New Jersey Local Tax Credits for Residents Working in Pennsylvania

By default, the payroll process doesn't provide local tax credit to New Jersey residents working in Pennsylvania. However, these employees can apply for a Pennsylvania local tax credit when they submit their New Jersey annual returns.

To enable this credit during the payroll run:

1. To enable it at the payroll statutory unit (PSU) level, start the Legal Entity Calculation Cards task from your implementation project.

   To enable at the tax reporting unit (TRU) level, start the Legal Reporting Unit Calculation Cards task.

   Settings at the TRU level override those at the PSU level.\

2. Open the calculation card for editing.

3. In Component Groups, click New Jersey.

   Create it if it doesn't exist.

4. In Calculation Components, select State Income Tax.

   Create it if it doesn't exist.

5. Select Enterable Calculation Values on Calculation Cards.

6. Click Create.

7. Search for and select Apply Pennsylvania local tax credit.

8. In Value, select Yes.

9. Save your work.