Is There a Reciprocal Agreement between Nj and Pa
As a professional, I understand the importance of creating content that not only captures the reader`s attention but also addresses their search queries. In this article, we will explore the question « is there a reciprocal agreement between NJ and PA » and provide a comprehensive answer to this common query.
Firstly, it is essential to define what a reciprocal agreement means. In simple terms, it is an agreement between two states that allows residents to pay income tax in their respective states of residence rather than where they work. This reduces the burden of double taxation on residents who work across state borders.
Now, to answer the question at hand – yes, there is a reciprocal agreement between NJ (New Jersey) and PA (Pennsylvania). This agreement has been in place since 1977 and allows residents who work in one of these two states but live in the other to pay taxes based on their state of residency.
Under this agreement, employees fill out Form NJ-165 and submit it to their employer if they reside in NJ but work in PA. This exempts them from paying PA income tax. Similarly, if a resident of PA works in NJ, they fill out Form REV-419 and submit it to their employer to avoid paying NJ income tax.
It is important to note that this agreement only applies to earned income and does not cover other forms of income, such as rental income or capital gains. Additionally, residents must file tax returns in both states, but they only pay taxes in their state of residency.
In conclusion, a reciprocal agreement between NJ and PA allows residents who work across state borders to pay taxes based on their state of residency. This reduces the burden of double taxation on residents and simplifies the tax filing process. It is beneficial for those who live in one state and work in another and can save them significant amounts of money in income taxes.
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