I moved to Pa three years ago and still currently work at the same company in New York State. This company for the last three years has been taking Pa taxes out of my paystub every week. It is labeled "PA W/H." I assumed that I need to only do Pa taxes when I do my state taxes. There is not a single deduction for NY W/h on my pay stubs. I heard of the term "Reciprocity" and thought it meant that you only need to file taxes in the state that you live in and it was between Pa and New York. Actually, I found that it is between Pa and New Jersey, and other states. Worst of all this means that I have not paid New York taxes for the last 3 years. I went onto "Taxact.com" and did my federal and state taxes with them. I didn't file with them on the state because the figure for the non-resident New York amount was $1,733 and I just paid into Pa $1,600! Does this sound right? I earned about $52,000 and I feel that why should I be paying both states so much money? If this is the way it will be, then I will transfer to pa and make the same amount of money and get less state tax taken out of me by the end of the year.
*Tomorrow I am asking my employer if they should have been deducting NY taxes out of me through the year as well as Pa.
*Will this be a big mess for me when I report the three years that I did not file Non-resident Ny taxes? Do you have any idea of the penalties that I could face? Also, any other advice would be greatly appreciated! Thanks!

Get professional tax help to straighten out your 2003 - 2005 tax returns.

PA will give you a credit for the NY state taxes paid to allow you to NOT pay twice on the same salary.