Income gets reported to the state it's earned in. Generally, this means out-of-state workers have to file a return for their work state in addition to their resident state (excluding reciprocal agreements and non-income tax states). Examples include:
- Out-of-state students who earn income in the state where they attend school
- Employees who regularly commute across state lines, like New Jersey residents who work in New York
- Employees who perform work in other states on assignment
Typically, you'll file a nonresident state return for the state you worked in (KY) and pay that state's tax. You'll then get a credit for taxes paid on your resident state return. That link has instructions.
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