I live in VA but work in DE.For DE I reported zero income and paid no taxes. Should i pay the taxes to DE and request a credit from VA for the income i earned from DE.

[raghavendra74]

I live in VA but work in DE.I was under the impression i need to pay taxes to the state you live.My employer deducted VA taxes for the earned income and zero for delaware. So for VA i reported the entire income and for DE I reported zero income and paid no taxes. Should i pay the taxes to DE and request a credit from VA for the income i earned from DE?

[ChristinaS]

You should be paying taxes to Delaware. If you worked in Delaware, your employer should have withheld taxes to Delaware. Delaware and Virginia do not have a reciprocal agreement. Delaware doesn't have reciprocal agreements with any state, in fact. That means when people work in DE, they need to pay taxes to DE.(unless, perhaps, you are in the military or your spouse is in the military)?

You get a credit on your Virginia return for the taxes you pay to Delaware. This reduces double taxation. The taxes you pay to Delaware are based on your Delaware tax return, and the tax liability on it. You couldn't get a credit on VA for paying $0 to another state.

Why didn't your employer withholding Delaware taxes?

[ChristinaS]

The income is reported 100% on both returns, with the credit for taxes paid to DE reducing the tax on the VA return. This could cause you to owe a big amount to DE on your taxes, so it would be helpful to know why your employer failed to withhold taxes for the proper state (DE).