Live in NJ work in PA(Philadelphia)

macher
macher Member Posts: 15 Level 2
edited January 15 in State Filing

Hi doing my taxes now and at the point where Free Tax is asking about local tax. I know that local tax, Phila city wage can be used as sort of a credit towards NJ state taxes per se. That there is a reciprocal agreement.

Free Tax is asking…

Select the state return this local tax withheld needs to be reported on.


What should I choose PA or NJ to get the “credit” for NJ state taxes?

Thanks!



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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 191

    Hi macher,

    If you're in the state section of FreeTaxUSA, the credit for taxes paid to another state is applied to your resident state tax return.

    In general, there are no reciprocal agreements between cities. Only states have reciprocal agreements. However, the state of NJ allows you to claim a credit for taxes paid to the City of Philadelphia.

    Since NJ is your resident state and PA is charging you city tax because you worked in the city, the tax paid to Philadelphia will give you a credit on your NJ state return. Your NJ state return will ask you about this tax paid in Philadelphia on the screen titled, "Philadelphia City Taxes Paid." Select 'Yes' on this screen and on the following screen 'Add Another State' (PA) and continue forward to add the city tax paid.

    Contacting Support through the chat feature will allow us to better guide you.

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