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Madeleine Baran

Tax reciprocity Q&A

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What is the tax reciprocity agreement between Minnesota and Wisconsin?

The agreement, created in 1968, simplifies the tax process for people who live in one state and work in the other. Under the agreement, if you commute between Minnesota and Wisconsin, you only have to file a state income tax return for your home state.

How many people commute between the two states?

About 57,000 Wisconsin residents commute to Minnesota. About 22,500 Minnesotans commute to Wisconsin.

How do the two states work out the difference in state tax revenues?

Since Wisconsin has a higher number of interstate commuters, the state makes payments to Minnesota. These payments compensate for the amount Minnesota would receive by taxing Wisconsin residents. This year, Wisconsin owes Minnesota $106 million to cover the difference. The formula used to calculate that pay-back has been a point of contention for several years.

What happens if Wisconsin says no to Pawlenty's request?

The governor has suggested that Minnesota would then repeal its reciprocity agreement. Interstate commuters would be required to file two separate state income tax forms, one for Minnesota and one for Wisconsin. The amount of taxes commuters pay would stay the same.

When will Minnesota officials hear back from Wisconsin?

Minnesota state Revenue Commissioner Ward Einess said he hopes to arrange an initial meeting with Wisconsin officials this week.