I'm not sure that this information is correct, DanielV01. According to the indiana.gov website (https://www.in.gov/dor/files/ib28.pdf), "A credit cannot be taken for any taxes withheld by or paid to any of these states [with reciprocal agreements] in connection with income from salaries, wages, tips,and commissions. If taxes have been withheld or paid to any of these states, a claim for refund should be filed with that state by filing that particular state’s income tax form for nonresidents."
If I understand this correctly (and I'm not sure that I do!), this means that Indiana residents do get double-taxed on Kentucky's "Local Income Tax" because the reciprocal agreement between Indiana and Kentucky does not apply to that particular tax. This is probably why the Indiana W-2 leaves the "Local Income Tax" box blank, while the Kentucky W-2 has it filled in.
On a different discussion thread, I believe you suggested that the KY "Local Income Tax" should be added to the Indiana W-2 values. I followed that advice and have now received a notification from Indianapolis that I owe them money (another turbo tax user writes of the same experience). Indianapolis has adjusted the total credits "to agree with our records": they simply subtracts the local income tax from my KY W-2 to reflect only the numbers reported on the Indiana W-2 (which leaves "Local Income Tax" blank).
So, it seems to me that Indiana residents should simply disregard their KY W-2 and just accept the fact that they get double-tax on the KY "Local Income Tax".
For the benefit of myself and everyone on the IN/KY boarder, I would greatly appreciate a response that either corrects me or corrects your earlier post.
Here's hoping you're correct!
