Do you live in Pennsylvania but work in New Jersey? If so, this is a video for you.
Here in South Jersey, it is common for clients to work in a different state from where they live. One question that I get asked in these situations is “which state do I pay taxes to?” Well, Pennsylvania residents working in New Jersey do not have to worry about that problem, too much.
The States of Pennsylvania and New Jersey have an agreement that says employees earning wages in one state but residing in the other state will only have to pay taxes based on where they live. That means that if Pennsylvania residents are earning wages in New Jersey, only Pennsylvania income taxes should be withheld from your paycheck.
This agreement saves taxpayers from having to file nonresident tax returns in the state where they work, but it only covers wages earned as an employee. Other types of income will still be subject to state taxes based on where it is earned.
Not all states have this type of agreement, so if you are working in a different state than where you live you should discuss this with your tax advisor. To learn more about how working in multiple states impacts your taxes, contact and Alloy Silverstein advisor today.
Associate Partner
Ren III provides tax, accounting, and advisory services to a broad range of clients, with a specialty for manufacturers, title insurance companies, and professional service providers.
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