Service agreements (formerly known as bipartite agreements) are formal contracts to enter into a consulting agreement or other services that are not performed through the Payroll Office. You should submit Form IL-W-5NR, « Employee`s Statement of Nonresidence in Illinois, » to your employer to confirm that you live in one of the four states on a reciprocal basis. If you are by chance withdrawing from your current state and moving to Illinois, you must submit Form IL-W-5, « Certificate of Residence in Illinois, » to your employer. If you`re crossing the illinois-state border to work, you should discuss your withholding tax situation with your employer to make sure you won`t be surprised at tax time. Illinois has a tax deal with four neighboring countries: Iowa, Kentucky, Michigan and Wisconsin. An Illinois resident who works in Iowa, Kentucky, Michigan or Wisconsin only has to pay income tax to Illinois. These neighboring states do not tax the wages of Illinois residents who work in their jurisdictions. You are entitled to a refund if you reside in Illinois and have been withheld taxes from your paycheck for one of these four neighboring states. However, upon your return to Illinois, you are not eligible for a credit for taxes withheld by those states. These agreements should not be used for part-time employees. They are processed on the pay slip. An « agreement » is a written document that defines a contractual relationship, an exchange of promises, the performance of an act or a right signed by and between one or more parties.
In essence, an agreement is less formal than a contract. No dollar threshold for an agreement is required.