If the taxpayer was an Indiana resident during the tax year and had income from Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin, the taxpayer is covered by a 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 the employer withheld state taxes for the nonresident state, the taxpayer will need to file a claim for refund with that state. Credit for taxes paid to the other state can not be deducted on the Indiana return.
Indiana does not provide a credit for double-taxed income in Arizona, Oregon, and the District of Columbia. An Indiana resident filing a nonresident tax return with one of those states or DC must claim a credit for taxes paid to Indiana on the nonresident return.
Indiana Resident return
- Personal Information
- Other Categories
- County of Residence - Complete as needed
- Taxpayer - Received wages in IL,KY,MI,OH,PA and/or WI - Enter the wages received and the reciprocal state.
If the other state is Kentucky:
- Add or Edit Kentucky Nonresident Return
- Were you a Full-year Resident of a Reciprocal State? - Answer yes and select state from list
- Was your Only KY income for 2023 from Salaries or Wages Earned While a Resident of a Reciprocal State? - Answer yes
To claim exempt from Kentucky withholdings in the future, file form 42A809 with the employer.
If the other state is Michigan:
- Add or Edit Nonresident Michigan Return
- Non resident and Part Year Income Allocation
- Income Allocation
- Wages & Salaries - Enter the total income earned in Michigan while a resident of Indiana as a negative number.
To claim exempt from future withholdings, file form MI-W4 with the employer.
If the other state is Ohio:
- Add the Ohio Non Resident Return
- Nonresidents who meet certain required criteria - Answer Yes to this question. Reciprocal states qualify.
If this question was answered No when adding the Ohio Nonresident Return:
- Edit Ohio Non Resident Return
- Select Form IT-NRS (affidavit of Non-Ohio Residency). Select Yes to complete the form. Complete the next two sections indicating taxpayer place of Domicile and place of Abode (both should be the resident state).
To claim exempt from future withholdings, complete form IT-4NR and file it with the employer.
If the other state is Pennsylvania:
- Add or Edit Nonresident Pennsylvania return
- Pennsylvania Taxable Income
- Gross Pennsylvania Compensation
- Calculated Wages
- Complete Schedule NHR
Pennsylvania requires proof that taxes were paid to the other state. The return must be printed and mailed along with a copy of the Indiana state return, the W-2(s) with the Pennsylvania income and a statement explaining you are a resident of a reciprocal state.
To claim exempt from future PA withholdings, file form REV-419 with the employer.
If the other state is Wisconsin:
- Add or Edit Wisconsin Nonresident return
- Legal Residence Questionnaire - Enter Taxpayer/Spouse Status and State of Residence (if not completed when adding the state)
- Wisconsin Income
- Total Income
- Wages, Salaries, tips ect
- State Wages - Enter the amount of Wisconsin Income as a negative amount
Disregard the warning about the withholdings amount.
To claim exempt from Wisconsin withholdings, complete form W-220 and file it with the employer.
Note: The taxpayer may still be liable for county or city taxes in the state where the income was earned. Check with the state for more information.
Additional Information: