NJ/PA reciprocal agreement - credit for PA local taxes paid by NJ resident

[CM Tax]

My client is a resident of NJ working in the city of Philadelphia. His W2 reports both PA sourced income and Local Income (along with taxes paid for both). He's already getting a refund for the state income tax withheld. I know he's able to claim a credit for the PA local income tax withheld but I'm unable to figure out where to put it in Proconnect.

Thanks in advance for your help.

[itonewbie]

Since wages tax has already been fully withheld by the City of Brotherly Love and no Philly return will be prepared, ProConnect Tax is a bit dumb in figuring the Other State Tax Credit.  A bit of help from you will be needed.

1. Head to State & Local > Other State Tax Credit > NJ Other State Tax Credit;
2. State Abbreviation: Leave blank;
3. Other jurisdiction, if not a state: Enter Philadelphia;
4. Income taxed by other state [Override]: Enter Philadelphia wages;
   
5. Tax paid to other state [Override]: Enter Philadelphia LIT.
   

ProConnect Tax will then prepare NJ-COJ and compute the credit with the proper limit automatically.  Double check to make sure the computation is correct.

The computed amount will flow to NJ-1040, Line 44 with code 52, which stands for Philadelphia.

[Terry53029]

I don't believe you can claim a credit for states that have a reciprocal agreement. this is from NJ division of Taxation. Here is the link.

https://www.state.nj.us/treasury/taxation/njit25.shtml#:~:text=Compensation%20paid%20to%20Pennsylvan....

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. To stop the withholding of Pennsylvania income tax, complete Form REV-419EX, Employee’s Nonwithholding Application Certificate, and give it to your employer. More information is available on the Pennsylvania Department of Revenue website or by calling 1-717-787-8201.

[sjrcpa]

The question is about the local Philadelphia income tax. No reciprocity there. If you work in Philly you are subject to Philly tax.

[CM Tax]

Thank you!! Really appreciate it.

[itonewbie]

@CM Tax NP. If the response solved your problem, you may consider marking it the solution to help others who have similar questions since this has popped up a few times in the past.