reciprocity NJ-Philadelphia

[wmchef]

Hi, I am filing for a NJ resident working in Philadelphia. The w2 shows local withholding for Philadelphia

only. Do I need to REP PA or can I report the income as NJ? TY Bill

[George4Tacks]

When all else fails, read the instructions:

Who must file?
Any PA resident, nonresident or part-year resident
who:
• Received total PA gross taxable income in
excess of $33 during the tax year, even if no
tax is due; and/or
• Incurred a loss from any transaction as an
individual, sole proprietor, partner in a partnership or PA S corporation shareholder

[sjrcpa]

NJ taxes all income of NJ residents.

You don't need to file Philadelphia if tax withheld = tax owed.

You may need to file PA though, unless NJ and PA have a reciprocal arrangement. That I don't know.

[Accountant-Man]

IF the employer did it right, there should be no PA income tax because of the reciprocity compact. No PA return is needed for this job, except to get refunded PA income tax improperly withheld.

NJ resident, in-Philadelphia employee, needs to file NJ COJ to claim credit against NJ tax. Be aware that Philly wages are usually higher than NJ wages, so you might not claim 100% of wage tax as a credit.

IE, city taxes 401k deferral while NJ does not, so city wages are higher than NJ wages.

[Accountant-Man]

There is no Philly return to file for wages. But you might be able to file a wage tax refund petition if some of the wages were paid for days worked outside Philly. Or sick or vacation days, too.

Then you have to adjust the COJ if 100% of Philly wages should not have been taxed by Philly. 

[sjrcpa]

I figured you would know off the top of your head Daniel. Glad you dropped in.

[Accountant-Man]

I have so much knowledge in my head, there's no room for hair on the top of my head.

[drbdrb]

Just as an aside, neither NJ or PA allows tax deferral on contributions to 403(b) plans.