Employees residing in one of the reciprocal states can submit Form WH-47, Certificate Residence, to apply for an exemption from Indiana State income tax. Instead of double deduction and taxation, the worker`s Home Member State can credit the amount withheld for his or her state of work. But remember that a worker`s state of residence and work may not calculate the same tax rate on government income tax. A reciprocal agreement is a special tax system between two states. When two states enter into the agreement, they allow residents of one state to apply for exemption from withholding tax in another state. For example, if an employee lives in Ohio and works in Indiana, that employee may ask his company not to withhold state taxes in Indiana. You can apply using form WH-47. Keep in mind that the opposite is true. If an employee lived in Indiana and worked in Ohio, they could also ask the employer not to withhold the IT-4NR form.
In both scenarios, the employee then submits a W-2 form to the tax time in the resident. It is important to note that employers are not required to meet any of the above requirements. It is important to know whether the employer has a tax identifier in that state. For example, if the Ohio employer does not yet do business in Indiana, it probably would not have a tax identifier in that state. Without a tax identifier, the employer cannot transfer taxes to the state. It is up to the employer to decide whether an Indiana tax ID should be put in place. This is why the transfer of the territorial tax is sometimes referred to as «polite restraint». When the 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. Virginia has reciprocity with the District of Columbia, Kentucky, Maryland, Pennsylvania and West Virginia. Submit the 4-year form to your employer in Virginia if you live in one of these states and work in Virginia.
Employees can apply for an exemption from state income tax by filing The Employee`s Certificate of Nonresidence form NJ-165 in New Jersey. 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. The employee must request that his public taxes be withheld. Montana has a fiscal counter-value with North Dakota. Residents of North Dakota working in Montana can apply for an exemption from the State of Montana income tax.