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 a company S. New Jersey has had reciprocity with Pennsylvania in the past, but Gov. Chris Christie terminated the contract effective January 1, 2017. You should have filed a non-resident return to New Jersey from 2017 and paid taxes there if you work in the state. Fortunately, Christie reversed course when a hue and a cry from residents and politicians were edited. This can significantly simplify the tax time of people who live in one state but work in another state, which is relatively common among those living near national borders. Many states have mutual agreements with others.

The map below shows 17 states (including the District of Columbia) where non-resident workers living in different states do not have to pay taxes. Move the cursor over each orange state to see their reciprocity agreements with other states and find out what form non-resident workers must submit to their employers to be exempt from deduction in that state. A worker must demand the taxation of taxes from his home state and not from the state of work. Workers do this by providing employers with an exemption form for the state of work. Proper restraint is essential. The reluctance of the wrong condition – particularly when a worker has expressly asked to be exempted from his or her state of work – can lead to fines. At the end of the year, employers must use the W-2 form to show workers how much it has been retained for each state. There is no agreement in the Tri-State area of New York (New Jersey, Connecticut and New York). In these situations, workers collect taxes from their state of work and pay taxes to their country of origin. After almost forty years, the reciprocity agreement between New Jersey and Pennsylvania expires on December 31, 2016. On September 2, 2016, New Jersey Gov.

Chris Christie signed a contract to terminate the contract effective January 1, 2017, in a move that some believe could generate $180 million in additional revenue for New Jersey. This means that, for the first time since 1978, wealthy taxpayers working in New Jersey but living in Pennsylvania will pay much higher income taxes. 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. Tax reciprocity is a state-to-state agreement that eases the tax burden on workers who travel across national borders to work.