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. The following countries have reciprocal agreements in which you can submit an exemption form: If your employee works in Illinois but lives in one of the reciprocal states, they can file the IL-W-5-NR form, Employee`s Statement of Nonresidency in Illinois, for the exemption from the Illinois National Income Tax. You do not have to file a tax return in D.C if you work there and if you live in another state. Send the D-4A exemption form, the « Certificate of Non-Residence in the District of Columbia, » to your employer. Unfortunately, it only works backwards with two states: Maryland and Virginia. You do not have to file a non-resident return to any of these states if you live in D.C, but you work in one of those states.
Indiana has reciprocity with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. Send the WH-47 exemption form to your employer in Indiana. States that oppose Michigan include: When an employee submits his or her tax return, he files a tax return for each state in which you withheld your taxes. It is likely that the employee will receive a tax refund or a credit for taxes paid to the state of work. This can significantly simplify the tax time of people who live in one state but work in another state, which is relatively common among people living near national borders. Many states have mutual agreements with others. A mutual agreement allows residents of a state to work in a neighbouring state while paying taxes only to the resident state. This allows taxpayers to file a tax return (resident state) when an exemption from the other state`s withholding tax has been sought. In some states, such as Virginia or Maryland, the withholding certificate (government version of Form W-4) is used to explain this withholding tax exemption.
In other states, such as Wisconsin, a separate form is used as a certificate of non-residence. Check the chart below to see your state`s unst established certificate. 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. If you are not applying for a tax exemption in the non-resident state, you may need to file a tax return in the non-resident state to demand a refund of the withheld taxes.