RSUs taxed by 2 states - moved from PA to NJ

Forum|Forum|2 years ago
March 4, 2024
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My husband had some RSUs vest last month (Feb 2024). We moved in July 2023 from Pennsylvania to New Jersey. State tax was withheld on the full amount for NJ and on 80% of the amount for PA, as we lived in PA for 80% of the vesting period. My understanding is that we would get credit/refund in NJ for the tax paid to PA so that we are not double-taxed. Yet I am questioning if this withholding is correct, as I cannot find any info on PA Dept of Revenue site that says they tax RSUs like this. I have learned some states do (i believe CA, MA, NY...), but I see nothing for PA. Can anyone confirm? thx

Not A Product Question

DianeW777

Reciprocity will rule in this situation. First until the RSUs vest they are not yours, for this reason all of the income should be taxed to New Jersey(NJ), where you lived when it was fully vested in 2024. You will file your Pennsylvania (PA) return as a nonresident with zero income in 2024 and receive a full refund of any taxes withheld since you lived in NJ. You will file your NJ return as a full year resident and include all of your income only on that tax return.

NJ and PA are reciprocal states (see below).

PA Nonresident Filing Requirement with Reciprocal Agreement:

PA has reciprocal tax agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia. Under these agreements, one state will not tax a resident of the other state on compensation subject to employer withholding.

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