New Jersey resident working in Philadelphia. I have a W2 and 1099 Misc.

[sjmanoush]

My employer sent me three W2's: one federal, one state (NJ), and one local (Philadelphia).  Boxes 15-20 are filled out differently on all 3 W2's.  On Federal W2, box 15 (state) is blank; State ID No says "total state", Box 16 (state wages) is blank, Box 17 (state income tax) has a number, Box 18 (local wages) has a number, Box 19 (local income tax) has a number), and Box 20 (locality name) says Philadelphia.  My State (NJ) and Local (Philadelphia) W2's have different boxes filled out and empty, with the same information.  I'm not sure how to fill this into the state and local sections of my Federal return.  Thank you.

[DanielV01]

Treat the different lines as one W-2.  What you will do is enter the Federal portion as normal from the Federal portion, then enter the NJ state information (NJ should have information on boxes 15-17) under State Information, and then the Philadelphia information (boxes 18-20) on the Local Wage information.  You will say that the local wage information is associated with Pennsylvania.

Entering this information correctly will assist you with your NJ return.  You are taxed in NJ for your income (because you live there), and in Philadelphia (because you work there), and NJ will give you a credit for the tax you pay to Philly on that income also.  (Not all states give a credit for taxes paid to a locality, but NJ does).

You didn't ask a question about the 1099-Misc.  If you had a question or wanted to provide additional information, feel free to comment so that we can fully assist you.

[sjmanoush]

So, on my PA return (which I am filling as a non-resident), when it pulls my W-2 information from Federal, my employer's state ID is listed as NJ.... although I work in PA.  And the taxable income is blank/zero.  This is OK?  As far as my 1099, this is being treated as a schedule C business on my PA return. (Net income from this work is actually negative after accounting for expenses.)  Either way, am I reporting this as PA income or NJ income (this work was also done in Philadelphia)... should I be paying PA/Philly taxes on this or NJ taxes?  Finally, on my PA return, on one of the last screens, "Special PA W2 situations", should I be clicking on the box that says "you earned income in another state"?  Thank you very much.

[DanielV01]

Let me answer one question at a time:
1.  Is this OK?  Yes.  You enter the information into TurboTax as it appears on your W-2
2. Your 1099 is reportable to both states.  Since you have a loss in PA, you will not have tax there on that income.  Self-employment income (Sch. C) must be reported to both states.  
3. Your wages (W2), however,  are only taxable in NJ because NJ and PA have a reciprocal agreement.  Philly does tax you (that's not covered by the reciprocal agreement), but you do not need to file anything in the PA state return.  Thus, with the "Special PA situations", you do click on the "earned income in another state" box to ensure that the W2 reports zero income to PA.  I will provide a second answer with some screenshots to assist.

[sjmanoush]

Thank you very much!! There does seem to be a schedule C associated with my 1099 misc for my PA return, but there is no space to report amount gain/loss.  I suppose the net loss is transferred from the federal return?  The end result is 0 income and 0 tax for PA. On my NJ return, however, the "my business" section does show the net loss.   Am I responsible for paying Philadelphia taxes on my 1099 misc income?  There doesn't seem to be a way to do this through turbo tax, so do I need to do it separately?  And, another question about reciprocal states..... on my NJ return, when it's time to report credits for taxes paid to reciprocal states, it carries over the amounts for "double taxed income" and "tax paid to PA on double taxed income" from my PA return... so both numbers are 0.  I am filling in the appropriate numbers from my W2, but on the bottom of the screen it says "Note: Do not enter the income amount and taxes withheld from your W-2. We need the actual numbers from your other state's tax return."  If I leave them 0, though, I won't get the credit....  Thank you again for answering all these questions.

[DanielV01]

The credit for tax paid to PA on double taxed income will be the amount you pay to Philadelphia.  Since you have a loss on your 1099 after the Schedule C is prepared, there is nothing additional to report to Philadelphia, which would be done outside of TurboTax.

[DanielV01]

You will replace the zero with the amount in box 19 for Philadelphia in the double-taxed income section.

[sjmanoush]

Thank you very much!

[DanielV01]

You're welcome.

[DanielV01]

Here is the screenshot for the PA return:  

[divad1]

Hi. Here's is situation.  Blank w2 State name, wage, & w/h boxes (15-17), but local wages & w/h & name (philly) boxes (18-20) NY Resident.

Is a PA State return needed? Do I need to put the local Philly amts on a PA State return.)  Is just a local Philadelphia return needed?

Also, I presume I take credit on NY return for taxes due to Philly and PA, if a PA return is filed?

 Please help. Thanks.

[DaveF1006]

Tell me about the time you spent in Philly as a New York resident? Was it an assignment? If so, how many days?

[divad1]

Hello and thanks. Was in PA as student. Wages were for fellowship for 1 semester. I think it is non taxable in PA, hence no State wages or w/h taxes per W2. And there were local w/h taxes for Philly, 3.4567%.

[DaveF1006]

According to Pa sources,  a scholarship or fellowship award made on the basis of need or academic achievement is not taxable if awarded to encourage or allow the recipient to further educational development. At this point, you do not need to file a PA tax return.

However, you do need to file a Philadelphia City Tax return. The good news is you may receive a refund. The bad news is, Turbo Tax does not file Philadelphia City returns. You can file a Philadelphia city return through their website. Please select this link to file.  When you are in the website, go to online services>file your taxes. 

[divad1]

Thanks for the helpful feedback. One follow up, I'd done some additional review / reading and saw that filing a philly city return was required for non PA residents if the taxpayer worked in Philly, meaning wages AND if wage taxes were not withheld. In my situation, the Philly income wa just wages and wage taxes were withheld by the employer. So, given that taxes were withheld at the rate noted exactly on he Philly website, is it ok not to filed a philly return? Thanks again! And be safe and healthy.