If you are a business owner in Kansas and you have employees who work in another state, you may need to be aware of the Kansas reciprocal tax agreement. This agreement allows employees who work in Kansas but live in one of the six neighboring states to pay taxes only in their home state, instead of paying taxes in both states.
The six neighboring states involved in this agreement are Missouri, Nebraska, Oklahoma, Colorado, Arkansas, and Iowa. This agreement is important because it eliminates the double taxation for employees who live in one of these states and work in Kansas.
To take advantage of this agreement, the employee must complete a form called the KW-100, which is a certificate of non-residence. This form is used to notify the employer that the employee is a non-resident of Kansas and that they will be paying taxes in their home state. The employer then uses this form to ensure that the employee does not have Kansas income tax withheld from their paycheck.
It is important to note that this agreement only applies to state income taxes. Other types of taxes, such as local taxes or sales taxes, may still apply. Additionally, certain types of income may not be covered by this agreement, such as income earned from rental property or business income.
If you are an employer in Kansas with employees who live in one of these six neighboring states, it is important to understand the Kansas reciprocal tax agreement and ensure that your employees are properly completing the necessary forms. This can help avoid any potential issues with double taxation and ensure that your employees are able to pay their taxes correctly.
In conclusion, the Kansas reciprocal tax agreement is a beneficial agreement between Kansas and its six neighboring states. By allowing employees to pay taxes only in their home state, it eliminates the possibility of double taxation and ensures that employees are able to pay their taxes correctly. If you are a business owner in Kansas with employees who live in one of these neighboring states, it is important to be aware of this agreement and ensure that your employees are properly completing the necessary paperwork.