Tax Type
Individual Income Tax
Description
Virginia and West Virginia Enter Into Reciprocal Agreement
Topic
Basis of Tax
Date Issued
12-15-1988
SUBJECT: Virginia and West Virginia Enter Into Reciprocal
Income Tax Agreement
Under the terms of a "reciprocal" agreement, effective for taxable years beginning after December 31, 1988, Virginia residents will not be subject to West Virginia income tax withholding on compensation earned from sources in West Virginia, nor will they be required to pay income tax to West Virginia on such compensation, or file a West Virginia income tax return. Conversely, West Virginia residents earning compensation in Virginia will be similarly exempted from Virginia income tax filing, payment, and withholding requirements.
The Virginia and West Virginia Tax Commissioners entered into the agreement in accordance with §58.1-342.B. of the Code of Virginia. This section of the Code permits the Department of Taxation to negotiate reciprocal agreements with other states that similarly exempt Virginia residents from taxation.
Under the terms of the agreement, West Virginia employers, not otherwise required to withhold by law, will be encouraged to withhold and to remit Virginia income tax from compensation paid to Virginia residents. Virginia employers will likewise be encouraged to withhold and to remit West Virginia income tax from compensation paid to residents of that state.
The agreement will not apply to individuals who are part year residents in both states or dual residents of both states. A domiciliary resident of one state may become an actual resident of the other state if he or she maintains a place of abode in the second state for an aggregate of more than 183 days. Such individuals will continue to be liable for tax to each state.
The reciprocal agreement applies only to earned income. Individuals who have income from the other state, other than compensation earned in the other state, are required to file two income tax returns -- a resident income tax return with their state of residence and a nonresident income tax return with the other state. The nonresident state will allow a credit for taxes paid to the state of residence.
Questions about withholding taxes may be directed to the Taxpayer Assistance Section, Office Services Division, Virginia Department of Taxation, P. O. Box 6-L, Richmond, Virginia 23282, or (804) 367-8038.
Rulings of the Tax Commissioner