If I pay local tax where I work, do I have to pay again where I live?

Question

Can I get a refund from any of the two locations? How?

By local I mean city not state.

Answer 1

Let me answer differently. I live in PA where we pay a local tax in addition to the state tax. You file a local return where you live, not where you work. When the local tax people get your return, they see where your local taxes were withheld and paid to, and they go after them for the money. If you don't have a local tax where you live, you usually can not get a refund for the taxes you had withheld for where you worked. If your local rate is lower than the rate where you work, you will get a refund and vice versa.

For example, if you live in Allentown and work in the Poconos. Your W-2 will show that the Pocono local tax authority got your withholdings (lets say 1% of your $50,000 income was withheld or $500). You will file a return in Allentown. If they are also at 1%, you will have a liability of $500. You will also show that $500 was withheld, so you will pay Allentown nothing. They will go to the Pocono people and get your $500 withholding back from them.

If Allentown had a 1.5% tax rate, you will owe them $250 and they would still get their $500 from the Poconos.

If Allentown had a 0.5% tax rate, they would give you $250 refund and they would still get their $500 from the Poconos.

If Allentown had no local tax, you would not file a return, you would not get a refund, and the Poconos would keep it all $500.

Some local areas do not require employers to withhold local taxes if the employee lives somewhere that does not have local taxes. Some do.

My friend, who lives in Ohio, works in Kentucky. He had local taxes taken from his paycheck. Ohio has no local taxes. He can't get back his Kentucky withholdings, and his employer is not allowed to stop withholding them.

Hope this helps.

Answer 2

Yes, you must file a return in both states.

First, file a non-resident return where you work, listing only the income earned in that state. Pay any tax due.

Second, file a resident return in your home state listing all income from all sources. Take a credit for the taxes paid to the state where you worked. Pay any tax due.

The net result is that you will pay state income tax at the higher of the rates of both states; you will NOT be double taxed.

EXCEPTION: If your home state and the state where you work have a reciprocity agreement (PA and NJ for example) you only file a return in your home state. Check with your state's tax authorities to see if there is a reciprocity agreement in place.

Answer 3

It depends on where you live and where you work. You might or might not have to file in both cities, but usually wouldn't actually end up paying both although you might.

In PA for example, there's a flat amount that's paid to the municipality where you work, then a percentage that's paid to where you live - they are two different taxes.

Answer 4

Yes, you do. However, there is often a credit from you city of residence for taxes paid to the city where you work. Check with both cities to find out how to file a return. They may have the forms on their websites.

Answer 5

I live in NYC and work partially in NYS and partially in Connecticut. My employer is based in Connecticut, so he withholds Conn State tax. Does he have to withhold NYS tax too and how do I divide my payments to both states and NYC?

Answer 6

Yes! Lets say you live in Massachusetts and work in conneticut, you would have to pay state income tax from your work to the state of conn. You would not have to pay state income tax to Mass. for working in conn. however you would have to pay all other tax required by Mass. when living in Mass. such as state excise tax on your vechical, parking tax, water tax, or any other tax a state might charge its residents.