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 West Virginia return. If you qualify for the reciprocal agreement, you will need to remove the automatic calculation. Complete instructions for filing the West Virginia resident and the other state nonresident returns for the reciprocal states can be found within our Knowledgebase for each state.
West Virginia Residents - Subject to certain limitations, a West Virginia resident may be eligible to claim a credit for income taxes paid to another state. The purpose of this credit is to prevent the same income from being taxed in both states.
West Virginia Part-Year Residents - Part-year residents may claim credit for taxes paid to another state during their period of West Virginia residency.
Non-Residents are not entitled to a credit under any circumstances.
Are there any limitations to the amount I can claim for this credit?
According to the West Virginia instructions, the limitations for the credit are as follows:
- "The credit cannot exceed the amount of tax payable to the other state on income also subject to West Virginia Tax. This is the amount of income tax computed on the nonresident return filed with the other state.
- The credit cannot exceed the ratio of the West Virginia tax determined by dividing the amount of the taxpayer's West Virginia income subject to tax in another state by the total amount of the taxpayer's West Virginia income.
- The credit cannot reduce the West Virginia amount of tax due less than what would have been due if the income subject to tax by the other state was removed from the taxpayer's West Virginia income. "
A separate form must be completed for each state for which you are claiming the credit.
Does this credit have any exceptions?
Reciprocal States - Due to existing reciprocal agreements, West Virginia residents cannot claim the credit if the credit claimed is for state taxes paid on wages, salary, or unemployment earned in Kentucky, Maryland, Ohio, Pennsylvania, or Virginia. However, taxes paid on income derived from sources other than wages, salary, or unemployment income is permitted as a credit.