them. But, the situation is rare enough that it does require some special effort

[Hal_Al]

"Can i just pay the cheaper state?"

The answer is a straight out NO.

As the other replies indicate, you are require to pay NY tax on your NY income. As a PA resident, you are required to pay PA tax on ALL your income.  But, there is little or no double taxation, as PA gives you a credit for what you paid NY. In some states, it may only be a partial credit.

[Hal_Al]

As the other replies indicate, you are require to pay NY tax on your NY income. As a PA resident, you are required to pay PA tax on ALL your income.  But, there is little or no double taxation, as PA gives you a credit for what you paid NY. In some states, it may only be a partial credit.

[Shahzad5]

Hi dear are you still working in pa coz i moved from ny to central pa but my job is still in ny and i m having same concerns as you

[DoninGA]

@Shahzad5 READ the reply directly above the message you just posted.  It covers this issue completely.

[Minnie pallet]

My situation is similar: 

I work in New York and lived in New York  until 2/25/2019. 

i purchase a home in PA and  moved into my  home on 2/26/2019. 

 I commute daily from PA to New York for work . 

I am a part year resident for both states? 

How do i file my taxes ? 

[Hal_Al]

@Minnie pallet  - Yes, you are a part year resident of both states. The income up to 2/26/19  is allocated to NY.  After the move, the income is reported to BOTH states.  You claim a credit, on the PA return, for the tax paid to NY, but only on the  NY tax paid on the Feb 26 -December 31 wages

[Minnie pallet]

@Hal_Al Thank you, do i have to file two different state returns on turbo tax? if so once i  complete the two state returns is there anything else i ll have to do or turbo will take care of  everything? 

[Hal_Al]

Yes, you have to file and pay for two different state returns on turbo tax. There's an additional fee to efile the PA return (NJ efile is free but not the return preparation). If you need to pay one (or both) of the states, you'll need to send payment.

[FENGYEAN]

I did pay additional states  PA and NY. However I see the system did not calculate the tax that I paid to NY as credit to  PA return and it still shows I need to pay full tax on PA and the tax credit was not factored in Schedule G.