This is pretty close to the answer
I believe that None of the above is correct. The employee will fill out W-9 or the equivalent, to identify the withholding rate for each state. At the tax filing time all numbers will true up.
The math would be:
Employer state collects tax and resident state collects tax. However, if there is a reciprocity between the states then the resident state would allow a credit for tax "X" paid to other "non-res" state(s) for "Y" dollars of income.
In the event of non-reciprocity (I'm not positive here) I think you would allocate earnings by state so therefore, employer state would have earnings and the tax would be collected and subsequently reported via non-resident calculation. Resident state would have no income allocated and therefore no tax liability.
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