A reciprocal agreement allows residents of one state to work in a neighboring state while paying taxes to only the resident state. This allows taxpayers to file only one tax return (resident state) if they claim an exemption from the other state's withholding taxes. If you do not claim exempt in the nonresident state, you may need to file a return to claim a refund of taxes withheld.
West Virginia has reciprocal agreements with Kentucky, Maryland, Ohio, Pennsylvania and Virginia. If you are a West Virginia 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 West Virginia return. 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 West Virginia Resident return. You will also need to create the nonresident reciprocal state return to claim the refund.
What if the other state is Kentucky?
If the other state is Kentucky, go to the
- State Section
- Nonresident Kentucky Return
- 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.
What if the other state is Maryland?
If the other state is Maryland, go to the
- State Section
- Nonresident Maryland Return
- Basic Information. Complete the questions as they pertain to your resident state. To claim exempt from future Maryland withholdings, complete Form MW507 and file it with your employer.
What if the other state is Ohio?
If the other state is Ohio, go to the
- 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.
What if the other state is Pennsylvania?
If the other state is Pennsylvania, go to:
- State Section
- Nonresident PA return
- Adjustments to Income
- Reciprocal State Wage Adjustment - Enter the wages as a negative number.
Pennsylvania requires proof that taxes were paid to the other state. You must print and mail the PA return along with a copy of the Indiana state return, the W-2(s) with the PA income and a statement explaining you are a resident of a reciprocal state. To claim exempt from future PA withholdings, file Form REV-419 with your employer.
What if the other state is Virginia?
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 West Virginia 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.
NOTE: 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.