The credit for taxes paid to another state is automatically calculated if you add a nonresident return while already having a resident West Virginia return.
If you qualify for the reciprocal agreement:
- Remove the automatic calculation (it does not apply under reciprocity).
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." (IT140 Booklet)
West Virginia Part-Year Residents - Part-year residents may claim credit for taxes paid to another state during their period of West Virginia residency.
Please note: Nonresidents 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 cannot exceed:
- The amount of tax paid to the other state on income also taxed by West Virginia (This is the income tax shown on the nonresident return filed with the other state.)
- The ratio of WV tax based on WV income taxed by other state ÷ Total WV income.
- The credit cannot reduce WV tax below what you would owe if the income taxed by the other state were removed from WV income.
A separate form must be completed for each state for which you are claiming the credit.
Does this credit have any exceptions?
Reciprocal Agreement Rule
West Virginia residents cannot claim a credit for state taxes paid on:
- Wages, salary, or unemployment income earned in:
- Kentucky
- Maryland
- Ohio
- Pennsylvania
- Virginia
You CAN claim a credit for taxes paid on income from other sources (not wages, salary, or unemployment) in those states.