Yes, I live IN and work KY as well and they take local (Louisville-Jefferson) taxes via my pay checks. I was given a form W-1 REE to fill out and send to the payroll tax department to notarize and then send into the metro revenue commission. I normally file a KY return as Non-resident and IN typically gives back the local, however, filling out this form is easy, and you don't have to pay anything more than a stamp and an envelope to get your taxes returned. Hope this helps!
