If you are not filing a KY return because you do not have to pay tax (no tax liability) then the amount is zero.
If you do not have to pay KY tax, then there should not have been any state tax withheld on your W-2.
If you are an Indiana resident and work in Kentucky, which is what this thread is addressing, you should only have had Indiana tax withheld.
In this situation, there is NO Kentucky tax so NO credit for tax paid to the state of Kentucky.
This is because Kentucky and Indiana have a Reciprocal Agreement.
If the employer did withhold Kentucky tax, you would file a Kentucky State tax return to get this tax back.
When working and living in two different state which DO NOT have a reciprocal agreement, there can be a credit.
The credit is for the tax you ULTIMATELY pay, which is computed by doing a state tax return.
If I file a state return and it says my tax is $1,000, it doesn't matter how much was withheld, my tax is still $1,000.
If I had 200 withheld, I would owe 800.
If I had 1,500 withheld, I would get a 500 refund.
Either way, my tax liability is 1,000 and that can only be calculated by dong a state return.
If you paid local tax to a city or county in a different state, and you want to take a credit for that tax, you would need to compute that city or county tax return. In TurboTax, these local returns are usually in with the state returns. You could use the state return in TurboTax to compute the local return, or do one manually.
The tax is usually miniscule, so a credit would be small.
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