What actually happens
An employee who lives in West Virginia and performs work in Ohio sits in two tax systems at once. The residence state claims the right to tax all of a resident's income wherever earned; the work state claims the right to tax income sourced within its borders. Ohio and West Virginia resolved that overlap by agreement: the work state gives up its claim on commuters' wages entirely.
The certificate is not optional
Reciprocity does not apply automatically because the employee's address is in West Virginia. It applies when the employee gives you a signed IT 4NR (Employee's Statement of Residency in a Reciprocity State). Until that form is in your hands you are required to withhold Ohio tax, and an auditor will ask to see it. The form stays in your records; it is not filed with the state.
Unemployment insurance goes to one state only
Income tax can be split between states. Unemployment insurance cannot. Under the localization test used by every state, an employee whose services are performed entirely in Ohio is covered by Ohio for unemployment purposes, and all wages are reported there — regardless of where they live, where you are headquartered, or which state's income tax you withhold. Ohio's 2026 taxable wage base is $9,000. The four-factor test in order.
Local taxes are a separate problem
Ohio: Ohio has the most extensive local income tax system in the country -- roughly 600 municipalities and 180+ school districts levy income taxes, withheld by employers. Municipal tax is generally owed where the work is physically performed (subject to a 20-day occasional-entrant rule); school district tax is generally owed based on the employee's residence school district (Form IT 4 identifies it). CRITICAL: Ohio's state reciprocity agreements do NOT exempt a nonresident from Ohio MUNICIPAL income tax on work performed in an Ohio city.
West Virginia: Several West Virginia municipalities (e.g., Charleston, Huntington, Parkersburg, Weirton) impose a flat per-week City Service Fee (roughly $2-$5 per week) on people who work in the city, withheld by employers. It is a flat head-fee, not a percentage-of-income tax, and is not covered by state reciprocity.
What you have to register for
| Obligation | State | Agency |
|---|---|---|
| Income tax withholding | West Virginia | West Virginia Tax Division |
| Unemployment insurance | Ohio | Ohio Department of Job and Family Services (ODJFS) |
Frequently asked
Do Ohio and West Virginia have a reciprocal tax agreement?
Yes. Ohio exempts West Virginia residents from Ohio income tax withholding on wages, provided the employee files IT 4NR with their employer. Without that form on file the employer must still withhold Ohio tax.
Which state's income tax should be withheld?
West Virginia. Under the agreement the wages are taxable only by the state of residence, so you withhold West Virginia tax and stop withholding Ohio tax once the certificate is filed.
Which state gets the unemployment insurance wages?
Ohio. Unemployment coverage is never split between states for a single job. The localization test assigns the whole job to the state where services are performed, which here is Ohio, regardless of residence or where the employer is headquartered.