The below content should be reviewed in conjunction with the in-depth federal coverage of this topic provided above.

Authors: Stuart R. Buttrick, Susan W. Kline and Matthew A. Brown, Faegre Baker Daniels LLP

Summary

  • District of Columbia employers must withhold District income taxes on wage payments made to District residents who work in the District. An employee is a District residentfor income tax purposes if certain criteria are met. Nonresidents who work in the District are not subject to withholding. See Withholding on Residents, Nonresidents and Expatriates.
  • The District of Columbia has reciprocal agreements with Virginia and Maryland regarding state income taxes. Virginia or Maryland residents who work in the District have taxes withheld for their home states only. See Withholding on Residents, Nonresidents and Expatriates.
  • District employers determine income tax withholding for residents by using Form D-4, DC Employee's Withholding Allowance Certificate. See Employee's Withholding Allowance Certificate.
  • The withholding rate on supplemental wage payments, such as bonuses, is calculated differently depending on when the supplemental wage payments are made. See Supplemental Wages.
  • Each year, employers must provide copies of federal Form W-2, Wage and Tax Statement, to each resident from whom any amount of District income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form D-2 Reporting Requirements.