Residing in New Jersey, working in Pennsylvania. Paid Philadelphia local tax. When filing NJ state tax return, can I get credit on local tax paid ?

[evana0406]

I am residing in state of NJ, but working in state of Pennsylvania. I paid only Philadelphia local tax, not Pennsylvania state tax .  Do I get credit on the Philadelphia local tax paid when filing NJ tax return ?  Do I have to file PA state tax return? Do I have to pay NJ state tax on the wage that I paid Philadelphia local tax ? 

Thank you!

[DianeW777]

Yes.  The New Jersey/Pennsylvania Reciprocal Agreement does not apply to income or wage tax imposed and collected by the City of Philadelphia or any other municipality in Pennsylvania. That means a New Jersey resident who works in Philadelphia and pays city wage taxes can claim a credit for the taxes paid to Philadelphia.

• NJ Credit for Taxes Paid to Other Jurisdictions 

[evana0406]

@DianeW777  So you mean that I have to pay NJ state tax return and no need to file PA state return, I am correct ?

[evana0406]

@DianeW777  also, how can I claim credit in NJ state return on Philadelphia local tax paid ? 

[DianeW777]

Yes. You are correct if you have no Pennsylvania (PA) tax withheld.  If you do have PA tax withheld file a return to receive a refund because PA and New Jersey (NJ) are reciprocal states. However the local tax is not refunded, and not included in the reciprocal agreement.  Therefore NJ allows a credit for taxes paid to Philadelphia as indicated.

Continue through your NJ return until you reach the screen 'Credit for Taxes Paid to Another State' (see below).  Follow the screen prompts.