Are there any reciprocal tax agreements with Illinois?

Illinois has a reciprocal tax agreement with four bordering states: Iowa, Kentucky, Michigan, and Wisconsin. 1  Many states across the U.S. have reciprocal agreements, sometimes called tax reciprocity, with bordering states. Normally, anyone earning income in a particular state must pay taxes to that state.

How many bordering states do Illinois residents pay taxes to?

Under reciprocity, residents only pay income taxes to their home state, regardless of where they work. Illinois has a reciprocal tax agreement with four bordering states: Iowa, Kentucky, Michigan, and Wisconsin. 1  Many states across the U.S. have reciprocal agreements, sometimes called tax reciprocity, with bordering states.

How does the state of Illinois collect taxes?

Illinois must make up these lost revenues or curtail state services provided to consumers and taxpayers. Illinois is aggressively focusing upon collecting this tax. Illinois gathers sales information from other states and bills Illinois residents for unpaid tax, penalty, and interest.

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 do you need to know about the Indiana reciprocal agreement?

This agreement applies only to wages, salaries, tips and commissions. The income needs to be included on the Indiana return and tax paid to Indiana. If your employer withheld state taxes for the nonresident state, you need to file a claim for refund with that state.

How to file a reciprocal tax return in Indiana?

Go to the Residency Information and complete the questions indicting you are a resident of a reciprocal state (Indiana). Complete one form 740-NP-R for the taxpayer and one for the spouse (if applicable). To claim exempt from Kentucky withholdings in the future, file form 42A809 with your employer.

What are the bordering states that Illinois has tax agreement with?

Get the Facts on Tax Reciprocity. Illinois has a reciprocal tax agreement with four bordering states: Iowa, Kentucky, Michigan, and Wisconsin. It concerns income taxes for those who work in one state but live in another. Residents only pay income taxes to their home state, regardless of where they work.