Legislators in South Jersey are making new efforts to protect a long-standing tax deal between New Jersey and Pennsylvania, amid a new focus on how workers who travel across national borders are taxed. The Pennsylvania Revenue Department announced that New Jersey is ending its reciprocity agreement with Pennsylvania effective January 1, 2017, which requires individuals to file two income tax returns and withhold employers for both states starting in 2017. Residents of Pennsylvania and New Jersey receive a credit for income tax paid on wages that are earned in the other state. On Friday, September 2, 2016, Gov. Chris Christie reportedly informed Pennsylvania of New Jersey`s intention to withdraw from the mutual income tax agreement. Under the agreement, which has been in effect since 1977, residents of one state who earned wages in the other state paid only taxes to their state of residence at these wages. Under the agreement, any state can terminate the contract at the beginning of a calendar year by giving the other state a 120-day period. As things stand, the mutual agreement is terminated on January 1, 2017. The lack of a tax deal between New Jersey and New York is also seen as a net loser for New Jersey`s budget, especially with many New Jerseyers who used to work in New York, who were now working because of the pandemic. In addition, many people in the garden state also pay higher taxes because of differences in income tax structures in the two countries. Pennsylvania requires proof that taxes were paid to the other state.
You must print the return of the AP with a copy of the return of the state of New Jersey, the W-2 (s) with the AP income and a statement in which you reside in a reciprocal state, and send it by email. To be exempt from future PA deductions, submit the REV-419 form to your employer. Differences between the two tax structures can create tax benefits for both executives and large workers when travelling across national borders, and they can also promote economic development, particularly in southern Jersey. Christina Renna, president and chief executive officer of the New Jersey Chamber of Commerce, testified before the Senate committee before last week`s vote, which suggested that the pandemic has only increased the need for more scrutiny for lawmakers in the future of the bistro agreement. New Jersey Gov. Chris Christie announced in September 2016 that the agreement would be repealed on January 1, 2017. New Jersey faced a budget deficit of $250 million, and that would be $180 million net for the state. The denunciation of the mutual agreement would affect about 125,000 people who commute between New Jersey and Pennsylvania, another 125,000 who commute in reverse, and all the companies that employ these people. NOTE: The reciprocity agreement between Pennsylvania and New Jersey is not extended to Philadelphia.