Live in Philly, work in NJ (tax implications) (Philadelphia, Penn: credit, how much)

[Flipadelphia]

My wife recently began a job in Center City (thank you to those who commented on my previous thread regarding the Packard Motor Car Building; we ended up finding a place on Chestnut in a more lively area) and is currently commuting from NJ until we move in mid-March.

I think I have a good handle on her current situation: paying non-resident city tax, no PA tax, no NJ tax, and I understand that the city tax and NJ tax would essentially cancel themselves out due to the reciprocity.

Here's my question, though. After we move and until I find a different job, I'll be living in Philly and working in NJ. What are the tax implications there? I know I'll be on the hook for resident city tax at the end of the year, but how will my state income tax situation look?

Any help you can provide to make me less confused would be great.

[Flipadelphia]

OK, so after taking a minute to clear my head ... I know I could file a form with my employer asking them not to withold NJ income tax, which I would not be subject to as a PA resident. That does leave me with two questions, though:

1. Should I just allow me employer to continue withholding NJ tax so I get that money refunded to me to offset the PA state income tax I will owe at the end of the year? Or can I have my NJ employer withhold PA income tax somehow to avoid that situation and make sure the tax goes to the proper places?

2. Living in NJ and working in Philly, the Philly city tax IS your NJ state income tax for all intents and purposes, due to the credit NJ offers residents in that situation. Does paying Philly resident city tax afford you any sort of credit when it comes to paying PA income tax? Or do you just get hit with both? Thanks again.

[PhillyViaBoston]

You will owe federal taxes, Pennsylvania state taxes, and Philadelphia city taxes. Your employer should withhold some of your pay for these. These are all separate taxes, though the State of PA does take into account what was paid in "local tax" (to the City of Philadelphia in your case) when calculating their final bill. It is unlikely that you would pay enough in local taxes to offset your entire PA state tax burden.

Because NJ and PA are reciprocal states, you will not owe New Jersey state taxes, so your employer should not withhold NJ taxes from your pay. File whatever form you need to with your employer to make sure the taxes they withhold are appropriate for you. The less tax agencies you have to deal with the better and you're already on the hook for three (US, PA, Philly).

[phlinak]

Originally Posted by Flipadelphia

My wife recently began a job in Center City (thank you to those who commented on my previous thread regarding the Packard Motor Car Building; we ended up finding a place on Chestnut in a more lively area) and is currently commuting from NJ until we move in mid-March.

I think I have a good handle on her current situation: paying non-resident city tax, no PA tax, no NJ tax, and I understand that the city tax and NJ tax would essentially cancel themselves out due to the reciprocity.

Here's my question, though. After we move and until I find a different job, I'll be living in Philly and working in NJ. What are the tax implications there? I know I'll be on the hook for resident city tax at the end of the year, but how will my state income tax situation look?

Any help you can provide to make me less confused would be great.

The long term solution is to divest yourself (residentially and occupationally) of the city of Philadelphia as quick as humanly possible. (More money for you)

[john_starks]

i've been doing it for years

i've had a job outside nj

[Angus215]

Originally Posted by Flipadelphia

OK, so after taking a minute to clear my head ... I know I could file a form with my employer asking them not to withold NJ income tax, which I would not be subject to as a PA resident. That does leave me with two questions, though:

1. Should I just allow me employer to continue withholding NJ tax so I get that money refunded to me to offset the PA state income tax I will owe at the end of the year? Or can I have my NJ employer withhold PA income tax somehow to avoid that situation and make sure the tax goes to the proper places?

2. Living in NJ and working in Philly, the Philly city tax IS your NJ state income tax for all intents and purposes, due to the credit NJ offers residents in that situation. Does paying Philly resident city tax afford you any sort of credit when it comes to paying PA income tax? Or do you just get hit with both? Thanks again.

once you change your residency to PA, you need to tell your employer so they withhold PA tax. PA and NJ have reciprocity, so you pay state income tax where you live, regardless of where you work. Your Phila city wage tax will not be creditable against PA state tax (unlike NJ state tax). so, your total state/local tax liability will increase to 3% (state) + 4% (city) = 7%.

[Flipadelphia]

Thanks. I figured I would simply be on the hook more.

Obviously, my employer won't take Philly wage tax, and I'm not sure I'd be the biggest fan of cutting the city a big check come tax time. Any suggestions for helping soften that blow? Increase my PA state withholding to get a larger refund, negating some of the impact of paying all that city tax?

[dukelubas]

Figure out what it would be per pay check and take that amount and put it in a separate account until it's time to pay then write that big check to the city.

[tompotsy]

i'm considering a position in mt. laurel nj. but I live in Philadelphia. I would be working for the same company. my question is how much is the difference to figure out with paying city wage tax to philly and what will nj take out tax wise. I would like to be prepared to negotiate and not sure of there rates?

[sj08054]

Originally Posted by tompotsy

i'm considering a position in mt. laurel nj. but I live in Philadelphia. I would be working for the same company. my question is how much is the difference to figure out with paying city wage tax to philly and what will nj take out tax wise. I would like to be prepared to negotiate and not sure of there rates?

As a resident of Philadelphia, you have a 3.924% wage tax on top of the PA state income tax. Your NJ employer is not require to withhold NJ state tax.