Reciprocal Agreements TurboTax: What You Need to Know

If you have been working in one state and live in another, you may have to deal with reciprocal agreements. Reciprocal agreements are agreements between two states that allow individuals who live in one state and work in another to only pay taxes in their home state. This means that you will not have to file taxes in the state you work in, as long as your home state has a reciprocal agreement with that state.

If you are using TurboTax to file your taxes and you work in a state with a reciprocal agreement, you may be wondering how to handle this situation. Here are some things you need to know.

1. Check if your home state and work state have a reciprocal agreement

The first step is to check if the state you work in and your home state have a reciprocal agreement. You can check this information on the tax website of your state. If there is a reciprocal agreement, you will only need to file taxes in your home state.

2. Indicate your residency status in TurboTax

When you are filling out your TurboTax form, you will be asked to indicate your residency status. Make sure to select “nonresident” or “part-year resident”. This will prompt TurboTax to ask you for information about your work state.

3. Enter the income you earned in your work state

TurboTax will ask for information about the income you earned in your work state. Enter this information accurately. TurboTax will then calculate the taxes you owe in your home state, taking into consideration the reciprocal agreement.

4. Claim a credit for taxes paid in your work state

If you have paid taxes in your work state, you can claim a credit for these taxes on your home state tax return. TurboTax will help you with this process, by prompting you to enter the taxes you paid in your work state. This will reduce the amount you owe in your home state.

In conclusion, if you work in a state with a reciprocal agreement, filing your taxes can be a little confusing, but with TurboTax, it can be simple. Just make sure to check if your home state and work state have a reciprocal agreement, and follow the steps in TurboTax to accurately file your taxes. Remember to claim the credit for taxes paid in your work state to reduce the amount you owe in your home state.