I live in New York, but worked in Pennsylvania. If state taxes were taken out of my pay, do I still have to file in Pennsylvania?

by Mark B. Zinman, CPA | May 17, 2018
askacpaiconI live in New York and worked in Pennsylvania for a short time, making only $450. State taxes were taken out for a total of $13.82. Do I have to file in Pennsylvania? If so, how?

Answer: Whenever you work in a nonresident state, you are required to file that state’s return, claiming the money that you earned and reconciling what was withheld. Then the same income ($450) would be included in your New York State Income Tax Return. New York State Income Tax will be calculated on that same money, but then you will get a credit on your New York return for the money you paid to Pennsylvania. It is called an out-of-state credit. So, you report the money to Pennsylvania and pay its tax; then you report the money to New York and calculate its tax. In the end, you pay the total tax between the two states on the highest tax rate. So if New York has the higher tax rate (and it does), you will pay the New York tax on your $450 minus the tax you had to pay to Pennsylvania.

Filing your taxes can be complex, especially when you live in one state and work in another. A local CPA can help you make sure you are filing correctly. To find a CPA in Pennsylvania by location or area of expertise, visit www.ineedacpa.org. 

Answer By: Mark B. Zinman, CPA, is managing partner with Zinman & Company in Southampton, Pa. 

***Answer originally published Feb. 1, 2015.
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