New Jersey and Pennsylvania have a mutual agreement. Compensation for New Jersey residents who work in Pennsylvania is not subject to income tax in Pennsylvania. Compensation means wages, tips, fees, commissions, bonuses and other allowances paid for benefits as an employee. You do not have to file a tax return in D.C if you work there and if you live in another state. Send the D-4A exemption form, the “Certificate of Non-Residence in the District of Columbia,” to your employer. Unfortunately, it only works backwards with two states: Maryland and Virginia. You do not need to file a non-resident return in any of these states if you live in D.C. but you work in one of those states. But for three months, most New York workers didn`t have an office to go back to, and even now, many businesses are slow to bring staff to the site, so the “comfort of the employer rule” shouldn`t be used. Peskin said.
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. Reciprocal tax treaties allow residents of one state to work in other states without being deprived of taxes on their wages for that state. They would not need to file non-resident state tax returns there, as long as they follow all the rules. You can simply make a necessary document available to your employer if you work in a state in your home country. 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 who work in D.C. but do not live there do not need to have an income tax D.C. Why? D.C. has a tax reciprocity agreement with each state. 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.
An immeasurable number of New Jerseyers who usually commute to work in New York City have been stranded for months at Garden State because their offices closed during the coronavirus pandemic. 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.