PENNSYLVANIA

PA Taxes Improperly Withheld for NJ Residents

RECIPROCITY

• An agreement between Pennsylvania and New Jersey

• Withholding should be in the state where TP resides not the state where TP works

• Can do only for PA State wages– CANNOT do PA Municipal (e.g. Philadelphia)

wages (Out of Scope)

• Any other income from a reciprocal state is Out of Scope

Wrong State withholding

• Do e-file of NJ and Federal return as usual

• Prepare a PA return for TP refund of PA withholding (paper only)

• Note: Advise TP to talk to employer about correcting future PA withholding.

Federal

• No adjustments needed

PA Return (PA-40)

• PA Paper Return Preparation– 0 (zero) on line 1a wages– PA State Taxes withheld line 13– Refund is withholding amount

• Include in envelope to PA– Copy of W-2– Copy of NJ tax return (no supporting forms or

schedules needed)– Statement explaining TP is resident of

reciprocal state

New Jersey

• Wages are amount reported on line 16 of W-2 for PA

• Withholding is 0 (zero)

• Finish return as usual