Reciprocal agreements between states allow workers who work in one state but live in another to pay only income taxes to their state of residence. If reciprocity exists between the two states, staff must complete a certificate of non-residence and give it to you so that the tax on the place of residence can be withheld in place of the workplace tax. Simply reporting does not necessarily mean that your income is taxed. You can do this to claim a refund of taxes that have been improperly withheld. For example, if you live in Illinois and work in another state with which you have a mutual agreement, you must file a tax return from your employer`s state to recover that money if your employer has mistakenly withheld taxes from your paycheck. Employees working in Kentucky and living in one of the reciprocal states can submit Form 42A809 to ask employers not to withhold income tax in Kentucky. 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. The Maryland Supreme Court decision v. Wynne applies to all states, not just Maryland, although Maryland initially filed the complaint. In a 5-4 decision, the Court ruled that no jurisdiction could impose the same income, so you will not have to pay income taxes to your state of work and your country of origin, even if they do not have reciprocal agreements. Workers can apply for an exemption from Maryland income tax if they work in Maryland and in one of the following cases: for example, New York cannot tax you if you live in Connecticut, but work in New York, and you pay taxes on income earned according to Connecticut. Connecticut must offer you a tax credit for all taxes you have paid to the other state or you can file a New York State tax return to require a refund of the taxes withheld from it.
Small employers may not be aware of this rule. Contact the Ministry of Finance or Comptroller for the state in which you work if your employer is unsure or if you insist on withholding taxes on your salary. Workers are taxed in their country of origin if they do not declare whether they have a certificate of non-residence.