Some requirements apply to Michigan employers and Michigan residents who earn their income in other states. For Michigan employers, the general rule is that they must withhold income tax on all benefits paid to non-resident workers for work done in Michigan. However, where there is an agreement, the employer must either establish or develop a form containing specific information about the worker whose income must be exempt, including name, legal address and social security number, and again use that document as its power not to withhold income tax in Michigan. You do not pay taxes twice on the same money, even if you do not live or work in any of the states with reciprocal agreements. You just have to spend a little more time preparing several state returns and you have to wait for a refund for taxes that are unnecessarily withheld from your paychecks. New Jersey has had reciprocity with Pennsylvania in the past, but Gov. Chris Christie terminated the contract effective January 1, 2017. You should have filed a non-resident return to New Jersey from 2017 and paid taxes there if you work in the state. Fortunately, Christie turned the price around when a tinge and a cry from locals and politicians went up. Michigan has mutual agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin.
Send the MI-W4 exemption form to your employer if you work in Michigan and live in one of these states. Reciprocity agreements mean that two states allow their residents to pay taxes only where they live, not where they work. This is particularly important, for example, for people with higher incomes who live in Pennsylvania and work in New Jersey. Pennsylvania`s top tax rate is 3.07%, while New Jersey`s maximum tax rate is 8.97%. Finally, in September, gov. Christie announced that it had decided to terminate the contract, effective January 1, 2017. At the time, he was responsible for $80 billion in unfunded retirement commitments, although the Garden State experienced other budgetary difficulties that made it difficult to abandon revenues. The announcement immediately drew scorn from various stakeholders, including Pennsylvania Gov. Tom Wolf, the Gov. Christie flogging for the cost of Pennsylvania fused an additional $5 million a year. Ohio and Virginia both have conditional agreements.
When an employee lives in Virginia, he has to commute daily for his work in Kentucky to qualify. Employees living in Ohio cannot be shareholders with 20% or more equity in an S company. Mutual tax treaties have little public coverage, but they are very important for people whose income taxes affect them. Last year, for example, New Jersey Gov. Chris Christie left the citizens of New Jersey and Pennsylvania angry for months by publicly raging over the idea of withdrawing from the AP/NJ income agreement, a four-decade-old agreement between the two states. Workers do not owe double the taxes in non-reciprocal states. But employees might have to do a little more work, for example. B file several government tax returns.