How do I file my taxes if I work in Delaware, but live in Pennsylvania?

by David M. Lastowski, CPA | May 03, 2018
askacpaiconI work in Wilmington, Del., but I live in Pennsylvania. My employer takes out state tax and pays it to Delaware. How and where do I file my state taxes? It seems that I pay a lot more to Delaware each year in state taxes than I did to Pennsylvania when I worked there.

Answer: As a Pennsylvania resident who works in Delaware, you will need to file two state income tax returns. You will need to file a Delaware return and pay tax on your Delaware-based income. Then you will need to file a Pennsylvania personal income tax return and pay tax on your total income ( which would include your Delaware-based income and any other income from additional sources). You won’t be taxed twice on your Delaware income as Pennsylvania will let you credit some or part of the taxes you paid to Delaware against  whatever Pennsylvania income taxes you owe.

For example, assume your Delaware wages are $10,000 and you paid $500 in tax to Delaware.  The Pennsylvania tax on that same $10,000 is $307, but Pennsylvania will allow you to calculate a credit based on the $500 you paid to Delaware, and use that credit against what you owe to Pennsylvania. You will use PA Schedules G-R and G-L to calculate the credit.

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Answer By: David M. Lastowski, CPA, is the owner of David M. Lastowski CPA.

***Answer originally published Nov. 1, 2014.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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