Remote worker - Do i owe local tax?

[gmott18]

I live in PA and my company is in NJ. I work remotely from PA.

Now, my company hasnt taken out local taxes so i assumed I owed it to Berkheimer who collects it.

So i think i was told to use box 5 on my W2 but then Berkeheimer told me to use box 16.  Box 16 is usually the same as box 18.  So is that what i should be using? Box 16?  

[MaryK4 · Accepted solution]

Yes, you should use the Box 16 amount for Berkheimer local tax collection.

[gmott18]

Thank you. 

In the future, once my company starts taking this local tax out, i will also use box 16 for full year calculation / determination on full year local (mult by 1%) and then use box 19 for local tax partial paid. the difference of the full year owed minus the estimated payments made would be what i owe/am refunded,etc. (in the future once my company starts withholding local for me). The box 18 in that case would just be as of when they implemented the local withholding.

[MaryK4]

Yes, the Pennsylvania local taxes can be tricky- your employer is supposed to withhold the correct amount as below: 

An individual employee’s local Earned Income Tax (EIT) Rate is determined by comparing the employee’s “Total Resident EIT Rate” (for the municipality in which the employee lives) to the “Work Location Non-Resident EIT Rate” (for the municipality in which the employee works). The applicable EIT rate owed and to be withheld is always the higher of the two rates.

[gmott18]

Key word or words there is:  supposed to.

Smaller company and the HR person wears many hats. Eventually, she will get around to this.  I have other things pending with her at the moment.  i will try and remind her about this.