I have got a case--- Employee lives in Pennsylvania (PA) and works in New Jersey. Since the said states have reciprocity, EE should be taxed in PA.
I have tried changing master data with two different scenarios:
1) 'PA' as residence tax area in IT 0207 and NJ as work tax area and unemp. tax authority in IT 0208 and IT 0209
2) 'PA' as the Tax Area in all three infotypes 207, 208 and 209.
In spite of that in Payroll, state income taxes were not taken correctly i.e. in both scenarios system considered NJ state income tax only. It is not considering PA state.
Could you please help me in resolving this.