I live in oklahoma, work in Kansas. Filed taxes using turbo tax. In that case, both states used my federal adjusted income with additions to W-2 income to determine adjusted gross income. So, Kansas taxed me not just on the income I earned in Kansas but also on all of the investment income I earned. The program then only allowed a credit in Oklahoma for the taxes paid on income earned from employment in Kansas. As a result, I paid taxes to both states for all of my investment income. In the end, I had to pay more in state income taxes than I paid in Federal because I was double taxed on all of my investment income. I thought it was illegal for two states to tax someone on the same income, but phone calls to both state tax commissions received answers of you have to pay our state on all of that income.
