If you're a West Virginia resident and paid income tax to another state on income that is also taxed by West Virginia, you may qualify for the West Virginia Credit for Taxes Paid to Another State.
This credit helps prevent the same income from being taxed twice.
In many cases, the credit can be calculated automatically when you have income that is reported to both West Virginia and another state. However, you may need to provide additional information if the income was reported on a part-year resident return or if the credit cannot be determined automatically.
Residents of Reciprocal States
- Kentucky
- Maryland
- Ohio
- Pennsylvania
- Virginia
What does this mean?
When might the credit still apply?
- Business income
- Partnership income
- Rental income
- Pass-through entity income
- Other income that is not covered by a reciprocity agreement
Who Qualifies for the Credit?
You may qualify if:
- You were a West Virginia resident.
- You earned income that was taxed by both West Virginia and another state.
- You paid income tax to the other state on that income.
The credit is generally limited to the portion of tax attributable to income taxed by both states.
What Information Will I Need?
To calculate the credit, you may need information from the other state's income tax return.
Typical information includes:
- The other state where the income was taxed
- The amount of income taxed by both states
- The portion of that income that came from wages
- The amount of income tax paid to the other state
Select the Other State
Choose the state where you paid income tax on income that is also included in your West Virginia return.
If you paid tax to more than one state, separate calculations may be required for each state.
Net Income Taxed by Both States
Enter the amount of net income reported to the other state that is also included in your West Virginia income.
What income should be included?
Include only income that is:
- Taxable to the other state, and
- Also taxable to West Virginia
Do not include income that was reported only to the other state and is not included in your West Virginia taxable income.
Portion of Net Income From Wages
If part of the income reported above came from wages, enter the wage amount separately.
This information helps determine the proper calculation of the credit because different types of income may be treated differently under state tax laws.
Examples of wages include:
- Salary
- Hourly pay
- Bonuses
- Commissions
- Taxable employee compensation
Income Tax Paid to the Other State
Enter the amount of income tax paid to the other state on the income taxed by both states.
What amount should I enter?
In most cases, this is the total tax shown on the other state's return if all of the income reported to that state is also taxed by West Virginia.
If only a portion of the income reported to the other state is included in West Virginia income, you may need to prorate the amount of tax paid and enter only the portion attributable to the income taxed by both states.
Do not enter withholding
Do not enter:
- State income tax withholding from Form W-2
- State withholding reported on Forms 1099
- Estimated tax payments
- Penalties or interest
Only enter the actual income tax liability paid to the other state.
How Do I Enter the Credit?
- Navigate to the State section.
- Select the 3 dots for Edit
- Select Credits.
- Choose Credit for Taxes Paid to Another State.
- Select the other state.
- Enter the income taxed by both states.
- Enter any wage income included in that amount.
- Enter the income tax paid to the other state.
- Continue through the remainder of the West Virginia return.
What Records Should I Keep?
Keep copies of:
- The other state's income tax return
- W-2 forms
- Forms 1099
- Supporting worksheets
- Proof of tax paid to the other state
These records can help support the credit if the West Virginia State Tax Department requests additional information after your return is filed.
Example
Suppose you're a West Virginia resident who works in Maryland. Maryland taxes the wages earned there, and West Virginia also taxes those wages because you're a West Virginia resident.
Because the same income is taxed by both states, you may qualify for the West Virginia Credit for Taxes Paid to Another State. The credit helps offset the double taxation by allowing you to claim a credit for eligible taxes paid to Maryland.