When a Michigan resident mistakenly withheld a reciprocal state`s income tax on wages earned there, it is the michigan resident`s responsibility to file a non-resident tax return with that state in order to obtain a refund of the withheld tax in error. 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. Use our table to find out which states have mutual agreements. And find out what form staff need to do to keep you out of their country of origin: it can greatly simplify the tax time of people who live in one state but work in another state, which is relatively common for people living near national borders. Many states have mutual agreements with others. Residents of countries that work in Michigan do not have to pay taxes on their wages or wages paid in Michigan. The following states have a mutual agreement with Michigan: Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. 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. States that have reciprocal agreements with Michigan include: employees who work in D.C. but do not live there do not need to have an income tax D.C. Why? D.C. has a tax reciprocity agreement with each 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.

In the absence of a reciprocity agreement, employers withhold the state income tax for the state in which the worker works. 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.