NJ/PA reciprocal agreement - credit for PA local taxes paid by NJ resident

Since wages tax has already been fully withheld by the City of Brotherly Love and no Philly return will be prepared, ProConnect Tax is a bit dumb in figuring the Other State Tax Credit.  A bit of help from you will be needed.

1. Head to State & Local > Other State Tax Credit > NJ Other State Tax Credit;
2. State Abbreviation: Leave blank;
3. Other jurisdiction, if not a state: Enter Philadelphia;
4. Income taxed by other state [Override]: Enter Philadelphia wages;
   
5. Tax paid to other state [Override]: Enter Philadelphia LIT.
   

ProConnect Tax will then prepare NJ-COJ and compute the credit with the proper limit automatically.  Double check to make sure the computation is correct.

The computed amount will flow to NJ-1040, Line 44 with code 52, which stands for Philadelphia.

I don't believe you can claim a credit for states that have a reciprocal agreement. this is from NJ division of Taxation. Here is the link.

https://www.state.nj.us/treasury/taxation/njit25.shtml#:~:text=Compensation%20paid%20to%20Pennsylvania%20residents,to%20Pennsylvania%20income%20tax%20either.

if you are a New Jersey resident and your employer withheld Pennsylvania income tax from wages, you must file a Pennsylvania return to get a refund. To stop the withholding of Pennsylvania income tax, complete Form REV-419EX, Employee’s Nonwithholding Application Certificate, and give it to your employer. More information is available on the Pennsylvania Department of Revenue website or by calling 1-717-787-8201.