The Pennsylvania Department of Revenue has signed a reciprocal tax agreement with several states that allows commuters to pay state income taxes only in their state of residence, instead of both in their state of work and residence.

This agreement is a boon to commuters who live in Pennsylvania and work in Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia, and vice versa. It eliminates the hassle of filing tax returns in both their state of residence and their state of work, and saves them money in taxes.

Under the agreement, the state where the employee lives will be the one to tax their income, regardless of where they work. They will only need to file a tax return in their state of residence, and their employer will only need to withhold taxes for that state.

This agreement applies to wages, salaries, tips, commissions, and other compensation received by employees who work in one of the states in the agreement and live in another. It does not apply to self-employment income, rental income, or income from a business.

To take advantage of this agreement, employees must complete a Form REV-420, which certifies that they are residents of one of the states in the agreement and that their employer should withhold taxes for their state of residence.

This reciprocal tax agreement is a welcome relief for commuters who have to navigate the complexities of filing taxes in multiple states. It simplifies the process of paying taxes and saves them time and money. If you are a commuter who lives in one of the states in the agreement and works in another, be sure to take advantage of this benefit and file a Form REV-420 with your employer.