Overview

State reconciliation (recon) is an annual summary return that ties the state income tax a payer withheld and remitted over the year back to the withholding reported on the individual information returns filed with that state, such as W-2s, 1099s, or both.

Why Reconciliation Matters

• It gives the state agency a single, aggregate figure to check against the sum of all individual W-2/1099 filings for that payer.
• It confirms that the tax withheld equals the tax remitted, flagging any underpayment or overpayment.
• Many states will reject or flag a filing if the reconciliation totals do not match the accompanying information returns.

States Supported for Recon Filing

TaxBandits supports 1099/W-2 state reconciliation for eight states. Coverage varies by form type:

State	Reconciliation Form	Applies To
Alabama	Form A-3	1099-NEC, 1099-MISC, and W-2
Connecticut	Form CT-W3	W-2 only
Idaho	Form 967	W-2
Maryland	Form MW508	W-2
Missouri	Form MO-W-3	W-2
Pennsylvania	Form REV-1667	1099-NEC and 1099-MISC
Vermont	Form WH-434	1099 and W-2
West Virginia	Form IT-103	1099-NEC, 1099-MISC, and W-2

How to File

• To file state reconciliation for 1099-NEC, 1099-MISC, or W-2, provide the reconciliation details in the StateReconData object within the Create request.
• Include the following information as applicable to the state:
  • State withholding account number
  • Monthly or quarterly reconciliation details
  • Annual reconciliation totals
  • State-specific payment or EFT details
  • State-specific address and other required information
• If reconciliation is mandatory for the selected state, the StateReconData object must be provided. Otherwise, the state filing request will fail validation.

States with Mandatory Reconciliation Requirement

The following states require reconciliation to be filed along with the corresponding 1099/W-2 state return:

• Alabama (AL)
• West Virginia (WV)

For these states:

• Reconciliation is mandatory when State Filing is enabled.
• StateReconData must be included in the Create request.
• The reconciliation data must contain all applicable state-required information.
• The state filing cannot be completed if the required reconciliation information is missing.