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Additional Posts in SALT - State and Local Tax
Oct. 15th is almost here. Hang in there!
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Will states start imposing sales tax on NFTs?
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I'm not a 1040 guy at all but I do know you should be requesting a refund from Philly if you haven't already. My office is also in Philly but I've been working outside the city since covid. I'm still waiting on my philly refund and I sent in the forms back in February.
Yes! Same thing happened to me. Worked for PHL but from home in NEPA. I called & sent an email to payroll. They had it cleared up by the next paycheck.
You should have withholding where you are working from unless Delaware and Pennsylvania have reciprocity. Have you been coding your time to Pennsylvania? When you file your return, hour W2 is going to say which state the income is sourced to. It should be sourced to where you are providing services so if you haven’t been in Philly for the last year, you shouldn’t have income sourced there. They wouldn’t withhold from both states for the same time period. You are taxed where you provide services at but then you file a resident return where your tax home is and you will take a credit for taxes paid to another state
I code my time to Delaware.
PA and Philly are both convenience of the employer jurisdictions so if your employer is making you work from home than only DE wages should be withheld. If it is your choice to wfh than it is correct for them to withhold pa and Philly as there is no reciprocity. You would claim a credit on your DE tax return for Pa taxes paid. I can’t remember if DE allows a credit for Philly.
You need to talk to your payroll dept then so they at least switch to the correct withholding especially since you code your time as de. My experience has been they won’t do anything to fix what was done previously so you will probably have to wait until you get your W2 to file a Philly refund claim and tax return filing to get the pa amount back.
You won’t have to pay Philly tax. Philly tax is levied only on services provided within the City. If your employer has mandated you work from home, or your work location has changed to your home, no Philly tax. Assume the same applies for PA, but I haven’t checked that specifically.
If you have been coding your time right in mobile t&e (I.e. using DE as your work location) you should have been getting an adjustment for the Philly tax in each paycheck (except for vacation/holiday/sick days - Philly will still tax those). Like others have said, Philly has the convenience of the employer rule which will probably kick in now that the office is technically open.