Anaya Nolan
While there is no tax reciprocity between Kansas and Missouri, the two states have agreements between their departments of revenue to prevent double taxation. Residents of Kansas who work in Missouri will have to file their Missouri returns first and will receive a credit for the tax they pay in Missouri on their Kansas returns.
| Characteristics | Values |
|---|---|
| Reciprocal tax agreement | No |
| Double taxation | Possible, but can be avoided |
| Filing | Required in both states |
| Filing order | Missouri first, then Kansas |
| Tax credit | Available in Kansas for taxes paid in Missouri |
| Earnings tax | 1% earnings tax in Kansas City, Missouri |
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What You'll Learn
There is no tax reciprocity between Kansas and Missouri
Reciprocal tax agreements allow residents of one state working in another state to pay taxes on their earned income based on the rules of their state of residence. They also mean that residents of one state working in another may not need to file separate tax returns if they provide the correct documents to their employers. As of 2024, 16 states have reciprocal tax agreements in place, but Kansas and Missouri are not among those states.
If you live in Kansas and work in Missouri, you will pay most of your taxes to Missouri at the Missouri rate, and then pay the difference to Kansas. You will need to file in both states. First, prepare your Missouri filing, and then take a credit on your Kansas filing for taxes paid to Missouri. Some companies will withhold both states' taxes for you so that you don't owe money to Kansas when it's time to pay taxes. If you work in Kansas City, Missouri, there is also a 1% earnings tax that your employer should withhold.
If you live in Missouri and work in Kansas, the process is similar. You will pay taxes to Kansas based on the Kansas rate and then pay the difference to Missouri. Again, you will need to file in both states.
While there is no tax reciprocity between Kansas and Missouri, both states have agreements between their departments of revenue due to the frequency of residents commuting across state lines for work.
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Residents of Kansas who work in Missouri must file taxes in both states
If you live in Kansas and work in Missouri, you will need to file taxes in both states. While this may sound complicated, it is a common situation, as many people live in one state and work in another.
Firstly, you will need to file your Missouri taxes. To do this, you must complete Form MO-1040, along with either Form MO-CR (Missouri resident credit) or Form MO-NRI (Missouri income percentage). You can calculate your Missouri tax liability using both forms to determine which will result in the lowest tax liability. Form MO-CR allows you to claim a resident credit for taxes paid to other states, such as Kansas, while Form MO-NRI allows you to pay taxes only on the income earned in Missouri.
After filing your Missouri taxes, you will need to file your Kansas taxes. On your Kansas state K-40 income tax return, there will be a line for credit paid to other states, where you can insert the amount of taxes you owe on your Missouri return. This will help prevent double taxation, as you will only be taxed on the difference between the Missouri tax rate and the Kansas tax rate.
It is important to note that there is no tax reciprocity agreement between Kansas and Missouri. However, both states have provisions to honor credits paid to each other, which helps to prevent double taxation. Additionally, some companies will withhold taxes for both states, so you don't end up owing money to Kansas.
While filing taxes in both states is necessary, it is not as complex as it may seem. By following the steps outlined above and consulting the relevant state websites, you can ensure that you are complying with the tax laws and minimizing your tax liability.
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Kansas will give a credit for taxes paid in Missouri
Kansas and Missouri do not have a reciprocal tax agreement. However, Kansas will give a credit for taxes paid in Missouri. This is because federal law prohibits two states from taxing the same income, and residents of Kansas who work in Missouri will likely be taxed in both states.
If you are a resident of Kansas but worked in another state and are required to file an income tax return there, you may claim a credit for the taxes paid to that state. To do this, you must complete the worksheet for residents in the Kansas tax booklet to determine your credit. You must include a copy of the other state's return with your Kansas return, but not just the W-2 forms. If the other state does not require an income tax return, you will not receive a credit from Kansas.
If you are a part-year resident of Kansas and worked in another state while living in Kansas, you may also claim a credit for the taxes paid to the other state. This is also the case if you paid income tax to a local jurisdiction in another state.
In addition, if you are a resident of Kansas and paid property taxes to a county in the state, you are not required to report the property taxes paid as an addition modification on Form MO-A. This is because Kansas allows individuals to include Missouri property taxes as part of their Kansas itemized deduction, which reduces their Kansas tax.
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Missouri has a lower income tax rate than Kansas
There is no tax reciprocity agreement between Kansas and Missouri. However, they do have provisions to honour credits paid to other states, which helps prevent double taxation. This means that if you live in one state and work in the other, you will pay the majority of your taxes to the state where you live, at its tax rate, and then pay the difference to the state where you work. You will need to file taxes in both states.
Missouri has a progressive income tax, with eight tax brackets. The first $1,273 of taxable income for a single filer is not taxed. The next $1,274 to $2,546 is taxed at 2%, the next $2,547 to $3,819 is taxed at 2.5% plus an additional $25, and so on. The state also has a standard deduction of $14,600 for individual filers, $29,200 for joint filers, $21,900 for heads of household, and $29,200 for qualified widows/widowers. In addition to the state tax, Kansas City and St. Louis collect their own earning taxes of 1%.
Kansas, on the other hand, has a flat income tax rate of 3.5% for single filers with an income of $15,000, and 4.75% for those earning more than $15,000. For joint filers, the rate is 3.5% for income up to $30,000 and 4.75% for income above that. The state has a standard deduction of $9,000 for single filers and $12,500 for joint filers.
Therefore, if you live in Kansas and work in Missouri, you will pay Missouri taxes at the Missouri rate on your income up to $15,000 (or $30,000 for joint filers), as this is lower than the Kansas rate. You will then pay Kansas taxes at the Kansas rate on any income above that threshold.
If you live in Missouri and work in Kansas, you will pay Missouri taxes on your entire income, as the Missouri rate is lower than the Kansas rate. You will then need to pay the difference to Kansas.
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Employees can avoid double taxation by submitting the correct forms
While there is no tax reciprocity between Kansas and Missouri, employees can still avoid double taxation by submitting the correct forms. Double taxation occurs when the same income is taxed twice, either at the corporate, personal, or cross-country level. In the context of state taxes, double taxation can occur when an individual lives and works in different states and is therefore subject to the tax laws of both states.
To avoid double taxation, employees working in Missouri but residing in Kansas can take advantage of the provisions in place to honor credits paid to other states. Firstly, employees should ensure that their Missouri income is taxed at the Missouri rate. Then, when filing taxes in Kansas, they can claim a credit for the taxes already paid to Missouri. This will help ensure that they are not taxed on the same income by both states.
Additionally, some companies may withhold taxes for both states, allowing employees to pay the difference to Kansas. Employees working in Kansas City, Missouri, should also be aware of the 1% earnings tax that their employer should withhold.
It is important to note that reciprocal tax agreements between states allow residents of one state to pay taxes based on the rules of their state of residence, even if they work in another state. While Kansas and Missouri do not have such an agreement, understanding reciprocal tax agreements can be useful for employees in other situations. For example, if an employee resides in a state with a reciprocal agreement with their state of employment, they can provide the required documents to their employer to avoid filing nonresident state tax returns for their state of employment.
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Frequently asked questions
No, there is no tax reciprocity between the two states. However, they do have provisions to honor credits paid to other states, which helps prevent double taxation.
You will file as a resident for Kansas and a non-resident for Missouri. Kansas will give you a credit for the tax you pay in Missouri, but only up to the amount of Kansas tax on the same income. You will need to file in both states. You will first prepare your Missouri filing, then take a credit on your Kansas filing for taxes paid to Missouri.
Reciprocal tax agreements allow residents of one state to work in another state without having income taxes withheld in the state they work in. The income they earn in their work state is taxed based on the tax rules of the state they reside in.
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