Wisconsin’s Reciprocal Tax Agreements

At tax time, those who work in the state of but don’t actually live there may worry that filing their may be more difficult than usual. However, across the United States, working in a border state near your resident state is actually quite common. There are agreements in place between certain states that exempt a taxpayer form having to pay income tax on money they earned outside of their state.

These agreements, known as reciprocal , help to simplify tax time for a commuter. For those who work in the state of Wisconsin, but live in Illinois, , or Michigan, you’re in luck! exist between these states and Wisconsin, which means that you won’t have to pay Wisconsin income tax on any money you earned while working in the Badger State. All you have to do is file Form 20 with your , which qualifies you for the .

Reciprocal agreements only apply to employment income, however, so if you have other sources of income from Wisconsin, you may still have to file a return in both your home state and Wisconsin. Unearned sources of income can include lottery winnings, capital , and interest income.

If you have non-employment income, or if your employer accidentally withheld taxes in Wisconsin, then you’ll need to file a tax return in both states.