NJ Income Tax – PA/NJ Reciprocal Income Tax Agreement 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. The Reciprocal Agreement covers compensation only.

How is PA Local tax calculated?

An individual employee’s local Earned Income Tax (EIT) Rate is determined by comparing the employee’s “Total Resident EIT Rate” (for the municipality in which the employee lives) to the “Work Location Non-Resident EIT Rate” (for the municipality in which the employee works).

Do you live in NJ but work in PA?

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. If this is your situation, you would answer No in the Personal Info section of TT to the question about having Other State Income.

How to file a W-2 in New Jersey?

W-2 reporting for New Jersey Residents working in New York The New York portion of the W-2: By law, New York employers are required to report in Box 16 of your W-2 the same amount that is reported in Box 1, regardless of what portion of the wages were actually earned in New York.

Do you have to file a PA tax return if you work in NJ?

The only reason you’d have to file a non-resident PA return is if your employer mistakenly withheld PA taxes, or if you had PA income other than W-2 wages, such as rental income from a property located in PA. PA-NJ reciprocity applies only to W-2 wages, not to any other type of income.

Why do I get two W2’s in PA?

With the passage of Pennsylvania Act 32 (effective January 1, 2012) the commonwealth, as an employer, withholds and remits local earned income taxes to a single tax collector for all municipalities except Philadelphia. The primary reason for receiving two Form W-2’s is moving into or out of Philadelphia or changing your work