*Ohio and Virginia have conditional agreements. If an employee lives in Virginia, they have to commute daily to their work in Kentucky to qualify. Employees who live in Ohio cannot be shareholders with 20% or more equity in an S company. If an employee lives in a state without a mutual agreement with Indiana, they can get a tax credit for taxes withheld for Indiana. Reciprocity agreements mean that two states allow their residents to pay taxes only where they live, rather than where they work. This is especially important, for example, for the highest income earners who live in Pennsylvania and work in New Jersey. Pennsylvania`s peak rate is 3.07%, while New Jersey`s peak rate is 8.97%. You don`t pay two taxes on the same money, even if you don`t live or work in one of the states with mutual agreements. You just need to spend a little more time preparing several government returns and you have to wait for a refund for taxes that will be unnecessarily withheld from your paychecks. If your employee works in Illinois but lives in one of the mutual states, they can submit Form IL-W-5-NR, Employee`s Statement of Nonresidence in Illinois, for the Illinois State Income Tax Exemption. Workers working in Kentucky and living in one of the member states can submit Form 42A809 to ask employers not to withhold income tax in Kentucky. This can greatly simplify the taxing time of people living in one state but working in another, which is relatively common among those who live near national borders.

Many States have reciprocal agreements with others. The states of Wisconsin with mutual tax agreements are: Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. Submit the MI-W4 exemption form to your employer if you work in Michigan and live in one of these states. Delaware law requires that any employer who is required to withhold Delaware income tax from its employees is also required to report the hiring of new employees of the Department of Children`s Aid Services. The report must be made within twenty days of the recruitment(s) of the new employee(s) and must include the employee`s name, address and social security number as well as the date and status of the employee`s recruitment. . . .