State with Reciprocal Agreements

State With Reciprocal Agreements

 

Now just what is “thing” called reciprocity?

Simply put, it’s an agreement between states that allow nonresidents who worked in that particular state to not pay that state’s income tax. They can have state income tax withheld for where they live. There are 17 states (listed below) that have reciprocal agreements with other states to not tax nonresident workers. Therefore, your employee does not have to have state income tax withheld for where they work “IF” they live in the states outlined in the chart below.

 
 
ARIZONA
No State Income Withholding for Worked In if: The employee is a nonresident of Arizona that works in the state and is a resident of California, Indiana, Oregon, or Virginia.
What to File with Employer for Resident Withholding: Form WEC Withholding Exemption Certificate
DISTRICT OF COLUMBIA
No State Income Withholding for Worked In if: For employees whose permanent resident is not in DC for the tax year and the employee does not reside in DC for 183 days or more in the tax year.
What to File with Employer for Resident Withholding: Form D-4A Certificate of Nonresidence in the District of Columbia
ILLINOIS
No State Income Withholding for Worked In if: The employee is a nonresident of Illinois that works in the state and is a resident of Iowa, Kentucky, Michigan, or Wisconsin.
What to File with Employer for Resident Withholding: Form IL-W-F-NR Employee’s Statement of Nonresidence in Illinois
INDIANA
No State Income Withholding for Worked In if: The employee is a nonresident of Indiana that works in the state and is a resident of Kentucky, Michigan, Ohio, Pennsylvania, or Wisconsin.
What to File with Employer for Resident Withholding: Form WH-47 Certificate of Residence
IOWA
No State Income Withholding for Worked In if: The employee is a nonresident of Iowa that works in the state and is a resident of Illinois..
What to File with Employer for Resident Withholding: Form 44-016, Employee’s Statement of Nonresidence in Iowa
KENTUCKY
No State Income Withholding for Worked In if: The employee is a nonresident of Kentucky that works in the state and is a resident of Illinois, Indiana, Michigan, West Virginia, Wisconsin, or Ohio.
What to File with Employer for Resident Withholding: Form 42A804 (K-4),Kentucky’s Withholding Certificate
MARYLAND
No State Income Withholding for Worked In if: The employee is a nonresident of Maryland (and does not maintain residence for 183 days or more) that works in the state and is a resident of District of Columbia, Pennsylvania, Virginia, or West Virginia.
What to File with Employer for Resident Withholding: Form MW507,Employee’s Maryland Withholding Exemption Certificate
MICHIGAN
No State Income Withholding for Worked In if: The employee is a nonresident of Michigan that works in the state and is a resident of Illinois, Indiana, Kentucky, Minnesota, Ohio, or Wisconsin.
What to File with Employer for Resident Withholding: Form MI-W4,Employee’s Michigan Withholding Exemption Certificate State of Michigan – Department of Treasury
MINNESOTA
No State Income Withholding for Worked In if: The employee is a nonresident of Minnesota that works in the state and is a resident of Michigan or North Dakota.
What to File with Employer for Resident Withholding: Form MWR,No State Income Withholding for Worked In if: Exemption/Affidavit of Residency for Tax Year 2019
MONTANA
No State Income Withholding for Worked In if: The employee is a nonresident of Montana that works in the state and is a resident of North Dakota.
What to File with Employer for Resident Withholding: Form MW-4,Montana’s Employee Withholding Allowance and Exemption Certificate. (Form MT-R – No State Income Withholding for Worked In if: Exemption from Withholding is no longer in use, per the state agency. Please use above form.)
NEW JERSEY
No State Income Withholding for Worked In if: The employee is a nonresident of New Jersey that works in the state and is a resident of Pennsylvania.
What to File with Employer for Resident Withholding: Form NJ-165,Employee’s Certificate of Nonresidence in New Jersey.
NORTH DAKOTA
No State Income Withholding for Worked In if: The employee is a nonresident of North Dakota that works in the state and is a resident of Minnesota or Montana.
What to File with Employer for Resident Withholding: Form NDW-R,No State Income Withholding for Worked In if: Exemption from Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
OHIO
No State Income Withholding for Worked In if: The employee is a nonresident of Ohio that works in the state and is a resident of Indiana, Kentucky, Michigan, Pennsylvania, or West Virginia.
What to File with Employer for Resident Withholding: Form IT 4NR,Employee’s Statement of Residency in a No State Income Withholding for Worked In if: State
PENNSYLVANIA
No State Income Withholding for Worked In if: The employee is a nonresident of Pennsylvania that works in the state and is a resident of Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia. (Reciprocal agreement only applies to the state level and not the local. See Local Tax Snapshot for Pennsylvania for more details)
What to File with Employer for Resident Withholding: Form REV-419EX,Employee’s Nonwithholding Application Certificate.
VIRGINIA
No State Income Withholding for Worked In if: The employee is a nonresident of Virginia that works in the state and is a resident of District of Columbia, Kentucky, Maryland, Pennsylvania, or West Virginia.
What to File with Employer for Resident Withholding: Form VA-4,Employee Withholding Exemption Certificate
WEST VIRGINIA
No State Income Withholding for Worked In if: The employee is a nonresident of West Virginia that works in the state and is a resident of Kentucky, Maryland, Ohio, Pennsylvania, or Virginia.
What to File with Employer for Resident Withholding: Form WV/IT-104, West Virginia Certificate of Nonresidence
WISCONSIN
No State Income Withholding for Worked In if: The employee is a nonresident of Wisconsin that works in the state and is a resident of Illinois, Indiana, Kentucky, or Michigan.
What to File with Employer for Resident Withholding: Form W-220, Nonresident Employee’s Withholding No State Income Withholding for Worked In if: Declaration
 
 
OHIO
No State Income Withholding for Worked In if: The employee is a nonresident of Ohio that works in the state and is a resident of Indiana, Kentucky, Michigan, Pennsylvania, or West Virginia.
What to File with Employer for Resident Withholding: Form IT 4NR,Employee’s Statement of Residency in a No State Income Withholding for Worked In if: State
 

The employee would submit Ohio Form IT 4NR to Employer to have Pennsylvania State Income Tax withheld for residence.

 

Note – the above image is only dealing with the state income tax portion and not the local tax. Since the example is for OH/PA, click here for the OH/PA Local Tax Snapshot to see how the local tax would work for employees.