Many major cities, or even those close to the border of a neighboring state, have a significant portion of taxpayers who travel from another state to work there. For example, many New Jersey residents work in New York City, or Marylanders may drive to Virginia. It may not seem like a hassle to cross the border, but what does working in a different state mean for your taxes?<\/p>\n
It doesn\u2019t mean your taxes will be doubled. <\/strong>You won\u2019t end up owing more than your fair share of taxes. Some states have reciprocal agreements, which mean you don\u2019t have to pay taxes in specific neighboring states if you work there. For states without these agreements, you will file a resident and non-resident tax return to ensure you are being taxed appropriately.<\/p>\n Reciprocal Agreements<\/u><\/strong><\/p>\n Certain states have agreements in place with their neighbors, affording taxpayers the ability to work in nearby state without having to pay taxes there. The following lists reciprocal agreements between certain states:<\/p>\n District of Columbia<\/strong>: You don\u2019t have to pay income tax for the district unless you are a resident<\/p>\n Illinois<\/strong>: Citizens of Iowa, Kentucky, Michigan and Wisconsin are exempt<\/p>\n Indiana<\/strong>: Citizens of Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin are exempt<\/p>\n Iowa:<\/strong> Citizens of Illinois are exempt<\/p>\n Kentucky<\/strong>: Citizens of Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin are exempt<\/p>\n Maryland<\/strong>: Citizens of D.C., Pennsylvania, Virginia and West Virginia are exempt<\/p>\n Michigan<\/strong>: Citizens of Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin are exempt<\/p>\n Minnesota<\/strong>: Citizens of Michigan and North Dakota are exempt<\/p>\n Montana<\/strong>: Citizens of North Dakota are exempt<\/p>\n New Jersey<\/strong>: Citizens of Pennsylvania are exempt<\/p>\n North Dakota<\/strong>: Citizens of Minnesota and Montana are exempt<\/p>\n Ohio<\/strong>: Citizens of Indiana, Kentucky, Michigan, Pennsylvania and West Virginia are exempt<\/p>\n Pennsylvania<\/strong>: Citizens of Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia are exempt<\/p>\n Virginia<\/strong>: Citizens of D.C., Kentucky, Maryland, Pennsylvania and West Virginia are exempt<\/p>\n West Virginia<\/strong>: Citizens of Kentucky, Maryland, Ohio, Pennsylvania and Virginia are exempt<\/p>\n Wisconsin<\/strong>: Citizens of Illinois, Indiana, Kentucky and Michigan are exempt<\/p>\n If you fall under any of these reciprocal agreements, you\u2019ll have to fill out an exemption form, which will lessen the burden at tax time. You will only be required to pay taxes in the state in which you reside, and you won\u2019t have to pay income tax in the state you work. Each state has a different form, so be sure to obtain the correct exemption form from your HR department or the IRS.<\/p>\n Don\u2019t forget: The reciprocal agreement is only relevant to employment income. If you receive additional forms of income from another state, even if it is a neighboring state with a reciprocal agreement, you will still need to file a non-resident tax return. For additional information you should contact your financial advisor.<\/p>\n States Without Agreements<\/u><\/strong><\/p>\n If you live in one state and work in another state that does not have a reciprocal agreement, you\u2019ll need to file two tax returns: one resident and one non-resident.<\/p>\n On your regular return, the resident tax return for your home state, you will report all sources of income you received during the tax year, including those earned in the different state.<\/p>\n On your non-resident return, you only have to list income you made in the state. Generally, you can claim a tax credit within your home state to cover the taxes you paid to your work state.<\/p>\n Other Income Sources<\/u><\/strong><\/p>\n If you have income from any state outside your home state, you\u2019ll need to file a non-resident tax return. This can include any of the following:<\/p>\n Many major cities, or even those close to the border of a neighboring state, have a significant portion of taxpayers who travel from another state to work there. For example, many New Jersey residents work in New York City, or Marylanders may drive to Virginia. It may not seem like a hassle to cross the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[126],"tags":[330,331,325,236,239,333,27,335,336],"class_list":["post-611","post","type-post","status-publish","format-standard","hentry","category-states","tag-kentucky","tag-michigan","tag-minnesota","tag-montana","tag-north-dakota","tag-ohio","tag-taxes","tag-west-virginia","tag-wisconsin"],"yoast_head":"\n\n