@dominibopula wrote:
I am sorry- I AM talking about 2024. We just received 2024 KY refund which was 1000% LESS than we expected because the new employer took out KY taxes. I spoke to the KY Dept of Revenue and they require an amended W2 from the employer with an explanation. No problem there, but the employer wants to verify where I got the info that residency in TX is based on start date of new job. I have combed through instructions, and online, and the only place I see it is in the TT software. Just looking for the law.
You should have filed a part-year resident return for KY, declaring the date that you stopped living in the state. Only income paid to you while you were a state resident (or income from a KY state source) is taxable in KY. Kentucky-source income includes wages paid while you were living in Kentucky, the profit from the sale of property in Kentucky (your home, if there was a taxable capital gain) and any other Kentucky sourced income like rental properties. (But stocks and bonds are income in the state where you actually live, no matter where the company is headquartered. You would only pay income tax on investment income that was paid to you while you were a KY resident.)
When filing the part-year KY return you must manually assign each item of income, Turbotax can't guess for you. Pay careful attention when dividing your income on the part year return.
Your domicile is your permanent home. You can only have one domicile at a time. To establish a new domicile, you must take active steps to abandon your previous domicile. Domicile is not controlled by any one factor, it is a combination of all factors including where you live, own property, are registered to vote, licensed to drive, where your doctor and dentist are located, and your intention to return (if any).
Assuming you established a new permanent home (domicile) in Texas, we next have to determine the date. The date is when you abandoned your Kentucky domicile. Again, this depends on a combination of all factors. If you did not sell your Kentucky house at all, it can be argued you never abandoned your domicile, that will be a tricky one. If you had a lease through September, and you let the landlord know you were abandoning it as of July 31, that might be the date you left your Kentucky domicile (as in, you bought the house in Texas on 7/18 but needed time to move your stuff.)
Once you have the date that you abandoned your Kentucky domicile, we have to ask how you filed. If you filed a part-year return but used the wrong date, you may need to amend. If Kentucky asserts that withholding is proof of domicile, you may need to send them a letter explaining your situation and enclosing any proof that you abandoned your Kentucky domicile and established a new domicile in Texas as of whatever date.
Your employer CAN'T amend your W-2. If you had KY withholding, that's what actually happened. It can't be changed retroactively. Money was paid into your account with Kentucky tax department. To amend your W-2, your employer would have to return that tax money out of their own pocket. Your W-2 shows what your income and withholding actually were, and that is a fixed fact. What you need to do instead, is make sure that you filed a correct part-year resident return with the correct dates and the income correctly allocated. If the withholding is more than the tax you owe (because you had withholding all year but only part of the income is taxable in Kentucky), then you get a refund. You may need to send corrected tax forms, a letter of explanation, and copies of supporting documents, to the KY DOR.
