(I’m a resident of PA but work in NJ)

[Mattzaki]

Hi so I recently started working in NJ, but am a resident in PA. I had been informed about the reciprocal agreement between the two states (NJ-165) form. From what I understood is that I am exempt from paying taxes in NJ and only pay income tax in PA. 

today I had looked in my paycheck and saw that only the income tax was changed. But am still paying for NJ SDI and 2 other taxes. 
My main question is , this the only thing that changes when it comes to this agreement between the two states? Do I still have to pay towards some nj taxes and all except for the state income tax? 

if so then should I just switch back to how I was paid originally because I was making more ! And this may seem like a obvious and stupid question but if I were to not sign the form and had not paid any taxes in the state I reside in would I later suffer the consequences of owing PA money? 

im just extremely confused by all of this because every one is saying something different like “ you shouldn’t have sighned that form ! You are making less and only getting a bigger return! “ just switch it back and you’ll be good” and others saying the opposite. I’m just really in need of a answer that can ease my stress about this so I can continue with my job knowing I did and understand everything correctly! 

thanks! 

[LenaH · Accepted solution]

The reciprocal agreement only applies to state income tax. Deductions, such as SDI, are not part of the reciprocal agreement. 

It is not recommended that you switch back to withholding New Jersey income tax as a Pennsylvania resident. If you are a Pennsylvania resident working in New Jersey, and your employer withholds New Jersey income tax, you must file for a refund from that state. You must also pay the amount of tax due to Pennsylvania by the due date. In addition, if you earned more than $8,000 from your out-of-state employer, you should be making estimated payments to Pennsylvania in order to avoid an estimated underpayment penalty on your state tax return. 

I am a PA resident. I work in a reciprocal agreement state.

[Mattzaki]

Thank you for the response that really clears things up! But here’s another one that threw me off! I just got my taxes done and my tax representative told me that I owed 0$ to PA? I was genuinely confused? 

2021 October 11th I started my Job in nj… and ist wasn't until 2022 of January the form I signed went into effect for withholding for PA.

so during the whole time of 2021 I worked there I didn’t pay a dime to PA ? And this is why I’m confused as to why I didn’t owe anything to my state ? I have a feeling that he did my taxes wrong and I will have a letter from the IRS come in soon stating I need to pay back the funds ..

does it sound like he messed something up ? Or am I okay?