TurboTax has no way to handle reciprocal state agreement?

[budward141]

I worked in PA last year, and lived in NJ, but still had PA taxes withheld on my W-2. With the reciprocal state agreement between the two states, I was expecting to see a refund for PA, but so far TurboTax doesn't show the amount I was expecting. Can TurboTax handle this situation?

[Anita01 · Accepted solution]

II the state you worked in shows taxes withheld for PA. and you lived in a reciprocal state, it means your tax was incorrectly withheld.  You need to have the employer correct it for 2019.  

For 2018, you will have to show zero earnings for PA and enter the tax withheld to receive all of it back.  Enter your income for NJ.

[budward141]

Thanks so far for the answer! To be clear, I report $0 income for my PA tax return, while also reporting the taxes withheld? (And the PA IRS wouldn't have any problems with this?)

[Anita01]

No, the employer withheld taxes from a reciprocal state incorrectly.

[budward141]

Okay, that makes sense. Thanks for the help!

[Anita01]

Make sure to have your employer correct this for this year.

[budward141]

Thanks, but I'm no longer with the employer anymore, so it isn't a problem.