PA Tax withheld by NJ

[jw-rogers]

I have a client who worked in Philly and came in with a W2 with NJ withholding and Philly city tax withheld. I understand there is a reciprocal agreement but any NJ/PA folks out there with any friendly advice on how this works?

My thought is that I need to do a NJ return to get the witholding back and then a PA return without the withholding....

Apologies, don't see many NJ/PA returns out west.

[sjrcpa]

Where does your client live?

Philly tax is a done deal. If you work in Philly you pay Philly tax. No Philly return needs to be filed if correct withholding was done.

[jw-rogers]

@sjrcpa She lived in Philly for 5 months, then in the suburbs for a month an then moved out here.

The W2 has NJ and Philly City tax even though she lived in Philly. So I'm guessing I do a zero withholding PA return and a NJ return with zero to get the funds back?

I've seen this a few times with remote workers but this is the first with the reciprocal agreement. 

[sjrcpa · Accepted solution]

If she never lived in NJ, then Yes NJ nonresident return to get the withholding back.

Part year PA return where she will pay tax, plus interest and penalty.

[Accountant-Man]

Which state is Out Here? Only OH, OK and OR are in the 50.

Inside Philly and the PA suburbs mean PA 40. Is Out Here also PA? Then NJ should have never been withheld. Then PA is owed all 3.07% tax on PA wages(not necessarily the same as Philly wages) and she gets back all NJ tax assuming she never lived there.

The reciprocal agreement only works for NJ residents working anywhere in PA or PA residents working in NJ.