I live in Pennsylvania and work in Delaware. I understand I will need to file two year-end state income tax returns. Since my Delaware income tax is withheld, but my Pennsylvania income tax is not, do I also need to file my Pennsylvania income taxes quarterly?
As a nonresident working in Delaware, you will have to file a nonresident return in Delaware. The tax you pay in Delaware will be credited in Pennsylvania for the amount of tax that would have been owed in Pennsylvania had you worked in Pennsylvania. In other words, you cannot get a refund in Pennsylvania if the tax paid in Delaware is higher than the tax that would have been due to Pennsylvania. Since Delaware has a graduated rate of income tax, it is possible that the amount of tax you pay in Delaware is less than what the rate would have been in Pennsylvania. If that is the case, you will owe the remaining amount to Pennsylvania.
In terms of making estimated payments, since Delaware is not a reciprocal state, no estimated payments are required unless you have greater than $8,000 in income other than compensation earned from the nonreciprocal state. This income could be from other jobs, interest, dividends, capital gains, or other passive forms of income.
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Answered by: Chad Schweighart, CPA, is an accounting manager with Gift & Associates in Mechanicsburg, Pa.