Two W-2s with different state earnings that doesn't match total federal earnings

[safetyprincess]

My daughter had a campus job at her NYS university in 2020. when the pandemic hit and her school closed, she was still able to do campus job off-site at home in PA - digital design work.

For this purpose, let's say she made $1000 gross pay which is what box 1 federal wages indicates. Her NY W-2 says she made $1000 in box 15 and took out state income tax. Her PA W-2 says she made $200 and took out state and local income tax. The school payroll dept wasn't very helpful. They said that because her last gross paycheck of $200 was paid out in May when school was closed and she did the work at home, it is considered PA earned income. I entered the info as one W-2 with 2 entries for box 15 - NY earned income as $1000 and PA earned income as $200. However, when you do the  PA return, Turbotax says you earned $1200 for this job. 

She is claiming as an independent in 2020 and her total income was such that she didn't owe any taxes after the standard deduction and household credit was applied. So she will get all her NYS taxes paid refunded.

On her PA taxes, I turned off the credit for NY taxes paid so she doesn't get a tax credit on her PA taxes. But what to do about the "extra" income noted on the PA state wages portion of the W-2? Any thoughts?

[Mike9241]

what should have been done

since you're saying she got 2 w-2's you needed to enter 2 w-2's 

first her federal return

based on her state of domicile being PA all her income is included on her PA return ( state of domicile means where her permanent residence is located)

she also has to file a NY return for the income earned there. this is prepared first because she files as a non-resident

then you prepare the PA return and get a credit for some or all of the taxes paid to NY, if any.

not sure she should have filed as an independent with only $1200 in income. did she provide over 1/2 of her support in 2020? support would include college costs and the costs of living her living at home. if she did not she can not file as "independent". Then her federal return should have indicated she could be claimed as a dependent on another's return. This is true even if the other taxpayer entitled to claim her as a dependent did not.  

one other criterion has to be met for her to be a dependent  - qualifying child:

If not a full-time student (parts of 5 months during the year), under 19 at the end of 2020. If a full-time student under 24 at end of 2020

[safetyprincess]

I was just making up numbers to illustrate my dilemma. she made more than $10,000 after graduating last May. It still doesn't answer my question of how to reconcile with how to address the PA income situation. The PA return says her income was $1200- adding the state wages for both states when it should just take the federal wage amount.