Pennsylvania has agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia. Generally, one state will not tax a resident of the other state on income subject to withholdings.
If you are a PA resident working in one of these states, and your employer withheld the other state’s income tax, you must file for a refund from that state. You cannot claim a refund for taxes withheld to a reciprocal state on the resident return.
**NOTE: If you are a PA resident working in a reciprocal-agreement state and your employer is not withholding PA tax, you must make PA estimated tax payments.
The credit for taxes paid to another state is automatically calculated in your account when you add a Nonresident return to your already created Resident Pennsylvania return.
What do I need to do?
If you qualify for the reciprocal agreement, you will need to remove the automatic calculation. To do so, log into your account and create the Pennsylvania Resident return.
If the other state is Indiana, go to:
- State Section
- Indiana Nonresident Return
- County Information
Complete the questions indicting you lived in Pennsylvania and the county where you worked. Next, go to Indiana Reciprocal return (it-40RNR) and answer the questions.
Please note that you may still be subject to county tax on the income you earned while a nonresident. According to Indiana Informational Bulletin #33, 'Indiana reciprocity agreements do not affect withholding requirements concerning the Indiana County Adjusted Gross Income Tax (CAGIT), County Economic Development Income Tax (CEDIT), or County Option Income Tax (COIT).' TaxSlayer does not automatically calculate this amount.
To claim exempt from Indiana withholdings on future returns, complete form WH-47 and file it with your employer.
If the other state is Maryland, go to:
- State Section
- Nonresident Maryland Return
- Basic Information
Complete the questions as they pertain to your residency. To claim exempt from future Maryland withholdings, complete form MW507 and file it with your employer.
If the other state is New Jersey, go to:
- State Section
- Nonresident New Jersey return
- Income Subject to Tax.
Enter the total income that qualifies for the reciprocal agreement on the first line, "Resident military income treated as Nonresident income for NJ purposes OR Pennsylvania residents as a result of the reciprocal agreement". To claim exempt from future New Jersey withholdings, complete form NJ-165 and file it with your employer.
If the other state is Ohio, go to:
- State Section
- Nonresident Ohio Return
- Subtractions From Income
- Income from Residents of Reciprocal States OR Nonresident Military Income
- Enter the total income earned while a nonresident of Ohio as a positive number.
Click Save followed by Back. Scroll down to Form IT-DA (affidavit of Non-Ohio Residency). Select Yes to complete the form. Complete the next two sections indicating your place of Domicile and place of Abode (both should be your resident state). To claim exempt from future withholdings, complete form IT-4NR and file it with your employer.
If the other state is Virginia, a Virginia return is not required if your only source of VA income was from wages and salaries. Form 763-S is required to be completed to claim a refund for the taxes withheld. The form needs to be mailed to Virginia with a copy of the Pennsylvania Resident Return and copies of the W-2 (s) used to create the return. The mailing address is located on the form. Complete form VA-4 to claim exempt from future withholdings. File the form with your employer.
If the other state is West Virginia, go to:
- State Section
- Nonresident West Virginia Return
- Basic Information.
Select you resident state and complete the section for Special Nonresident Income for Reciprocal States. To claim exempt from future withholdings, complete form WV/IT-104 and file it with your employer.
What else do I need to know?
The nonresident returns will refund some or all of the taxes withheld. You may still be liable for county or city taxes in the state where the income was earned. Check with the state for more information. Generally, the resident return will calculate an amount owed.