Reciprocity between states does not apply everywhere. A worker must live in a state and work in a state that has a tax reciprocity agreement. Increase your profits, strengthen existing customer relationships and gain new customers with our trusted payroll solutions that welcome internal, outsourced or hybrid models. Use our chart to find out which states have mutual agreements. And, find out what form employees have to fill to keep you out of their home country: you don`t pay taxes on the same money twice, even if you don`t live or work in any of the states with reciprocal agreements. You just have to spend a little more time preparing several state returns and you have to wait for a refund for taxes that are unnecessarily withheld from your paychecks. 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 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. New Jersey has only a reciprocity with Pennsylvania. This is the case for employees who live in Pennsylvania and work in New Jersey. 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.

States of mutual agreements have something called fiscal reciprocity between them, which relieves these problems. 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 a company S. Suppose an employee lives in Pennsylvania but works in Virginia.