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State Individual Income Taxes on Nonresidents: Managing Inconsistent State Guidelines

Reciprocity Agreements, Convenience Rules, Credits and Reverse Credits, Recent Developments, Filing and Withholding Thresholds

Note: CLE credit is not offered on this program

A live 110-minute CPE video webinar with interactive Q&A

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Friday, May 30, 2025 (in 9 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926
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This webinar will provide an overview of the nonresident individual income tax filing and withholding laws in all 50 states. Our panel of state and local tax professionals will discuss nonresident individual income tax filing and withholding thresholds, reciprocity agreements, convenience rules, credits and reverse credits for taxes paid to other states, local income taxes on nonresidents, public policy reforms that could reduce compliance burdens, recent legislative developments, and more. They will provide examples and offer suggestions for complying with varying state requirements for taxpayers who perform work in more than one state.

Description

State regimes for taxing nonresidents are complex. Complying with inconsistencies among states is a complicated process for individual taxpayers and SALT advisers. Some states utilize filing and withholding thresholds that provide some relief for qualified taxpayers. However, many states require nonresident filing and withholding on any state-sourced income. Even when states offer relief, taxpayers should not assume every taxpayer qualifies for such relief. For example, mutuality requirement states offer relief only to nonresidents who live in states with a “substantially similar exclusion” or no individual income tax, for example. Additionally, some states have clawback provisions that negate the relief for certain classes of employees. Arizona, for instance, revokes the relief for professional athletes and entertainers, while Utah revokes relief for “key employees.”

Often, neighboring states adopt reciprocity agreements. These agreements alleviate the taxpayer's burden of filing a nonresident return when they reside in one state but work in another. Assuming a multistate taxpayer qualifies for withholding relief in multiple states without examining the nuances of each state would be an oversight. Considering the complexities and inconsistencies of state guidelines, it is not surprising that nonresident income tax compliance is so low.

Listen as our panel of state and local tax veterans compares and contrasts the state rules for taxing nonresidents in specific states and offers compliance advice for SALT practitioners and multistate taxpayers.

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Outline

  1. States' income taxation of nonresidents: introduction
  2. Credits and reverse credits for taxes paid to other states
  3. Reciprocity agreements
  4. Convenience rules
  5. Filing and withholding thresholds
  6. State inconsistencies
  7. Local income taxes on nonresidents
  8. Recent state developments

Benefits

The panel will cover these and other critical issues:

  • Suggestions for managing multistate compliance for nonresidents
  • Examples of credits and reverse credits for taxes paid to other states
  • The impact of convenience rules on remote workers
  • Thresholds and filing requirements for nonresidents in various states
  • Federal and state legislative proposals and developments to reduce complexity and alleviate compliance burdens

Faculty

Loughead, Katherine
Katherine Loughead
Senior Policy Analyst & Research Manager
Tax Foundation

Ms. Loughead is a Senior Policy Analyst & Research Manager with the Center for State Tax Policy at the Tax...  |  Read More

Weinberg, Jonathan
Jonathan Weinberg, J.D., LL.M.
Principal
WithumSmith+Brown

Mr. Weinberg has extensive experience with income/franchise tax, sales and use tax, real estate transfer tax, and...  |  Read More

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