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MrStrohecker
New Member

Work Remotely in PA for Company in Ohio - taxed locally?

I work remotely in PA for a new company based in Ohio. I am taxed  where the company resides. I am reached out the HR department and they stated I need to pay the Pay Roll tax which is tied to where I work.   I think this needs to be my home office not where company office is located. 

Also I paid the Ohio state tax for 6 months instead of PA, this was recently corrected.  How would I correct this when its time to file taxes? 

2 Replies
TomD8
Level 15

Work Remotely in PA for Company in Ohio - taxed locally?

If you're a PA resident who works exclusively from a PA location for an OH employer, your W2 income is taxable only by PA.

Also, OH and PA have tax reciprocity.  This means that even if you worked in OH, your W2 wages would be still be taxable only by your home state of PA.

PA residents who work in OH should submit OH Form IT-4NR to their OH employer.  Here's a link to that form: 

https://tax.ohio.gov/static/forms/employer_withholding/generic/wth_it4nr.pdf

You may want to submit this form to your HR department even though you're not at present working in Ohio.

 

In order to receive a refund of the incorrectly withheld OH taxes, you'll have to file a non-resident OH tax return at year's end, showing zero OH income.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
Hal_Al
Level 15

Work Remotely in PA for Company in Ohio - taxed locally?

In order to receive a refund of the incorrectly withheld OH STATE income tax, you'll have to file a non-resident OH tax return at year's end.  Be advised  that Ohio does a convoluted tax calculation for non-residents/part year residents. It calculates tax on total income, then it calculates a non resident/part year resident credit, which it subtracts from the tax it calculated on the total income. The credit is calculated as your non-Ohio income divided by Total adjusted Income multiplied by the total tax. TurboTax (TT)   does this by allocating your income as either Ohio or non-Ohio. W-2 income will be allocated by the state name abbreviation shown in box 15 of your W-2. TT will ask you, item by item, in the state section, how much of your other income is Ohio or non-Ohio income. Make sure that your non-Ohio wages show PA (Other state postal abbreviation)  in box 15 of your W-2 screen, with the PA amount in box 16.

 

If you are a regular remote worker (as opposed to temporary during covid*), your employer should not have withheld local tax.  You will have to file a separate city return to claim that refund.  Contact the city tax dept. for instructions**, many have a special form for this situation.  After confirming with the city that you are entitled to a refund, try again to convince your employer they should not be withholding city tax.  The reciprocity agreement, between PA & OH does not apply to city tax.  You would not be entitled to a refund if you physically worked in that city. 

 

*Ohio, passed HB 197 which basically says working from home due to the COVID-19 pandemic shall be deemed to be a day performing personal services at the employee’s principal place of work. So you still need to pay city income  tax to the city where the employer is located. 

 

**For a list of all Ohio cities with an income tax go to http://www.tax.ohio.gov/municipalities/municipal_income_tax_forms.aspx

From there, there is a link to each city’s web site and/or RITA / CCA

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