Employees who work in Kentucky and live in one of the reciprocal states can submit Form 42A809 to ask employers not to withhold income tax in Kentucky. Ohio and Virginia both have conditional agreements. When an employee lives in Virginia, he has to commute daily for his work in Kentucky to qualify. Employees living in Ohio cannot be shareholders with 20% or more equity in an S company. If an employee lives in a state without a mutual agreement with Indiana, he or she can receive a tax credit for taxes withheld for Indiana. Employees residing in one of the reciprocal states can submit Form WH-47, Certificate Residence, to apply for an exemption from Indiana State income tax. You do not pay taxes twice on the same money, even if you do not live or work in any of the states with reciprocal agreements. You just have to spend a little more time preparing several state returns and you have to wait for a refund for taxes that are unnecessarily withheld from your paychecks. Michigan has mutual agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. Submit the MI-W4 leave form to your employer if you work in Michigan and live in one of these states. This can significantly simplify the tax time of people living in one state but working in another state, which is relatively common for people living near national borders. Many states have mutual agreements with others.
If an employee works in Arizona but lives in one of the reciprocal states, they can submit the WeC, Employee Withholding Exemption Certificate form. Employees must also use this form to terminate their release from source (z.B. when they move to Arizona). If you are eligible for the reciprocal agreement, you must delete the automatic calculation by logging into your account and logging in to the State Section Indiana Resident Return Enter Myself County Information. Close the top with the selection of the state of residence (last in the drop-down menu). Click Save and continue with income in the state. Complete both the amount of wages received and the status in which they were received. Suppose an employee lives in Pennsylvania but works in Virginia. Pennsylvania and Virginia have a mutual agreement. The employee only has to pay government and local taxes for Pennsylvania, not Virginia. They keep taxes for the employee`s home state.
Use our chart to find out which states have mutual agreements. And, find out what form the employee must fill to keep you out of their home state: New Jersey had a reciprocity with Pennsylvania, but Gov. Chris Christie terminated the contract effective January 1, 2017.