NJ resident worked in PA

[Angel Tr33]

Client is a Full Year resident of NJ and worked the entire year in PA.  Client's employer withheld PA taxes instead of NJ taxes.  I completely understand that NJ residents are not subject to PA income tax under the terms of the Reciprocal Personal Income Tax Agreement between the states.

First I prepared the Federal Return and filled in the information for PA income on the Nonresident State Allocation Wks.  Then I completed the Nonresident State Return(PA) which is showing a Zero Balance due.  I proceeded to client's Resident State Return(NJ) which calculates the client owing $2,950.00 because no NJ taxes were withheld.  On the clients W2 $2,467 of PA taxes were withheld. 

I thought when I selected PA as the Nonresident State and filled in Nonresident State Allocation Wks that the information would flow throughout the rest of the return.

Here are my questions:

-On the NJ return, can I complete Schedule NJ-COJ for taxes paid to the jurisdiction of PA?

This would create a credit in the amount of PA taxes withheld ($2,467) which will reduce the client's balance due.

- If this is not the solution, can someone please provide guidance in such  a scenario?

Any help would be greatly appreciated.

Thanks,

Angel

[sjrcpa]

That's not how it works. File the PA nonresident return and get the refund. File the NJ return and pay the balance due. With the extended due dates, client should get PA refund before NJ is due.

[Angel Tr33]

Thank you for your response and time. 

That's was my initial approach but, When I prepared the PA nonresident return it calculates a Zero Balance Due because it is pulling his wages from the federal return. So then I decided to override Line 1a which is Gross Compensation and replaced it to Zero.  This produced a refund which is what I expected, however, I'm receiving an error message when i go to e-file.

It states: " You Must Fix This Error -- Form PA-40: Ln 1a-Gross compensation should not overridden and changed for State Electronic Filing.  Using an override can prevent the cross-checking that's important to an accurate tax return.  The program automatically calculates Line 1a. To cancel the override, choose 'Cancel Override' from the Edit menu."

Is there away around this?