Q. Is deferred compensation subject to income tax in Delaware? One. The recommended withholding for deferred compensation payments is 5%. If your business makes deferred compensation payments to Delaware residents, you should be registered as a withholding taxpayer. A combined application for registration must be completed and sent to the Revenue Division, and the corresponding retention coupons will be sent to you. Q. I`m thinking about taking a job in Maryland. I know that states do not have a reciprocal agreement. How does the tax credit paid to another state work? Do I owe county taxes in MD? New Jersey has had reciprocity with Pennsylvania in the past, but Gov. Chris Christie terminated the deal effective Jan.
1, 2017. You will need to have filed a non-resident tax return in New Jersey starting in 2017 and have paid taxes there if you work in the state. Thankfully, Christie backtracked as a cry from residents and politicians rose. To do this, you must complete Form 200-02, which is the tax return for non-Delaware residents. You can download this form from the Delaware Department of Revenue (delaware.gov) website. The address to which you send the completed form is indicated at the end of the form. The address varies according to the tax result. New Jersey lawmakers who want to keep the deal intact say its benefits encourage businesses to move to South Jersey and ensure a lower tax rate for middle-class New Jersey residents traveling to Pennsylvania.
Q. Does Delaware accept consolidated withholding tax payments for more than one employer? A. No. Each company responsible for paying the Delaware withholding tax must file its own individual withholding tax return and must file its own federal employer identification number. Please do not pay under a single identification number, then issue forms W-2/1099 or submit form W-3 for multiple identification numbers. The reciprocity rule applies to employees who must file two or more state tax returns – a resident return in the state where they live and a non-resident tax return in other states where they might work so that they can recover any taxes that have been wrongly withheld. In practice, federal law prohibits two states from taxing the same income. “I`ve learned that it`s always best to work in the same state where you live,” Henderson said. “I do my own taxes, and dealing with two states that tax income differently only complicates life.” Also in 1977, New Jersey lawmakers hoped to strike a similar deal with Delaware, according to an Inquirer article at the time.
That never happened. Q. Is there a form for the employee to claim exemptions from withholding tax? R. Delaware accepts the federal Form W-4 so that an employee can take advantage of personal exceptions. For example, New York cannot tax you if you live in Connecticut but work in New York, and you pay taxes on that income earned in Connecticut. Connecticut is designed to offer you a tax credit for all taxes you paid to the other state, or you can file a New York State tax return to claim a refund of taxes withheld there. Virginia has reciprocity with the District of Columbia, Kentucky, Maryland, Pennsylvania, and West Virginia. Submit the VA-4 exemption form to your Virginia employer if you live and work in one of these states. Pennsylvania has reciprocal tax treaties with certain states that allow residents to work outside the state while withholding Pennsylvania taxes. Delaware is not one of those states.
Delaware does not have a specific income tax rate for municipal bonds. Revenues from municipal non-state bonds would be included in the federal government`s adjusted gross revenue, which is carried forward to Delaware`s yield. When two states have a mutual agreement — like Pennsylvania with six different states — you only pay state taxes to the one you call home. If you tell your employer that you are from outside the state, they should adjust the withholding tax to your income taxes. If the states do not have a mutual agreement, you will have to report your income to both governments, unless one of them does not have a state income tax. Pennsylvania and Delaware both do. You don`t need to file a tax return with D.C. if you work there and you`re a resident of another state. Submit the D-4A exemption form, the “Certificate of Non-Residency in the District of Columbia,” to your employer. Unfortunately, it only works the other way around with two states: Maryland and Virginia. You don`t need to file a non-resident tax return in one of these states if you`re in D.C. but work in one of these states.
Pennsylvania has a flat personal income tax rate of 3.07%. However, New Jersey and Delaware have progressive rates; People who earn more pay more. Q. My company moved its office from Delaware to Ohio last year. I had an employment contract and the company paid me under that contract, even though my employment ended that year. They removed the State of Delaware income tax from my payments for part of this year. I would like to know in these circumstances why they continue to levy Delaware tax and what, if any, I have a tax liability, given that I do not live in Delaware and did not work in Delaware this year. If there is a tax liability, please give me details on why and tell me how to calculate Schedule W, which clearly shows that there is no income attributed to Delaware if there are no working days for a non-resident in Delaware. Q. I am a pennsylvania resident and have worked for XYZ in Delaware for the past 20 years.
The company moved its operations to the state of North Carolina last July and ceased operations in Delaware after that date. I didn`t move. The company paid me severance pay this year. Do I have to report this income in Delaware? I haven`t worked or lived in Delaware this year. Q. How do I close my withholding tax account? One. If you wish to close your withholding tax account, you must first submit a final year-end withholding tax reconciliation form and then complete the process by submitting an application form indicating that your account is closed. If you have any further questions, please contact our source deduction unit at (302) 577-8779.
Reciprocal tax treaties allow residents of one state to work in other states without deducting the taxes of that state from their wages. You wouldn`t have to file non-resident state tax returns there, as long as they follow all the rules. You can simply provide your employer with a required document if you work in a state that has reciprocity with your home state. Q. How do I change my address in the state of Delaware so that I can get my tax information at my new address for next year? Indiana has reciprocity with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. .