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I live in PA but work in DE. What state do i pay taxes in? i hired an accountant last yr and he had me pay PA state tax, and get a refund from DE, but DE told me months later the return was filed wrong and instead of a $500+ refund from DE i owed roughly $26. I just want to be prepared next yr.

2007-10-09 05:49:49 · 1 answers · asked by hud1519 2 in Business & Finance Taxes United States

1 answers

Unless there is a reciprocity agreement between the states, you must file in both states. DE and PA don't have a reciprocity agreement as far as I know.

File a non-resident return in DE listing only the DE income and pay any tax due. Then file a resident PA return listing all income from all sources. You'll receive a credit on your PA return for the DE taxes paid, up to the tax that would have been levied by PA.

The net effect is that you pay tax on the DE income at the higher of the two state's rates.

2007-10-09 05:59:30 · answer #1 · answered by Bostonian In MO 7 · 2 0

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