Virginia Resident Worked in PA, Tax Withheld from PA W2

acaceresr87
acaceresr87 Member Posts: 1 Newcomer
edited April 3 in State Filing

Last year, I worked in PA while a resident of VA (address of VA on all W2's). I received my W2 for the two states.

I know there's an agreement between the two states, but I had PA state taxes (and Philadelphia taxes) withheld instead of VA state taxes withheld. In addition, I earned well below the VA threshold of filing requirements ($11,950) but well above the threshold for PA filing requirements ($33).

I have the same income reported for my PA W2 and my VA W2 (VA income is not $0).

I'm wondering how I go about filing state taxes.

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Answers

  • RyanZ
    RyanZ FreeTaxUSA Agent Posts: 80

    Yes, there is an income tax reciprocity agreement between Virginia and Pennsylvania
    https://www.tax.virginia.gov/reciprocity

    Here are the requirements for your Pennsylvania income to be exempt from taxation, as a Virginia resident:

    Who is exempt?
    Virginia Residents who:

    Work in Maryland, Pennsylvania, or West Virginia, are exempt from taxation in their respective state if:
    - They are present in the other state for 183 days or less during the year, and
    - Do not maintain an abode, such as a house or apartment, in their respective state and
    - Receive only wage or salary income in the other state.

    If you meet the requirements, you will want to file a Pennsylvania income tax return to claim a refund of the income taxes that were withheld for the state of PA.

    The tax reciprocity agreement is only between the states, so you may still be subject to local city income taxes in Pennsylvania. https://www.phila.gov/services/payments-assistance-taxes/taxes/business-taxes/business-taxes-by-type/wage-tax-employers/#:~:text=The%20tax%20applies%20to%20payments,also%20pay%20the%20Wage%20Tax.

    Philadelphia has a "Wage Tax" and

    "…applies to payments that a person receives from an employer in return for work or services. All employed Philadelphia residents owe the Wage Tax, regardless of where they work. Non-residents who work in Philadelphia must also pay the Wage Tax."

    The current nonresident wage tax is 3.44%

    You may file a Philadelphia tax return and claim a refund ONLY if you performed some of the work OUTSIDE of Philadelphia. If you didn't work outside of Philadelphia then you don't need to file a tax return with that city.

    For Virginia, the current (2024) filing requirement has an Income Threshold of $11,950.
    https://www.tax.virginia.gov/who-must-file

    Even though you don't have to file a VA income tax return if you don't owe any taxes and will not receive a refund, the state periodically sends letters asking taxpayers to verify their Virginia income.

    Summary:
    - File the Pennsylvania state tax return to claim a refund of the state income taxes withheld
    - Only file a Philadelphia City tax return if you worked outside of the city boundaries
    - Based on the information provided, you are not required to file a 2024 tax return with Virginia

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