Moved from NJ to Philly for less than month and moved back to NJ in same month. Job notified of move, so paid tax to Philly

[timofree94]

Paid tax to PA for 1 paycheck. How to file? Should I file a return w/ PA as nonresident and a return w/ NJ as full yr resident? Is reciprocal agreement at play here? Workplace was in NJ.

[Cynthiad66 · Accepted solution]

Yes.  You got it!  There is a reciprocal agreement.  Prepare your Federal, then your PA then NJ in that order.  Your home state should be last.  TurboTax will direct you.  Answer the interview questions accurately.  They will ask if you worked in any other state.  Answer yes, as a Non-Resident.

The Reciprocal Agreement covers compensation only.  Likewise, if you are a New Jersey resident and your employer withheld Pennsylvania income tax from wages, you must file a Pennsylvania return to get a refund.

[timofree94]

OK, thank you very much! Just to clarify, I paid tax to Philadelphia and PA for one paycheck, but NJ did not tax me on that income. Since that income was not taxed twice, the reciprocal agreement between the states does not come into play at all, correct? I will just simply report to PA then NJ as you said.

[Cynthiad66]

Basically, the PA return is to get the withholding back as a refund, however NJ will include that income but will not tax you on it since you paid PA taxes.  TurboTax will take care of all of that because it is a part of the software.  All you need to do is enter the information. and the software will take care of it.

A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.

For example, let's say you live in New Jersey and work in Pennsylvania–two states with a reciprocal agreement. You can ask your employer to stop withholding Pennsylvania taxes. If your employer stops withholding Pennsylvania taxes, you would only have to file a New Jersey return.

The reverse would also be true. If you lived in Pennsylvania and worked in New Jersey, you can ask your employer to stop withholding New Jersey taxes. In this scenario, you would only have to file a Pennsylvania return due to the reciprocal agreement.

If your employer has withheld taxes for the work state instead of the resident state, you'll have to file for a refund from your work state. You'll still file your resident return that also includes that income and pay tax on it.

TurboTax handles reciprocal states and will generate the correct state(s) based on your personal information and your W-2.

State Reciprocal Agreement