Pennsylvania requires proof that taxes have been paid to the other state. You must print and send the AP return with a copy of the New Jersey State Restitution, the W-2(s) with the AP income, and a statement clarifying that you are established in a mutual state. To be exempt from future AP deductions, submit Form REV-419 to your employer. Pennsylvania and New Jersey end reciprocal agreements, withholding for two states as of 2017 You don`t pay two taxes on the same money, even if you don`t live or work in one of the states with mutual agreements. You just need to spend a little more time preparing several government returns and you have to wait for a refund for taxes that will be unnecessarily withheld from your paychecks. 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. Benefits paid to New Jersey residents employed in Pennsylvania are not subject to Pennsylvania income tax. Remuneration means salaries, wages, tips, fees, commissions, bonuses and other remuneration received for services as employees. On Friday, September 2, 2016, Governor Chris Christie reportedly announced Pennsylvania`s intention to withdraw from the income tax agreement. Under that agreement, which has been in force since 1977, residents of one State who earned wages in the other State paid only taxes to their State of residence on such wages. In accordance with the agreement, each State may terminate the agreement at the beginning of a calendar year by giving the other State a period of 120 days. In its current form, the mutual agreement will be denounced on 1 January 2017.
The Pennsylvania Department of Revenue announced that New Jersey is termening its reciprocal agreement with Pennsylvania effective January 1, 2017, requiring individuals to file two income tax returns, and withholding employers for both states beginning in 2017. Residents of Pennsylvania and New Jersey receive a credit for income tax paid on wages earned in the other state. On November 22, 2016, Governor Christie reversed course and said he would not unplug the Pennsylvania/New Jersey Reciprocal Income Tax Agreement. According to a statement, the health care reforms would result in a $200 million saving next year, allowing Governor Christie and his government to “save” the deal. The map below shows 17 orange states (including the District of Columbia) where non-resident workers living in reciprocal states are not required to pay taxes. Move the slider over each orange state to see their reciprocity agreements with other states and determine the form that non-resident workers must present to their employers to be exempt from withholding in that state. . . .