Which states does Wisconsin have a reciprocal agreement with?

Wisconsin has reciprocal agreements with Illinois, Indiana, Kentucky and Michigan. If you are a Wisconsin 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.  

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 Wisconsin 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 Wisconsin Resident return. You will also need to create the nonresident reciprocal state return to claim the refund.

If the other state is Illinois, go to the

1. State Section
2. Nonresident Illinois Return
3. Part Year and Nonresident Questions
   • Indicate you are a resident of Wisconsin. Click Continue through the State return.
4. Continue down to Additions and Subtractions to Income on Schedule M
5. Select yes to create the Schedule M
6. Schedule M. Other Subtractions
7. Enter the total Illinois portion of subtractions (bottom of screen)-
   • Enter the amount of wages earned in and taxed by Illinois while a Wisconsin resident

The state may send you a notice asking to prove why the income is not taxable to Illinois. To claim exempt from Illinois withholdings on future returns, complete form IL-W-5-NR and file it with your employer.

If the other state is Indiana, go to the

1. State Section
2. Nonresident Indiana Return
3. County Information
   • Complete the questions indicting you lived in Wisconsin and the county where you worked.
   • Then, 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).'  The program 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 Kentucky, go to the

1. State Section
2. Nonresident Kentucky Return
3. Basic Information.
   • Go to the Residency Information and complete the questions indicting you are a resident of a reciprocal state.
   • Complete one form 740-NP-R for the taxpayer and one for the spouse (if applicable).

To claim exempt from Kentucky withholdings in the future, file form 42A809 with your employer.

If the other state is Michigan, go to the 

1. State Section
2. Nonresident Michigan Return
3. Residents of Reciprocal States.
4. Enter the wages for Michigan as a negative.

To claim exempt from future withholdings, file form MI-W4 with your employer. 

NOTE: The nonresident returns will refund the taxes withheld. The resident return will calculate an amount owed (usually).