You are allowed the deduction in Kentucky. Kentucky calculates out the portion of the Moving Expenses that apply to Kentucky wages. If 25% of your wages were earned in Kentucky, the Schedule ME will allow you to have 25% of the deduction you took on the Federal Return for the Kentucky part-year return. If the percentage of Kentucky income is 45%, you receive 45% of the deduction, and so forth. Here is a link to the form, along with instructions as how the deduction is calculated: http://revenue.ky.gov/Software-Developer/Individual%20Income%20Tax%20Forms/16_42A740-NP-ME%20(0001)....
Kentucky does not consider how much the other state deducts, it simply calculates what applies to your KY income.
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