Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin. Submit the MI-W4 exception form to your employer if you work in Michigan and live in one of these states. New Jersey has had reciprocity with Pennsylvania in the past, but Gov. Chris Christie announced the deal with effect from Jan. 1, 2017. You should have filed a non-resident tax return in New Jersey starting in 2017 and paid taxes there if you work in the state. Fortunately, Christie reversed course when a cry rose from locals and politicians. A worker must live in a state and work in a state where there is a tax reciprocity agreement. Zenefits automatically detects whether an employee can use a mutual agreement based on their home address and place of work. Zenefits, however, simply notes the mutual configuration for HR and salary purposes. Employees must continue to complete a certificate of non-residence and submit it to their employer if necessary. If your employee works in Illinois but lives in one of the mutual states, they can submit Form IL-W-5-NR, Employee`s Statement of Nonresidence in Illinois, for the Illinois State Income Tax Exemption. Suppose an employee lives in Pennsylvania but works in Virginia.
Pennsylvania and Virginia have mutual agreement. The employee only has to pay public and local taxes for Pennsylvania, not for Virginia. They respect taxes for the employee`s home state. In some cases, such as MD or VA, the state exemption form contains a field for reporting the exemption based on a non-residential residence.