If you`re a resident of Indiana or Ohio, you may be wondering what the reciprocity agreement between these two states means for you. Essentially, this agreement allows residents of either state who work in the other state to only pay income taxes in their state of residence. This can be a big relief for those who were previously facing the prospect of double taxation.
The specific details of the agreement can get a bit technical, but here are some key things to keep in mind:
– To take advantage of the reciprocity agreement, you`ll need to fill out a form with your employer. This form will confirm which state you`re a resident of and what your withholding status should be.
– The agreement only applies to earned income – things like wages, salaries, and tips. If you have other types of income (such as rental income or investment income), you may still need to pay taxes in the state where that income was earned.
– Non-residents who work in either state but live elsewhere are not covered by the agreement. They may still need to pay taxes in both states.
Overall, the Indiana-Ohio reciprocity agreement is a good example of how states can work together to simplify tax matters for their residents. If you`re one of the many people who commutes across state lines for work, be sure to take advantage of this agreement to save yourself some money and hassle come tax time.