Michigan has mutual agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. Send the MI-W4 exception form to your employer if you work in Michigan and live in one of these states. Use our chart to find out which states have mutual agreements. And, find out what form the employee must fill in to keep you out of their country of origin: enter the overall income qualified for mutual agreement in the first line: “Military income resides as non-resident income for NJ purposes or Pennsylvania resident as a result of mutual agreement.” To be released from future deductions in New Jersey, complete the NJ-165 form and submit it to your employer. Tax reciprocity is a state-to-state agreement that eases the tax burden on workers who travel across national borders to work. In the Member States of the Tax Administration, staff are not obliged to file several state tax returns. If there is a mutual agreement between the State of origin and the State of Work, the worker is exempt from public and local taxes in his state of employment. 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. If your employee works in Illinois but lives in one of the reciprocal states, he or she can file the IL-W-5-NR Form, Employee`s Statement of Nonresidency in Illinois, for the Illinois State Income Tax Exemption. 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. 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. So what are the Netherlands? The following conditions are those in which the employee works. 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. 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.