Living in Jersey, working in Philly - Not receiving any credit for Philadelphia Wage Tax?

[fergusrd]

My employers, who did not withhold state tax for either PA or NJ, claim that the Philadelphia Wage Tax should allow me to receive credit for Taxes Paid to Other Jurisdictions, which would offset the amount I owe to NJ. I earned about $19000 dollars and TurboTax says I owe NJ $248. However, when I enter the amount of taxes paid for the Philadelphia Wage Tax ($686), it says my credit for taxes paid to Philadelphia is zero, so the amount I owe to NJ is unchanged. Am I doing something wrong?

[DMarkM1 · Accepted solution]

In the NJ interview for credit for other jurisdictions topic when entering Philadelphia Wage Tax information verify your entries. 

First, select the box for Philadelphia Income Tax and select "No" at the bottom of the page. 

Then verify the amount for the "Double Taxed Income." 

Since no NJ tax was withheld I assume box 16 on your W2 is empty so you would enter the lower of the amount in Box 1 of your W2 or the amount in box 18 for the Philadelphia Wage tax line. 

Next enter the box 19 amount for the City Wage Tax.   

[SweetieJean]

Be aware that that NJ will credit you for the Philly Wage Tax only to the extent of what would have been the NJ tax on those same wages.  In other words, if the Philly Wage Tax is a higher percent than your NJ income tax, you won't receive a full credit.

And, if you have other, non-wage NJ income, it may be subject to NJ tax.

Credit for Income Taxes Paid to Other Jurisdictions (Wage Income) (state.nj.us) at p. 10.

[fergusrd]

The Philly Wage Tax is 3.6% and the NJ Tax is 1.4%, so that does support me not receiving a full credit. That makes sense, but wouldn't that mean I should receive at least some of the $686 dollars back? I don't understand why it's crediting me zero. There could be nothing wrong, but I just want to make sure I don't deserve more before I file.

[fergusrd]

Okay, this was helpful! I was not entering the correct amount in the first box and I'm now receiving the proper credit!!! Thank you!!