Skip to main content
Level 4
March 5, 2026
Solved

I have a NJ resident working in Philafdelphia. How will the system handle it?

  • March 5, 2026
  • 2 replies
  • 15 views

 The Philadelphia employer is withholding tax on salary.

Best answer by Terry53029
New Jersey has income tax reciprocity with Pennsylvania. Your clients employer should withhold New Jersey income tax if your client informed his employer. If PA taxes were withheld then you have to file a nonresident return, and a NJ resident return. NJ should give credit for tax paid to another state on same wages. Be sure to do nonresident first, so you know the tax libility to put for the tax credit in home state.
If the employer withheld NJ tax then you only file NJ resident return, and nothing for PA.

2 replies

Intuit Community Champion
March 5, 2026
New Jersey has income tax reciprocity with Pennsylvania. Your clients employer should withhold New Jersey income tax if your client informed his employer. If PA taxes were withheld then you have to file a nonresident return, and a NJ resident return. NJ should give credit for tax paid to another state on same wages. Be sure to do nonresident first, so you know the tax libility to put for the tax credit in home state.
If the employer withheld NJ tax then you only file NJ resident return, and nothing for PA.

sjrcpa
Level 15
March 5, 2026

Philly has its own tax. If you work there you are subject to it.

NJ should give a credit for it but I don't use ProSeries so don't know how to generate it.

The more I know the more I don’t know.
Skylane
Intuit Community Champion
March 6, 2026

@zandw619    @Terry53029  Wages and other compensation paid to NJ residents working in PA is not subject to PA taxes and vice versa due to reciprocity.  The PA employer should not have withheld PA taxes for the NJ resident. This is a common employer mistake that you correct when filing the returns.

A PA non resident return should be filed with no taxable income to PA and claiming  a refund for ALL of the PA withholdings (do not include Philly withholdings)...  You should include the w2s as an attachment along with the NJ1040.  The NJ COJ will not apply b/c taxpayer should not be paying tax to PA

There's a certification form that the employee should . file with his employer so the employer report the earnings as taxable to NJ with his payroll company. It's a very common employer mistake...

When I've had these situations, I've tried to file the PA return early so that the TP can get the refund and then pay NJ by 4/15....   

https://https://www.nj.gov/treasury/taxation/njit25.shtml

 

If at first you don’t succeed…..find a workaround
Intuit Community Champion
March 6, 2026

@Skylane I agree with you when the nonresident return is filed all of the withholdings need to be refunded. The wages in nonresident state must be allocated as zero

Skylane
Intuit Community Champion
March 6, 2026

@Terry53029 Frankly, reciprocity is a PITA.  Too many PA employers mess it up 

If at first you don’t succeed…..find a workaround