Can you work in one state and live in another?
Through these agreements, you can live in one state and work in a neighboring state without paying taxes there. Instead of paying taxes where you work, you will pay taxes in your resident state, which is the state where you live. Pennsylvania and New Jersey, for example, have such an agreement.
How can you tell if an employee is a resident of a state?
It might be named with a number, or it could have various titles based on which state it originates from. You should see it listed somewhere on the page. Some payroll taxes, such as state and local withholding taxes, are based on your employee’s residence location as well as the work location.
Can a company withhold taxes from an employee’s state of residence?
Alternatively, some employers and employees agree to withhold taxes for the employee’s residence state, even though it is not required. That way, the employee does not have to pay estimated taxes or a large tax liability at the end of the year. Still stuck? Contact us
Do you have to pay Illinois income tax if you work in another state?
Living in Illinois and Working in Another State. An Illinois resident who works in Iowa, Kentucky, Michigan, or Wisconsin is only required to pay income tax to Illinois. These bordering states do not tax the wages of Illinois residents working in their jurisdictions.
What happens if you work in Pennsylvania and live in another state?
If you live in Pennsylvania and work in one of the two nonreciprocal states, the Pennsylvania credit is limited to the lesser of the tax you paid to the nonresident state or the Pennsylvania tax due on the compensation that was taxed in the nonresident state.
Through these agreements, you can live in one state and work in a neighboring state without paying taxes there. Instead of paying taxes where you work, you will pay taxes in your resident state, which is the state where you live. Pennsylvania and New Jersey, for example, have such an agreement.
It might be named with a number, or it could have various titles based on which state it originates from. You should see it listed somewhere on the page. Some payroll taxes, such as state and local withholding taxes, are based on your employee’s residence location as well as the work location.
Do you have to file Illinois taxes if you work in another state?
The reciprocal agreements do not apply to any other income you might have received, such as Illinois lottery winnings. Should I file an income tax return if I live in another state but worked in Illinois?