Which state do I pay taxes to: work and rent in NJ, driver’s license/registration in PA
What taxes do I pay if I live in PA and work in NJ?
NJ Taxation
Compensation paid to Pennsylvania residents employed in New Jersey is not subject to New Jersey Income Tax under the terms of the Reciprocal Personal Income Tax Agreement between the states. Similarly, New Jersey residents are not subject to Pennsylvania income tax either.
Do I pay taxes based on where I live or work?
The easy rule is that you must pay non-resident income taxes for the state in which you work and resident income taxes for the state in which you live, while filing income tax returns for both states.
What taxes do I pay if I work in Philadelphia and live in New Jersey?
Yes, you claim a credit for taxes paid to Philadelphia on your NJ return. However, you should have a W2 showing NJ taxes withheld. NJ and PA have reciprocity, so residents only pay state tax to their home state. Cities aren’t covered by reciprocity, which is why Philadelphia was withheld.
Do you get double taxed if you live in NJ and work in PA?
PA and NJ have tax reciprocity with regard to W-2 wages. If you lived in NJ the entire tax year, and worked in PA, your W-2 wages are not subject to PA taxes. For tax purposes, your PA wages are considered NJ income, and are fully taxable by NJ.
Can you live in Pennsylvania and work in New Jersey?
You’re correct, NJ and PA do have tax reciprocity for W-2 wages. If your only income from NJ was W-2 wages, you do not have to file a NJ tax return. That income is taxable only by your home state of PA.
What happens if you live in PA but work in NJ?
Starting in 2018, PA residents working in NJ will file a NJ income tax return then file a PA Income Tax Return (PA- 40). They will get a credit toward their PA income tax obligation for income tax paid to NJ. This is called a resident credit.
Do I have to pay taxes in two states?
If both states collect income taxes and don’t have a reciprocity agreement, you’ll have to pay taxes on your earnings in both states: First, file a nonresident return for the state where you work. You’ll need information from this return to properly file your return in your home state.
Can I be taxed on the same income in two states?
Federal law prevents two states from being able to tax the same income. If the states do not have reciprocity, then you’ll typically get a credit for the taxes withheld by your work state.
How do I file taxes if I work in one state and live in another?
You’ll file a nonresident state return in the state you worked. On it, list only the income you earned in that state and only the tax you paid to that state. You’ll then file a resident state return in the state where you live. On this return you will list all of your income, even that which you earned out of state.
How do taxes work if you live in NJ and work in NY?
New Jersey residents who work in New York State must file a New York Nonresident Income Tax return (Form IT-203) as well as a New Jersey Resident Income Tax Return (Form NJ-1040). Your employer will have withheld New York state taxes throughout the year but you’ll need to file in New Jersey as well.
Where do you pay taxes if you work remotely?
state of residence
Where do I file my taxes if working remotely? If you are officially a remote worker and are working from your home, then you will file your personal income taxes the same way you always have: to your state of residence. This is true no matter if you are a W-2 employee or a 1099-NEC independent contractor.