Division of TaxationCompensation paid to Pennsylvania residents employed in ³Ô¹ÏºÚÁÏ is not subject to ³Ô¹ÏºÚÁÏ Income Tax under the terms of the Reciprocal Personal Income Tax Agreement between the states.
Similarly, ³Ô¹ÏºÚÁÏ residents are not subject to Pennsylvania income tax either. Compensation means salaries, wages, tips, fees, commissions, bonuses, and other payments received for services rendered as an employee.
The Reciprocal Agreement covers compensation only. If you are self-employed or receive other income (ie., gain from the sale of property) that is taxable in both states, you must file a ³Ô¹ÏºÚÁÏ nonresident return and report the income received.
If you are a Pennsylvania resident and ³Ô¹ÏºÚÁÏ Income Tax was withheld from your wages, you must file a ³Ô¹ÏºÚÁÏ nonresident return to get a refund. To stop the withholding of ³Ô¹ÏºÚÁÏ Income Tax, complete an Employee's Certificate of Nonresidence in ³Ô¹ÏºÚÁÏ (Form NJ-165) and give it to your employer.
You must enclose a signed statement with your New Jersey nonresident returns indicating you are a resident of the Commonwealth of Pennsylvania.
Likewise, if you are a ³Ô¹ÏºÚÁÏ resident and your employer withheld Pennsylvania income tax from wages, you must file a Pennsylvania return to get a refund. To stop the withholding of Pennsylvania income tax, complete , Employee’s Nonwithholding Application Certificate, and give it to your employer. More information is available on the website or by calling 1-717-787-8201.