Have a Tax Question? Ask a Tax Expert
Generally you are responsible for state taxes to the state you reside in and any state where you have earned income.
If you and your husband are both employed in the state of Pennsylvania, then you will both need to file a state tax return with the state of Pennsylvania and will be liable for taxes on the income you earned in that state.
At the same time, since you are residents of Delaware, you will file a return with the state of Delaware as well, however, you will be given credit on your Delaware return for taxes already paid to the state of Pennsylvania. This in effect will avoid double taxation of your earned income.
If you have other income from things such as interest, dividends or other unearned income, that income would be taxable only in the state where you are a resident.
Hello again Customer,
I cannot comment on local taxes, as you have not given me the name of the city that you work in or the name of the city you reside in. I would need that information before I could give you an answer on the local tax issue.
As far as your state taxes and whether or not you should be having taxes withheld for both states, my answer would be "no". The reason for that is that if you are working in Pennsylvania, then I assume your employers are withholding Pennsylvania state taxes. At the end of the year, you will need to file a state return with both Pennsylvania and your resident state of Delaware. However, your first liability will be to the state where you actually earned your income, which is Pennsylvania. Your resident state of Delaware will then give you credit for taxes you paid to Pennsylvania, so chances are you should not end up owing any or much tax to Delaware. That being the case, there does not seem to be any reason to have Delaware taxes withheld from your checks.
If you have other income such as interest or dividends, then of course your liability for tax on that income would be to your resident state of Delaware, but state taxes on your actual income from employment should ultimately end up being paid to the state you work in.
Hello again vze,
Out of the 3 cities you listed, Philadelphia is the only one with an earnings tax. As a non-resident of Philadelphia, but having earnings from inside the city, your tax rate there is 3.5392% and your Philadelphia employer should already be withholding that amount from your paychecks.
You are correct that Delaware and Pennsylvania have different tax rates. The tax rate in Pennsylvania is a flat 3.07%, while in Delaware it is based on a scale ranging from 2.2% up to 5.95% depending on your income bracket. The highest bracket of 5.95% is levied on incomes of $60,000 or more. So depending on your income, it is possible that you could owe as much as an additional 2.88% in state taxes to the state of Delaware, if your income is in the top bracket.
If that is the case, then you may want to ask your employer to withhold additional taxes for the state of Delaware, or at least make estimated tax payments on your own to the state to cover any additional taxes you may owe at the end of the year.