Reciprocal Contract Agreement With California
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FAQ
State reciprocity agreements are pacts between two or more states that allow residents to only pay income tax on where they live versus where they work.
California does not have specific reciprocal tax treaties with other states, but residents of Arizona, Guam, Indiana, Oregon, and Virginia are allowed to be credited with their California income tax for taxes paid to their home state.
For example, let's say you live in New Jersey and work in Pennsylvania?two states with a reciprocal agreement. You can ask your employer to stop withholding Pennsylvania taxes. If your employer stops withholding Pennsylvania taxes, you would only have to file a New Jersey return. The reverse would also be true.
Some states, such as California, do not have any reciprocity agreements with other states. In those cases, individuals who live in one state but work in another will need to file and pay taxes in both states. Employers also have a responsibility to withhold taxes for the state in which the employee works.
Examples of states with tax reciprocity agreements include: Illinois and Indiana. Kentucky and Ohio. Maryland and Pennsylvania. Michigan and Indiana. Minnesota and North Dakota. Missouri and Kansas. Montana and North Dakota. New Jersey and Pennsylvania.