Suppose an employee lives in Pennsylvania but works in Virginia. Pennsylvania and Virginia have mutual agreement. The employee only has to pay public and local taxes for Pennsylvania, not for Virginia. They respect taxes for the employee`s home state. You do not have to file a tax return in D.C. if you work there and if you are established in another state. Submit to your employer the D-4A exception form, the Certificate of Nonresidence in the District of Columbia. Unfortunately, it only works the other way around with two states: Maryland and Virginia. You don`t have to file a non-resident tax return in any of these states if you live in D.C but work in one of those states. The U.S. Supreme Court ruled against double taxation in comptroller of the Treasury of Maryland v.
Wynne in 2015, who said that two or more states are no longer allowed to tax the same income. But filing multiple returns might be necessary to be absolutely certain that you won`t be taxed twice. Montana has a tax share with North Dakota. North Dakota residents who work in Montana can apply for an income tax exemption in Montana. On November 22, 2016, Governor Christie reversed course and said he would not unplug the Pennsylvania/New Jersey Reciprocal Income Tax Agreement. According to a statement, the health care reforms would result in a $200 million saving next year, allowing Governor Christie and his government to “save” the deal. Kentucky is mutualist with seven states. You can submit Exception Form 42A809 to your employer if you work here but are based in Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, or Wisconsin. However, Virginia residents must commute daily to qualify and Ohio residents cannot be shareholders of 20% or more in an S-Chapter company. ** NOTE: If you are a resident of the PA who works in a reciprocal Contracting State and your employer does not withhold pa tax, you must pay the estimated PA taxes. Michigan`s retorted states for taxes include: employees don`t owe double taxes in non-reciprocal states. But employees may need to do a little extra work, for example.
B file several state tax returns. Reciprocity agreements mean that two states allow their residents to pay taxes only where they live, rather than where they work. This is especially important, for example, for the highest income earners who live in Pennsylvania and work in New Jersey.