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chammell · Mar 18, 2009, 02:03 PM

I work for a Philadelphia, PA employer and live in New Jersey. They are deducting Philadelphia Income Tax and PA UC witholding. That's it for state and local taxes and witholdings. NJ has a reciprocal agreement with Philadelphia that will credit my NJ state income tax with the amount I paid to Philadelphia. Also, NJ has mandatory disability insurance (NJ SDI) that requires an employee and employer contribution. Two questions:
1. Will I get a refund for any Philadelphia income tax over and above what I owe NJ?
2. Don't I owe NJSDI? If so, shouldn't my employer be witholding it now? What about the employer's share?

Thanks.

AtlantaTaxExpert · May 11, 2009, 01:01 PM

1) Yes, if a refund is due, which is NOT likely (the PA tax is as close to a flat tax as possible; most returns show NO refund and NO balance due).

2) Probably; contact the NJ state tax authorities and ASK.

ebaines · May 11, 2009, 01:21 PM

First - since you are an NJ resident they should not be withholding PA income tax, because of the reciprocal agreement between PA and NJ. You do not owe any PA income tax (even though you work there) so your employer should be withholding NJ tax, not PA tax. So now you will have to file a PA income tax return to get your money back, and also a NJ resident tax return to pay NJ taxes on the full amount of your wages. Because of the reciprocal agreement you are not allowed to claim a credit for "taxes paid to other jurisdictions" on your NJ tax form for any PA withholding - see page 9 of:
http://www.state.nj.us/treasury/taxa...i-ee/git3w.pdf and note that you should give your employer a statement of non-residency to get them to stop withholding PA tax.

The Philly wage tax is a different story - that tax is not part of the NJ-PA reciprocal agreement. So when you file your NJ tax return you claim the Philly wage tax as "taxes paid to other jursidictions." For more info see the following web site:
Income Tax - Credit for Taxes Paid to Other Jurisdictions - NJ Taxation

As for NJ SDI - I suspect that they should be taking that out along with NJ withholding. Perhaps when you get the withholding issues straightened out this will take care of itself.