Across State Lines

Today TaxMama® hears from John in the TaxQuips Forum about an inequity. “My father & I both worked in PA, but both lived in NJ for the entire 2011. However on my W-2, I paid state taxes to NJ.  On his W-2 He paid state taxes to PA.  Is this correct? Also he worked inside of Philadelphia and paid local city taxes – are these refundable at all?  I worked outside of the city and was not subject to these taxes.”

Hi John

Interesting about the different treatment. Aaah…this treatment has more to do with his employer than with the tax laws. His employer is not set up to deal with NJ payroll issues. John, your father needs to sit down with someone who really IS familiar with the reciprocity laws between NJ and PA.

It took me less than a minute to find this page that describes the rules. He should be able to get a refund for the taxes paid to PA. He should also check with his employer’s payroll department and see if they can change the way his withholding is taken out.

Clearly, he will be facing underpayment penalties in NJ. If there are enough people working for his employer who live in NJ, perhaps they will resolve this for 2012 at the employer level. If not, your father will need to be making estimated taxes to NJ. Also:

Meanwhile, to stop the withholding of Pennsylvania income tax, New Jersey residents, like your father, who receive compensation from Pennsylvania must complete Form REV-419, Employee’s Nonwithholding Application Certificate and turn this in to his employer.

And remember, you can find answers to all kinds of questions about state tax reciprocity, and other tax issues, free. Where? Where else? At

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