45 IAC 3.1-1-76 - Reciprocity
Authority: IC 6-8.1-3-3
Affected: IC 6-3-3-3; IC 6-3-5-1
Sec. 76.
Reciprocal Agreements States. Residents who have income consisting of salaries, wages, and commissions from states with which Indiana has a reciprocal tax agreement must report all such income as if it were from Indiana. These states include:
Illinois Michigan Pennsylvania
Kentucky Ohio Wisconsin
Credit cannot be taken for any taxes withheld by or paid to any of these states in connection with salaries, wages, or commissions received from such states. If tax has been withheld by any of these states, a claim for refund should be filed with the state which withheld the taxes.
EXAMPLE: Taxpayer is Full-Year Indiana
| Income from Indiana ............ $6,000.00 | |
| Income from Illinois (wages) ..... | . 4,000.00 |
| Total Income Exemptions ........ | . 3,000.00 |
| Total liability to Illinois ......... | . -0- |
| Calculate Indiana tax and credits as f | ollows: |
| Total income ................... $10,000.00 | |
| Less: Exemptions .............. | . 3,000.00 |
| Taxable Income ............. | 7,000.00 |
| Indiana tax rate ................ | . .02 |
| Indiana tax ................... | . 140.00 |
| Credit for tax paid to Illinois: | NONE |
No credit is allowed taxpayer since Indiana and Illinois have a reciprocal agreement. Taxpayer must file with Illinois to recover any withholding to Illinois.
For income other than salaries, wages and commissions, a credit will be allowed under the procedures for claiming credit for taxes paid to other states as outlined in Regulation 6-3-3-3(a)(010) [ 45 IAC 3.1-1-74 ].
Likewise, a resident of another reciprocal agreement state who works in Indiana and has Indiana withholding tax deducted from his wages, salaries or commissions may claim a refund of the amount so withheld. To claim a refund, an individual must file an Indiana Nonresident tax return indicating residency in a reciprocal state and attaching a wage and tax statement (Form W-2) showing that Indiana taxes were withheld.
Notes
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