Reciprocity Includes information for: • Wisconsin residents who work in: Illinois Indiana Kentucky Michigan • Residents of the above states who work in Wisconsin Publication 121 (2/24)
| Reciprocity Includes information for: • Wisconsin residents who work in: Illinois Indiana Kentucky Michigan • Residents of the above states who work in Wisconsin Publication 121 (2/24) |
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TABLE OF CONTENTS
Page
1. INTRODUCTION ..................................................................................................................................................3
2. WHAT IS RECIPROCITY? .......................................................................................................................................3
3. WHAT INCOME IS SUBJECT TO RECIPROCITY? ......................................................................................................3
A. Illinois ...................................................................................................................................................................... 3
B. Indiana .................................................................................................................................................................... 4
C. Kentucky ................................................................................................................................................................. 4
D. Michigan ................................................................................................................................................................. 4
4. PROCEDURES FOR NONRESIDENTS OF WISCONSIN ..............................................................................................4
A. How to Prevent Withholding .................................................................................................................................. 4
B. Filing a Wisconsin Income Tax Return .................................................................................................................... 4
5. PROCEDURES FOR WISCONSIN RESIDENTS ..........................................................................................................4
A. Filing a Wisconsin Income Tax Return .................................................................................................................... 4
B. Other State's Income Tax Return ............................................................................................................................ 5
C. Withholding and Estimated Tax Payments ............................................................................................................. 5
6. ADDITIONAL INFORMATION ...............................................................................................................................5
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Reciprocity Publication 121
IMPORTANT CHANGES
Use this publication in preparing your 2023 tax return. There are no substantive differences between this version of
the publication and the previous version (2/23).
1. INTRODUCTION
Individuals who are employed outside their state of domicile (often referred to as legal residence) may be subject
to the income tax laws of two states, that is, their state of domicile and the state in which they are employed.
Two methods exist to prevent the same income from being subject to tax by more than one state. These methods
are:
• Reciprocity
• Credit for tax paid to another state
This publication discusses reciprocity and its effect on residents and nonresidents of Wisconsin. Information on the
credit for tax paid to another state can be found in Publication 125, Credit for Tax Paid to Another State.
2. WHAT IS RECIPROCITY?
Wisconsin has reciprocity agreements with four states: Illinois, Indiana, Kentucky, and Michigan. As a result of these
agreements:
• Wisconsin generally will not tax the salaries, wages, commissions, fees, etc. earned by employees who are
domiciled in Illinois, Indiana, Kentucky, or Michigan who are employed in Wisconsin (see Part 3 for Exceptions)
• Illinois, Indiana, Kentucky, and Michigan generally will not tax the salaries, wages, commissions, fees, etc. of
individuals who are domiciled in Wisconsin and who are employed in these states (see Part 3 for Exceptions)
Caution: Income subject to reciprocity may mean something different in each state. See Part 3 for further
information.
Example: An individual is domiciled in Wisconsin. The individual commutes daily to their job in Illinois. Because their
wages are subject to reciprocity, the individual does not have to file an Illinois income tax return to report the
income earned in Illinois. They must include the income earned in Illinois on their Wisconsin income tax return.
3. WHAT INCOME IS SUBJECT TO RECIPROCITY?
Reciprocity applies only to income earned as an employee. It does not apply to other types of income, such as gains
on the sale of property, rental income, lottery winnings, self-employment income, income from pass-through
entities, etc.
The reciprocity agreements with the four states specify the type of income that is subject to reciprocity. Following
are descriptions of the income subject to the reciprocity agreement with each of the four states.
A. Illinois
Reciprocity with Illinois is limited to wages, salaries, commissions, and any other remuneration paid to
employees for services. It does not apply to income from self-employment.
Example: An individual, who is domiciled in Illinois, is self-employed as an accountant. They commute daily to
their office located in Wisconsin. All self-employment income is earned in Wisconsin. Because reciprocity does
not apply to income from self-employment, the individual must file a Wisconsin income tax return to report the
self-employment income.
Exception: Reciprocity also does not apply to:
• Income earned in Wisconsin by an individual who is domiciled in Illinois, but not a resident for Illinois income
tax purposes. An individual who is absent from Illinois for other than temporary or transitory purposes is
generally not considered a resident for Illinois income tax purposes.
• Income earned in Illinois by an individual who is domiciled in Wisconsin if the individual is considered a
resident of Illinois for income tax purposes. An individual who is in Illinois for other than temporary or
transitory purposes is generally considered a resident for Illinois income tax purposes.
Individuals who have questions about whether they are considered Illinois residents for income tax purposes
should contact the Illinois Department of Revenue by phone at 1-800-732-8866 or by email via their website at
revenue.illinois.gov.
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Reciprocity Publication 121
B. Indiana
Reciprocity with Indiana is limited to wages, salaries, tips, and commissions received as an employee.
Exception: Reciprocity does not apply to income earned in Indiana by an individual who is domiciled in
Wisconsin if the individual is considered a resident of Indiana. Individuals domiciled in Wisconsin who have
questions about whether they are considered residents of Indiana for income tax purposes should contact the
Indiana Department of Revenue by phone at (317) 232-2240 or by email via their website at in.gov/dor.
Note: Individuals who earn income that is not taxable to the State of Indiana because of the reciprocity
agreement may still be subject to an Indiana county income tax on that income.
C. Kentucky
Reciprocity with Kentucky is limited to wages, salaries, and commissions received as an employee.
Exception: Reciprocity does not apply to income earned in Kentucky by an individual who is domiciled in
Wisconsin if the individual is considered a resident of Kentucky for income tax purposes. An individual is
considered a resident of Kentucky if they live in Kentucky for more than 183 days during the taxable year.
Individuals domiciled in Wisconsin who have questions about whether they are considered residents of
Kentucky for income tax purposes should contact the Kentucky Department of Revenue by phone at
(502) 564-4581 or by email via their website at revenue.ky.gov.
D. Michigan
Reciprocity with Michigan is limited to compensation for wages, salaries, and commissions received as an
employee.
Individuals domiciled in Wisconsin who have questions as to whether reciprocity applies or if income is subject
to Michigan tax should contact the Michigan Department of Treasury by phone at (517) 636-4486 or by email
via their website at michigan.gov/treasury.
4. PROCEDURES FOR NONRESIDENTS OF WISCONSIN
A. How to Prevent Withholding
Individuals domiciled in Illinois, Indiana, Kentucky, or Michigan and employed in Wisconsin should file
Form W-220, Nonresident Employee's Withholding Reciprocity Declaration, with their Wisconsin employers to
stop the withholding of Wisconsin income tax from their wages subject to reciprocity. This exemption from
withholding will remain in effect as long as the individual is subject to reciprocity.
B. Filing a Wisconsin Income Tax Return
A nonresident or part-year resident of Wisconsin must file a Wisconsin income tax return if their gross income
from Wisconsin sources is $2,000 or more. Gross income does not include income that is not taxable to
Wisconsin because of reciprocity.
Therefore, if you are domiciled in Illinois, Indiana, Kentucky, or Michigan for the taxable year and your only
income from Wisconsin sources is income that is subject to reciprocity, you are not required to file a Wisconsin
income tax return for such taxable year. However, if Wisconsin income tax was withheld from your wages, you
must file a Wisconsin return (Form 1NPR) to get a refund of the withheld tax.
5. PROCEDURES FOR WISCONSIN RESIDENTS
A. Filing a Wisconsin Income Tax Return
If, while you are domiciled in Wisconsin, you earn income that is subject to reciprocity, you must report such
income on your Wisconsin income tax return (Form 1 for a full-year Wisconsin resident or Form 1NPR for a part-
year resident or nonresident).
Individuals domiciled in Wisconsin who earn income in another state that is subject to reciprocity (that is, the
income is not taxable by that state) may not claim a credit on their Wisconsin income tax returns for tax paid to
the other state on that income.
If you earn income in Illinois, Indiana, Kentucky, or Michigan and it is taxable by that state, you may claim a
credit on your Wisconsin income tax return for net income tax paid to that state.
Note: You may not claim credit for other taxes paid, such as a city tax or county tax, unless those taxes are paid
directly to the state.
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Reciprocity Publication 121
B. Other State's Income Tax Return
You are not required to report income subject to reciprocity on a tax return for the reciprocal state (that is,
Illinois, Indiana, Kentucky, or Michigan). Therefore, if your only income from a reciprocal state is income that is
subject to reciprocity, you are not required to file an income tax return with such reciprocal state. (Exception:
You must file an Indiana income tax return if the income is subject to an Indiana county tax.) However, if your
employer withheld income tax for such reciprocal state from your wages, you will have to file an income tax
return with that state to obtain a refund of tax withheld.
C. Withholding and Estimated Tax Payments
You may request your employer to stop withholding income tax for the reciprocal state. Contact your employer
or the reciprocal state's department of revenue to obtain the required form.
You may also request your employer to withhold Wisconsin income tax from your wages. However, an employer
outside Wisconsin may not be required to withhold Wisconsin tax. If your employer does not withhold
Wisconsin income tax, you may be required to make estimated tax payments.
Estimated tax payments are generally required if you expect your Wisconsin income tax return to show a
balance due of $500 or more. You may be charged underpayment interest if the required estimated tax
payments are not made. Go to www.revenue.wi.gov/pay for payment options.
6. ADDITIONAL INFORMATION
If you have additional questions or need copies of Wisconsin forms or publications, you may visit any Wisconsin
Department of Revenue office or call or email:
Visit our website . . . revenue.wi.gov
Email. . . DORIncome@wisconsin.gov
Write . . . Mail Stop 5-77
Wisconsin Department of Revenue
P.O. Box 8949
Madison, WI 53708-8949
Telephone. . . (608) 266-2486
Applicable Laws and Rules
This document provides statements or interpretations of the following laws and regulations enacted as of February
27, 2024: ch. 71, Wis. Stats., and sec. Tax 2.02, Wis. Adm. Code.
Laws enacted and in effect after this date, new administrative rules, and court decisions may change the
interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this
document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.
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