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If you live in Pennsylvania and work in New Jersey, your income is taxed by Pennsylvania and is not subject to tax by New Jersey. If taxes are improperly withheld by an employer in New Jersey, a taxpayer can apply for a refund.erbert M. Paul, a New York tax lawyer, explained how New York handles the matter. If you have a residence in New York and in another state as well, and spend more than 183 days in New York, he said, you are considered a statutory resident and all of your income is subject to New York tax..
If the state you work in does not have a reciprocal agreement with your âhomeâ state, youâll have to file a resident tax return and a nonresident tax return. 1  On your resident tax return (for your âhomeâ state), you list all sources of income, including that which you earned out-of-state. On your nonresident tax return (for your âworkâ state), you only list the income that you made in that state.