Start For Free

Fast, Secure, and Always Accurate!

Back to List

Category: West Virginia

West Virginia Credit for Taxes Paid to Another State

West Virginia Residents Subject to certain limitations, a West Virginia resident may be eligible to claim a credit for income taxes paid to another state. The purpose of this credit is to prevent dual taxation of such income.

Note: Income from “guaranteed payments” shown on a W-2 as wages but taxed as business income on the Ohio income tax return qualifies for the Schedule E credit. See Publication TSD-422 for additional information.

 

Part-Year Residents Part-year residents may only claim credit for taxes paid to another state during their period of West Virginia residency.

 

Nonresidents are not entitled to a Schedule E credit under any circumstances.

 

 

Limitations:

The amount of a Schedule E credit is subject to the following limitations:

 

* The credit cannot exceed the amount of tax payable to the other state on income also subject to West Virginia Tax. This is the amount of income tax computed on the nonresident return filed with the other state.

 

* The credit cannot exceed the percentage of the West Virginia tax determined by dividing the portion of the taxpayer's West Virginia income subject to taxation in another state by the total amount of the taxpayer's West Virginia income.

 

* The credit cannot reduce the West Virginia tax due to an amount less than what would have been due if the income subject to taxation by the other state was excluded from the taxpayer's West Virginia income.

 

A separate Schedule E must be completed and attached for each state for which you are claiming a credit.

You must maintain a copy of the other state tax return in your files. This credit is not allowed for income tax imposed by a city, township, borough, or any political subdivision of a state or any other country. Local or municipal fees cannot be claimed. Due to existing reciprocal agreements, West Virginia residents cannot claim the Schedule E credit if the credit claimed is for state income taxes paid on wage and salary or unemployment compensation income earned in Kentucky, Maryland, Ohio, Pennsylvania, or Virginia. However, taxes paid on income derived from sources other than wage and salary or unemployment compensation income is permitted as a Schedule E credit.

 

You may claim credit on your West Virginia Resident Income Tax Return for state income tax paid, as a nonresident, to ONLY the following states:

 

Alabama

IndianaNew Hampshire
ArizonaIowaNew Jersey
ArkansasKansasNew Mexico
CaliforniaLouisianaNew York
ColoradoMaineNorth Carolina
ConnecticutMassachusettsNorth Dakota
DelawareMichiganOklahoma
District of ColumbiaMinnesotaOregon
GeorgiaMississippiRhode Island
HawaiiMissouriSouth Carolina
IdahoMontanaUtah
IllinoisNebraskaVermont
  Wisconsin

 **NOTE: THE LIST ABOVE IS SUBJECT TO CHANGE AT ANY TIME***

 

 

Special Instructions for West Virginia Residents Regarding the Following States:

Kentucky, Maryland, or Ohio: If your income during 2016 was from wages and/or salaries only, you may not claim a Schedule E credit. In order to receive a refund of the erroneously withheld tax, you must file a return with the state in which taxes were withheld. If you had income from a source other than wages and/or salaries, you are allowed a credit for income taxes paid by completing Schedule E. You must maintain a copy of the other state tax return in your files.

 

Pennsylvania or Virginia: If you income during 2016 was from wages and/or salaries only, you may not claim a Schedule E credit. In order to receive a refund of the erroneously withheld tax, you must file a return with these states. If you spent more than 183 days in one of these states and are considered an actual resident for tax purposes, or, if you had income from a source other than wages and/or salaries, you are allowed credit for income taxes paid to the Commonwealth of Pennsylvania or Virginia by completing Schedule E. You must maintain a copy of the other state tax return in your files.

 

Special Note: You may be relieved from having another state's income tax withheld from your wages. Contact your employer or the other state's taxing authority for additional information.