[JerseyJohn]

Hi,

I work in Philadelphia, PA. I live in New Jersey. My company is in Fairfax, VA.

I just received my W2 and the NJ State Tax box is blank. I am set up correctly with my company as being a New Jersey resident.

Any ideas here?

[AtlantaTaxExpert]

It is possible that the combination of the Philadelphia City Income Tax (if applicable) and the Pennsylvania state income tax will exceed the NJ state income tax. If so, the first two taxes will completely offset any NJ state tax due.

I see it all the time for people who work in NY City and live in NJ.

[JerseyJohn]

It is possible that the combination of the Philadelphia City Income Tax (if applicable) and the Pennsylvania state income tax will exceed the NJ state income tax. If so, the first two taxes will completely offset any NJ state tax due.

I see it all the time for people who work in NY City and live in NJ.

Can you elaborate? I don't think I'm understanding. Thanks

[AtlantaTaxExpert]

Okay, let's assume you paid Philadelphia $700 on their 1% city income tax on $70,000 in salary.

Let's also assume you paid Pennsylvania $5,600 on their 8% state income tax.

The total taxes paid is $6,300 to Philly and PA.

Your NJ tax comes to $6,200.

Since you earned ALL of your income in Philadelphia, PA, New Jersey gives you a dollar-for-dollar tax credit.

Since the $6,300 you paid is $100 MORE than the $6,200 you would have owed NJ, your Philly/PA taxes completely offsets any NJ tax. You owe NJ NOTHING!

[JerseyJohn]

Okay, let's assume you paid Philadelphia $700 on their 1% city income tax on $70,000 in salary.

Let;s also assume you paid Pennsylvania $5,600 on their 8% state income tax.

The total taxes paid is $6,300 to Philly and PA.

Your NJ tax comes to $6,200.

Since you earned ALL of your income in Philadelphia, PA, New Jersey gives you a dollar-for-dollar tax credit.

Since the $6,300 you paid is $100 MORE than the $6,200 you would have owed NJ, your Philly/PA taxes completely offsets any NJ tax. You owe NJ NOTHING!

Ok, one more question.

In 2005, I was a resident of NJ for 11 months.

My NJ tax would have been $848.00

However, My Philadelphia Wage Taxes withheld were $2864

New Jersey has been after me for this tax all year. Does the rule apply for 2005 as well?

[AtlantaTaxExpert]

Did you file a 2005 NJ tax return?

Even if the tax paid to other governments offsets your NJ tax, you have to FILE to prove it!