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April 14, 2025
Question

We live in PA and my wife works in DE. She did not have PA state taxes listed on her W-2, but did have DE state taxes taken out. Is her entire income not taxable in PA?

  • April 14, 2025
  • 1 reply
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1 reply

AmyC
April 14, 2025

Your resident state taxes all income but gives you a credit for the double taxed income. You must: 

  1. prepare the nonresident DE first to create the DE taxable income and tax liability, 
  2. prepare your PA resident return
  3. the program can calculate your PA tax and credit for DE income.

You get credit for the lower state tax on the lowest taxable amount.

  • Each state calculates taxable income differently. 
  • Each state has its own tax rate/ system.
  • You get the lowest of both categories as a tax credit.
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