Reciprocal state and clergy housing allowance in terms of state tax withholding

hjw77 Member Newcomer
edited January 4 in State Filing


 I live in PA and work as a clergyman in NJ. I receive salary and housing allowance on my W-2. I know that PA and NJ have reciprocal agreement and I am under the impression that PA doesn't recognize housing allowance when it comes to state tax withholding while NJ does.

 My question is, if my impression with housing allowance is correct, is it possible to ask my employer to withhold NJ state tax to save on my state tax return? Or will I be forced to pay my state tax with PA no matter what so it's better to ask them to withhold PA state tax? Do I have a choice?

 Thank you!



  • KeriC
    KeriC FreeTaxUSA Agent

    Because PA and NJ have reciprocity, you should only have PA tax withheld from your income and not have any NJ tax withheld, correct?

    If no NJ tax is withheld, you should not need to file an NJ tax return and will only need to file a PA return. In this case, it would be better to ask your employer to withhold PA state tax to cover the housing allowance income.