Question

Work in NY, Live in PA, but some income is taxed using prior year's withholdings when working in NJ

Forum|Forum|4 years ago
April 2, 2022
1 reply
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For 2021, I work in NY and live in Philadelphia, PA. Employer does not take out taxes for PA. I am filing as a non-resident of NY, and getting a credit on my resident PA return for the NY taxes I paid.

The confusing part is how to handle filing for NJ.

On my W-2 for 2021, I also have wages of $13,500 earned in NJ, and $945 of NJ state taxes paid. This is because I never worked in NJ in 2021. However, my employer made a one time payment in 2021 and withheld taxes based on the prior year's (2020) withholding info. (I guess this is because the money is attributed to 2020.) In other words, in 2020, I worked for the same employer part time in both NY and NJ, while living in PA full time).

Does PA consider the $13K as part of my taxable income. If so, do I get a credit for it? Or should I expect to get a full refund of $945 from NJ, and also include the $13K as part of my taxable income?

E

ErnieS0

Pennsylvania residents are taxed on income earned anywhere, so your payment for work done in New Jersey in 2020 but received in 2021 would be taxable to PA on the 2021 tax return.

PA and NJ have reciprocity, so your employer should have withheld PA tax on the payment, not NJ tax.

File a nonresident paper return with NJ to get back your withholding. Change your NJ wages to $0 in the NJ section.

You must enclose a signed statement with your New Jersey nonresident return indicating you are a resident of the Commonwealth of Pennsylvania.

NJ Income Tax – PA/NJ Reciprocal Income Tax Agreement

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