Unfortunately, there is no doubt that some employers and subcontractors have wasted time and resources preparing for policy change. There is no doubt that while the change generates additional revenue for New Jersey, it would have had a negative impact on many businesses and commuters between states. But the agreement will be maintained for the foreseeable future. The new efforts also come, as lawmakers urge Murphy`s administrators to take a closer look at how New Jerseyers who work in New York and pay income taxes in Albany are influenced by the lack of a similar income tax agreement between the two states. 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. Compensation paid to Pennsylvania residents employed in New Jersey is not subject to New Jersey income tax, pursuant to the terms of the interstate mutual income tax agreement. Similarly, New Jersey residents are not subject to income tax in Pennsylvania. Compensation involves wages, wages, tips, fees, commissions, bonuses and other payments made for benefits as employees. The map below shows 17 states (including the District of Columbia) where non-resident workers living in different states do not have to pay taxes. Move the cursor over each orange state to see their reciprocity agreements with other states and find out what form non-resident workers must submit to their employers to be exempt from deduction in that state.
This can significantly simplify the tax time of people who live in one state but work in another state, which is relatively common among people living near national borders. Many states have mutual agreements with others. But under a law passed last week unanimously by members of the Senate`s Budget and Appropriation Committee, state lawmakers would have the power to prevent at least one governor from taking unilateral action against mutual agreement. Pennsylvania and New Jersey are ending the reciprocity agreements that will hold two states in 2017, Michigan has reciprocal agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin.