A W-2 from an employer in Newark and a 1099 from a client in Philadelphia arrived in the same week, both addressed to a household in Brooklyn. Each state on those forms can claim part of the household’s income, and each one decides for itself how an extension works and how much has to be paid by April. New York, the home state, cannot settle its credit for tax paid to New Jersey until the New Jersey return is finished.

Filing Order for State Returns

A resident state taxes all of its residents’ income, wherever it was earned. A state where the household earned money but does not live taxes only that income, through a nonresident return. To keep the same dollars from being taxed in 2 states, the resident state gives a credit for tax paid to the other state.

The credit equals the tax actually owed to the other state or the tax the resident state would have charged on the same income, whichever is smaller. When the work state’s rate is higher, the difference is not recovered. If a New Jersey nonresident return shows $3,000 of tax on wages earned there and New York would have charged $2,600 on the same wages, the New York credit is $2,600, and the remaining $400 is a cost the credit does not cover. The credit uses the liability figure from the finished nonresident return, which can differ from the amount withheld during the year, and some resident states require a copy of that return to be attached.

The nonresident return has to be finished before the resident return, because its final tax figure sets the credit. A household that extends the nonresident return to October also has to extend the resident return, since the resident return cannot be completed with an accurate credit until the nonresident return is done.

Reciprocity Agreements Between States

About 16 states and the District of Columbia have reciprocity agreements. Pennsylvania has them with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia, and Illinois has them with Iowa, Kentucky, Michigan and Wisconsin. A Pennsylvania resident who works in New Jersey owes income tax only to Pennsylvania on those wages and files a single state return. That worker gives the New Jersey employer Form NJ-165, while a New Jersey resident working in Pennsylvania uses Form REV-419, and Illinois uses Form IL-W-5-NR for commuters from its 4 partner states. Wisconsin, Minnesota and Indiana take a different approach and extend reciprocity to any state that treats their residents the same way. Nonresidents who work in the District of Columbia can claim an exemption from District withholding on Form D-4A.

Several of the reciprocity agreements cover only wages and other compensation, and an employee usually has to file a declaration with the employer to claim the exemption. The Pennsylvania and New Jersey agreement is limited to wages, so a Pennsylvania consultant paid on a 1099 by a New Jersey client gets no relief from it. Without the declaration, the employer withholds tax for the work state, and the only way to recover that money is a nonresident return, which has its own extension rules.

Extension Requests State by State

Filing a personal tax extension online moves the federal deadline to October 15, and each state on the household’s list then applies its own rule to the matching state return.

New Jersey grants a 6-month extension for both resident and nonresident returns when withholding, estimated payments and any amount sent along with Form NJ-630 cover 80% or more of the year’s New Jersey tax by the original due date. A federal Form 4868, attached to the New Jersey return, can replace the state form when the 80% test is already met. When it is not met, the state denies the extension retroactively to April 15, and missing the extended filing date has the same effect.

In Maryland, a taxpayer who owes nothing and has an IRS extension needs no separate Maryland request, though the state can later ask for a copy of the federal one. A taxpayer who owes Maryland tax has to request the extension and pay by April 15, and a taxpayer with no Maryland balance and no federal extension has to request the state extension online by the same date.

Remote Work and the Convenience Rule

New York applies the convenience of the employer rule to remote work. When an employee works outside New York for personal convenience, those days still count as New York workdays. Delaware and Pennsylvania adopted versions of the same rule, while Connecticut and New Jersey apply theirs only to residents of states that impose a similar rule.

On July 2, 2026, a New York appeals court rejected a challenge to the rule brought by Edward Zelinsky, a Cardozo law professor who lives in Connecticut and sought refunds for days he worked at home during pandemic closures. The court found that the law school required off-campus work during the closures and left the location of that work to him, which left those days subject to New York’s rule. The same professor lost an earlier challenge to the rule at New York’s highest court in 2003, and commentators expect him to seek review there again. An appeal by a Pennsylvania resident is pending before the same appellate court.

The rule can produce tax on more than 100% of a worker’s wages. When the resident state declines to give a credit for remote days that New York taxes, the same salary is taxed by both states. Tax Foundation research on state policies toward nonresidents describes this as true double taxation, with all of the wage income exposed to 2 states’ income taxes. New Jersey responded in 2023 with a law that offers refundable credits to residents who challenge New York’s taxation of their remote work.

City Income Taxes

Philadelphia taxes nonresidents on wages for work performed inside the city. Under the city budget approved in June 2025, the nonresident rate fell from 3.44% to 3.43% on July 1, 2025, as part of a 5-year schedule of small cuts that reaches 3.39% by 2030. The city’s rate table puts the nonresident rate at 3.425% for pay dates from July 1, 2026. A nonresident whose employer required work outside the city on some days can petition the city’s Department of Revenue for a refund of tax withheld for those days.

New York City’s resident income tax is reported on the same state Form IT-201 as New York State tax, so the state’s Form IT-370 extends both at once. The IT-370 instructions presume reasonable cause for late payment when the balance due on the finished return is no greater than 10% of the combined state and city tax and is paid with the return. For the household in Brooklyn, that 10% figure is the target for its April payment.

The Resident Return Deadline

An extension gives each of these returns the same October date, but the dates are not equal in practice. The nonresident return has to be done early enough that its tax figure is available for the resident return, which leaves the home state, the only state that taxes all of the household’s income, with the least time to get its return right.