[sweetcoffee]

I work in pa live in nj. My company took out pa state and city tax not nj tax. Do I file nj or pa tax? How do this procedure work for for filing state tax when you work out of state.

[MukatA]

If you work (or work and live) in two different states, you will file tax return in both the states.

File PA return and report income earned while in PA. You do not pay PA city tax. Ask your employer not to withhold city tax.

In the state that is your tax home (NJ), report your worldwide income for full year. Also in this state claim credit for the taxes paid to the other state. Your U.S. Tax Return: Working or Living in Two or More states

[ebaines]

I must disagree with Mukata on this. There is a reciprocal agreement between NJ and PA such that as an NJ resident you only owe income tax to NJ, and not PA. You should talk to your employer about having NJ tax withheld from your pay rather than PA tax see: Income Tax - PA/NJ Reciprocal Income Tax Agreement - NJ Taxation You need to file a form REV-420 with your employer. As for city tax - if this tax is for Philly then I believe you will have to pay that, as it is considered a payroll tax, not an income tax, and applies to everyone who earns income in Philly.

To get your money back from PA file a non-resident tax form, and include a statement that you are an NJ resident and hence are paying NJ tax on your PA income. You should get a full refund. The bad news is that you must pay the full amount of NJ tax by April 15 - which means if you don't get your refund from PA in time you will have to come up with the cash on your own.