[gaurav15]

Hi,

I work for a company in California. I used to live there till April 09. I moved to Pennsylvania and continue working from home as a full-time employee for the same company. My company did not withhold any PA taxes but withheld CA taxes from my income for the entire year.

Do I need to pay PA taxes? If yes, do I need to pay a penalty?
Do I get a refund of CA taxes?

Thanks.

[ebaines]

You were a resident of CA until April, then a resident of PA from May - December. Consequently as of May you stopped owing any taxes to CA on your income, but started owing PA. Tell your company to stop witholding CA tax ASAP, and start witholding PA tax. For 2009 you will file a part-year resident tax return for CA, and you should get a hefty refund for all the money that was incorrectly withheld. You will also file a part-year resident return for PA, and you'll find that you owe them a hefty payment. Unfortunately you can't get CA to send a check on your behalf directly to PA, so my advice is file ASAP for CA so you get a quick refund, then file in PA by April 15 using your CA refund to finance your payment. For tax year 2010 and beyond you file in PA only.

If you employer won't (or can't ) withhold PA taxes for you, you must start filing quarterly income tax statements with PA or else face the risk of penalties when you file your 2010 PA taxes in April 2011. You don't owe a penalty for '09 - since this was your first year in state. But if you're not careful you may owe a penalty in '10.