If an employee lives in a state without a mutual agreement with Indiana, he or she can receive a tax credit for taxes withheld for Indiana. Do you have an employee who lives in one state but works in another? If it is the presence, you usually keep government and local taxes for the state of work. The worker still owes taxes to his country of origin, which could cause him trouble. Or can he? Mutual agreements. Although the states that are not mentioned do not have fiscal reciprocity, many have an agreement in the form of credits. Again, a credit contract means that the worker`s home state grants them a tax credit for the payment of state income tax to their working-age state. Use our chart to find out which states have mutual agreements. And, find out which form the employee needs to fill out to keep you out of their country of origin: what are the reciprocal states? 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. 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.
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. The states of Wisconsin with reciprocal tax agreements are: Michigan has mutual agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. Submit the MI-W4 leave form to your employer if you work in Michigan and live in one of these states. Tax reciprocity is a state-to-state agreement that eases the tax burden on workers who travel across national borders to work.