If you live in Virginia and work in a neighboring state—or vice versa—you might wonder whether you're required to file income tax returns in both states. The answer largely depends on whether the states involved have a reciprocal tax agreement and the type of income you earn.
Virginia has reciprocal income tax agreements with the following states:
These agreements are designed to simplify tax obligations for people who live in one state but work in another. If you’re a resident of one of these reciprocal states and earn only wages or salary in the other, you usually do not need to file a nonresident tax return in the work state.
If your income comes solely from wages or salary, and you qualify under a reciprocity agreement, you are generally required to file a resident return in your home state only. You do not have to file a tax return in the state where you work—as long as you submitted the proper exemption form to your employer (see our article on claiming exemption from withholding).
While reciprocity simplifies tax filing for wage earners, there are a few important exceptions where you may need to file in both states:
In these cases, you may need to file a nonresident return in the work state to report income and possibly claim a refund, and a resident return in your home state to report all income and claim a credit for taxes paid to other states, if applicable.
For most people with only wage income and who properly claim reciprocity, the answer is simple: file only in your home state. However, it’s important to keep good records and review each state’s filing requirements if your situation is more complex.
Not sure if you must file in both states? Contact Watter CPA today for expert guidance on reciprocity rules and multi-state tax returns.
