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

by James J. Cunningham, CPA | Jun 01, 2018
askacpaiconMy wife works in the same state in which we live – Delaware - but I work in Pennsylvania. How do we file our state taxes? We file federal taxes jointly, but do we do the same with our state taxes, even though I work in another state? Also, on my W-2, all my state taxes have gone to Pennsylvania, nothing has been taken for where I live.

Answer: The state-of-resident income tax rules would apply to Delaware. Pennsylvania does not have a reciprocal agreement with Delaware, therefore the Pennsylvania employer is required to withhold Pennsylvania taxes for wages earned in Pennsylvania. For Pennsylvania, you should file a Pennsylvania nonresident income tax return. For Delaware, you will have to file a joint or separate return, making sure you include the income you earned in Pennsylvania. As a Delaware resident, you can take credit for the taxes paid to Pennsylvania. This is a general overview. Working and living in different states does raise some complex tax issues, and you may want to consult an advisor familiar with Delaware and Pennsylvania tax law.

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Answer By: James J. Cunningham, CPA, is Tax Partner with BDO USA, LLP in Pittsburgh.

***Answer originally published Nov. 1, 2014.
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