NJ Resident, Works Part-Time in PA — Do I Need to File PA Taxes?

tb001
tb001 Member Posts: 4 Newcomer
in Filing my taxes

Hi, I have a question about state tax filing for NJ and PA.

We live in New Jersey, and my wife works in Pennsylvania — she goes to the PA office about 2 days a week. I know NJ and PA have a reciprocity agreement, so we weren’t sure if we need to file a PA return. But her W-2 shows both NJ and PA taxes withheld.

On the second page of her W-2 (which is mostly blank except for a few fields), we see:

  • Box 14:
    • LST 52
    • PASUI 179.39
  • Box 18: 247,742.72
  • Box 19: 2,477.49
  • Box 20: 461801-67

When uploading to FreeTaxUSA, both pages of the W-2 got combined into one screen. These boxes (14, 18, 19, 20) were only filled on page 2, and seem to relate to PA.

Here’s what I entered in the “Your Taxes Paid to Another State” screen in FreeTaxUSA:

1.For “Enter the New Jersey income you received that was taxed by both New Jersey and Pennsylvania:”

→ I entered the amount from Box 18 ($247,742.72). Is that correct?

2. For “Enter the amount of tax you paid to Pennsylvania on the above income:”

→ I entered the amount from Box 19 ($2,477.49). Is that correct?

3. Enter the amount of tax withheld as shown on your Pennsylvania return:

→ I left this blank because I’m not sure where to find this. If something needs to be entered, where can I find it?

Questions:

  • Do I still need to file a PA return, or does reciprocity mean I can just file in NJ?
  • If yes, did I enter the correct info above in the tax credit screen?
  • What do I do with local taxes shown in Box 14 (LST and PASUI)?
  • Where in FreeTaxUSA should I enter those, if needed?
  • Is there a step-by-step guide for handling NJ/PA reciprocity situations like this?

Thanks in advance!

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Comments

  • PhillipB
    PhillipB FreeTaxUSA Team Posts: 96

    Hello,

    While there is a reciprocal agreement between the two states, the agreement doesn't apply to municipalities. From what I can see, you can claim the credit for taxes paid based on the local tax amounts in boxes 18-20.

    If you have already filed the return, you would need to amend. To claim the credit, follow these steps:

    1. After starting the amended return, click State TAB > Click on Philadelphia Tax > answer yes to the question on the basis that it was another PA municipality > click Save and Continue
    2. Answer yes that you had taxes withheld from your wages > Click Save and Continue
    3. Click +Add a State > Choose "Other" from the list > enter the code from box 20 of your W-2 > click Save and Continue
    4. Enter the amount from box 18 as the income taxed by both NJ and the PA school district
    5. Enter the amount from box 19 in the tax you paid and the tax withheld lines > Click Save and Continue

    Then go ahead and submit the NJ return.

    Thanks for using the FreeTaxUSA Community

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