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paallen77
New Member

My husband lives in PA and works in NJ. Is his NJ income taxable in PA?

 
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DS30
New Member

My husband lives in PA and works in NJ. Is his NJ income taxable in PA?

Yes. Since he is a resident of PA, he will be taxed on all income from all sources (including his NJ sourced wage income).

He will only need to file a PA resident state income tax return to report all income (including his NJ-source wages). He will not have to file an NJ nonresident state income tax return (unless NJ withholdings taken out (see below)).

PA and NJ have what is called a state reciprocal agreement. This allows nonresidents to not have state withholding taxes taken out for wages earned in the state.

Since you will not have an NJ state income tax filing, just check that you selected "no" to " Did you make money in any other states?" under the Personal Information section in TurboTax (see screenshots)

You can get rid of a state without clearing your federal return by just deleting the state from your list of states under the "State Taxes" tab.

In order to get the full refund of your NJ state income tax withholdings, you will need to file a nonresident NJ return but report zero "0" income from NJ (even though you do have NJ wage income). You need to file your NJ return this way because PA does not allow a credit for tax paid to a reciprocal state on wages, salaries and commissions. If tax was withheld by a reciprocal state (NJ), you must file directly with the state for a refund of those taxes. You must mail in this NJ nonresident state income tax return and include your state W-2 information. You will want to include an explanatory statement with your NJ return stating your situation (that your NJ employer withheld NJ taxes from your wages in error due to a reciprocal agreement with PA).


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1 Reply
DS30
New Member

My husband lives in PA and works in NJ. Is his NJ income taxable in PA?

Yes. Since he is a resident of PA, he will be taxed on all income from all sources (including his NJ sourced wage income).

He will only need to file a PA resident state income tax return to report all income (including his NJ-source wages). He will not have to file an NJ nonresident state income tax return (unless NJ withholdings taken out (see below)).

PA and NJ have what is called a state reciprocal agreement. This allows nonresidents to not have state withholding taxes taken out for wages earned in the state.

Since you will not have an NJ state income tax filing, just check that you selected "no" to " Did you make money in any other states?" under the Personal Information section in TurboTax (see screenshots)

You can get rid of a state without clearing your federal return by just deleting the state from your list of states under the "State Taxes" tab.

In order to get the full refund of your NJ state income tax withholdings, you will need to file a nonresident NJ return but report zero "0" income from NJ (even though you do have NJ wage income). You need to file your NJ return this way because PA does not allow a credit for tax paid to a reciprocal state on wages, salaries and commissions. If tax was withheld by a reciprocal state (NJ), you must file directly with the state for a refund of those taxes. You must mail in this NJ nonresident state income tax return and include your state W-2 information. You will want to include an explanatory statement with your NJ return stating your situation (that your NJ employer withheld NJ taxes from your wages in error due to a reciprocal agreement with PA).


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