If the state you work in does not have a reciprocal agreement with your home state, you’ll have to file a resident tax return and a nonresident tax return. If your state doesn’t have a reciprocal agreement Ready to take the next step? A financial advisor can show you how all the pieces of your financial plan fit together. (See below.) You should also consult with a properly qualified accountant or tax specialist for additional guidance on state-specific tax concerns. If you have non-employment income coming in from your work state, you will also have to file a nonresident tax return, despite the fact that there is a reciprocal agreement in place. Note: Even if you live and work in states that have a reciprocal agreement with each other, the reciprocal agreement only covers employment income. There may be different exemption forms to fill out depending on your state, so talk to your HR representative to ensure you have the correct form. The exemption form will relieve you of the burden of paying income taxes to the state in which you work, so you only need to pay taxes to the state in which you live. Wisconsin: Residents of Illinois, Indiana, Kentucky and Michigan are exempt West Virginia: Residents of Kentucky, Maryland, Ohio, Pennsylvania and Virginia are exempt Virginia: Residents of D.C., Kentucky, Maryland, Pennsylvania and West Virginia are exempt Pennsylvania: Residents of Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia are exempt Ohio: Residents of Indiana, Kentucky, Michigan, Pennsylvania and West Virginia are exempt North Dakota: Residents of Minnesota and Montana are exempt New Jersey: Residents of Pennsylvania are exempt Montana: Residents of North Dakota are exempt Minnesota: Residents of Michigan and North Dakota are exempt Michigan: Residents of Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin are exempt Maryland: Residents of D.C., Pennsylvania, Virginia and West Virginia are exempt Kentucky: Residents of Illinois, Indiana, Michigan, Ohio, West Virginia, Wisconsin and Virginia are exempt Indiana: Residents of Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin are exempt Illinois: Residents of Iowa, Kentucky, Michigan and Wisconsin are exempt (If your work state is not on this list, check out the next section.)Īrizona: Residents of California, Indiana, Oregon and Virginia are exempt from paying income tax on wages earned in Arizonaĭistrict of Columbia: If you don't live in D.C., you don't have to pay income tax for the district The following have reciprocal agreements, and links to forms or additional info regarding these individual state exemptions can be found in the links. If your work state has one of these agreements, you’ll need to fill out an exemption form. Some states have reciprocal agreements, meaning you can work in a neighboring state without having to pay taxes there. The laws of the two states where you live and work will determine how you file taxes if you don't live in the state where you work. Where do you pay taxes when you live in one state and work in another? Read on for help on how to handle your taxes if you live in one state but work in another. But it can be a pain figuring out how to deal with the tax implications of having a "home state" and a "work state."īut there's no need to panic - most likely, you’re not going to be paying twice as much in taxes, although it can get complicated. It's not unusual to live and work in a different state, particularly if you live in a major metro area. Educational Resources About Family & Work.
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