topic How do I claim city and county tax refund for Kentucky? in State tax filing

How do I claim city and county tax refund for Kentucky?

lauren1 — Sat, 01 Jun 2019 13:18:09 GMT

What makes you think you are entitled to one? Refunds are...

Hal_Al — Sat, 01 Jun 2019 13:18:11 GMT

What makes you think you are entitled to one? Refunds are rare.

Actually, some counties (Kenton) and Covington due allow...

janet-s — Sat, 01 Jun 2019 13:18:12 GMT

Actually, some counties (Kenton) and Covington due allow for refunds if you work outside the area, such as at home outside of the area. Your employer will need to sign the form and you may be subject to taxes in that location.

It depends. If you live in KY, it will not be possible t...

DanielV01 — Sat, 01 Jun 2019 13:18:14 GMT

It depends. If you live in KY, it will not be possible to get a refund for local and county taxes. As Hal_Al mentions, KY localities take out the exact amount of tax on your wages. KY localities only tax income where you work. (Metro Louisville does tax a Louisville resident at a higher rate than a Louisville nonresident). Therefore, if you are a Kentucky resident, there is no real way to obtain a refund for local taxes paid to KY.

If you are an Indiana resident, however, you may be entitled to Indiana local taxes. Indiana localities also tax the income, because Indiana localities tax income to the resident of a county or a worker in the county. So if you live in Indiana and work in Kentucky, you can receive a credit on your Indiana return for the local tax you pay to the Kentucky city you work in. Please see the screenshot below on how you enter this in TurboTax.

If you are an Ohio resident , that worked in KY, you can...

Hal_Al — Sat, 13 Jun 2020 11:05:10 GMT

If you are an Ohio resident , who worked in KY, you can not get those refunded. But if you live in an Ohio city with a tax, they may give you a credit or partial credit. Many do. You need to check with your city.

Re: It depends. If you live in KY, it will not be possible t...

Drew01 — Fri, 12 Jun 2020 23:09:36 GMT

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!

Re: It depends. If you live in KY, it will not be possible t...

Hal_Al — Sat, 13 Jun 2020 11:13:41 GMT

Some (but not all) IN counties (but not the state) allow a credit, or partial credit for tax paid to an OH or KY city or county. That will come up in the IN state interview. For more, see: https://ttlc.intuit.com/questions/4699137-i-see-no-separate-question-for-school-taxes-in-indiana-like-ohio-i-listed-my-county-of-residence-and-address-are-they-collected-automatically-based-on-address

Re: It depends. If you live in KY, it will not be possible t...

yougogirls2 — Wed, 20 Jan 2021 02:37:00 GMT

Ok. I lived in Indiana the whole year and the position was in Louisville, KY. Can I get my local taxes money that they took out on my paycheck? My income was based upon Indiana taxes.

If I cannot get my KY local taxes money back, then I can claim it on out of state local taxes in Indiana?

KY is a reciprocal, so do I still have to complete a nonresident state return too?

Barbara

Re: It depends. If you live in KY, it will not be possible t...

AmyC — Thu, 21 Jan 2021 22:39:11 GMT

You do not need to ask for your local taxes back from KY. Instead, you can claim them on your IN state return to receive a credit for the tax paid. Your IN return combines both state and local taxes. The KY local tax would be a credit up to the amount Indiana locally would have charged on the same amount.

You do not need to file a non-resident return for KY.

To help clarify and navigate:

Regardless of where you work, Indiana will assess local taxes based on where you live (county of residence). But if you are paying local taxes in another state they will give you a credit for the amount of local tax you paid out of state (but only up to the amount of local tax you would have to pay to your Indiana county. They are claimed on Indiana Schedule 6 (taxes paid outside of Indiana). In Turbo Tax:

1. In State Taxes tab, continue to Your County of Employment Screen

2. For County of Employment, Scroll all the way to the end, and select Out Of State-Kentucky

3. Continue your Indiana Return until Take a Look at Indiana Credits and Taxes

4. Select Start on Credit for Non-Indiana Local Taxes

5. Fill in the information on the following screens (locality, what state, and how much local tax paid to state).

TurboTax will calculate the credit.

@yougogirls2

[Edited 1/21/2021 |2:24 pm PST]

Re: It depends. If you live in KY, it will not be possible t...

Hal_Al — Fri, 22 Jan 2021 14:49:47 GMT

Q. KY is a reciprocal, so do I still have to complete a nonresident state return too?

A. No, unless KY state tax was erroneously withheld. The reciprocal agreement does not apply to city and county income tax. KY cities and counties are allowed to withhold that tax from your pay. You cannot get that refunded.

Q. If I cannot get my KY local taxes money back, then I can claim it on out of state local taxes in Indiana?

A. Yes. You cannot get a credit, for KY local income tax against the IN state tax. But most IN counties do allow a tax credit. The IN county income tax is filed as part of the IN sate return. If your county is one that allows a credit, it should come up in the TurboTax state interview.

The allowable credit is equal to the lesser of:
 The amount of income tax actually paid to a locality in another state;
 The amount of adjusted gross income taxed by the locality outside of the state of Indiana
multiplied by the county rate to which the taxpayer is subject; or
 The amount of county tax due on the Indiana return

Reference: https://www.in.gov/dor/files/ib28.pdf

Re: It depends. If you live in KY, it will not be possible t...

yougogirls2 — Fri, 22 Jan 2021 13:52:46 GMT

Thanks. I was reading KY information thought I had too. I already downloaded KY. Too bad that I cannot get my money back on that.

Re: How do I claim city and county tax refund for Kentucky?

Aam21 — Thu, 05 Aug 2021 21:11:45 GMT

What form is necessary to get a refund of local taxes paid in error for Louisville Kentucky? The client is a nonresident and filed state taxes as a nonresident.

Re: It depends. If you live in KY, it will not be possible t...

Aam21 — Thu, 05 Aug 2021 21:15:43 GMT

Fortunately the client lives in Georgia and does not work in Kentucky but does computer on line teaching for a Kentucky source while in GA

Re: What makes you think you are entitled to one? Refunds are...

Aam21 — Thu, 05 Aug 2021 21:20:53 GMT

Because the state and local taxes were taken out erroneously when the client works outside of Kentucky and is a resident of Georgia

Re: What makes you think you are entitled to one? Refunds are...

Hal_Al — Thu, 05 Aug 2021 23:38:13 GMT

Most (if not all) KY cities and counties administer their local income tax. It is not handled by the state tax dept. Contact the city (or county) tax dept. for refund forms. The forms are not available in TurboTax. Describe your situation to them, as a special form may (probably) will be required.

Re: How do I claim city and county tax refund for Kentucky?

dayakhalsa32 — Fri, 21 Jan 2022 11:56:25 GMT

Hi all,

What if I work 100% from home in Tennessee for an employer in KY?

thanks

Re: How do I claim city and county tax refund for Kentucky?

Hal_Al — Fri, 21 Jan 2022 12:03:47 GMT

@dayakhalsa32 said "What if I work 100% from home in Tennessee for an employer in KY?"

I assume your employer withheld city/county tax and you asking if you can get it refunded. You'll have to contact the city/county tax dept for an answer. . If you normally worked in KY, but are home because of covid, the answer is probably no.

Re: How do I claim city and county tax refund for Kentucky?

DanielV01 — Fri, 21 Jan 2022 13:21:07 GMT

@dayakhalsa. Different KY localities have different policies, (none of which can be resolved with TurboTax software, unfortunately). If you were not working inside of the county, you can, in fact, get a refund for mistaken withholdings. You will want to contact both the local taxing district as well as your employer, as they may well have to sign off on the errant withholdings being a mistake so you may be refunded. And if you are working from home due to Covid, as @Hal_Al mentions, it might not be possible to get a refund, depending on that locality's specific COVID policy.

Re: How do I claim city and county tax refund for Kentucky?

taxes_due — Wed, 09 Feb 2022 02:47:12 GMT

Hello, so I did get a refund from a County (local tax) in Kentucky for working from home for most of 2020 and they sent me a 1099-G this year for the exact amount that was refunded.

Also I did not pay anything back to Indiana, since i filed the refund after i filed taxes in 2021.

How do I adjust that on my taxes this year for 2021 (1099-G) and do I have to since i did not pay local tax to Indiana in 2020 ?

I am planning to get that refund again because I worked from home all 2021. Do I need to ask for refund again or can I claim that in my 2021 taxes ?

Also, the Kentucky County tax rate was/is a lot more than Indiana county local tax I live in.

Thanks!

Re: How do I claim city and county tax refund for Kentucky?

KrisD15 — Wed, 09 Feb 2022 03:08:35 GMT

I am not sure I follow,

would you please clarify.

Are you asking how you claim a city and/or county tax refund (as income) on your Federal 1040?

If so, you only need to report the 1099-G if you Itemized Deductions on your 2020 Federal return.

Kentucky and Indiana have a "Reciprocal Agreement" between them, so you should only be paying state tax to the state in which you live. City and County tax doesn't apply since the agreement is only between the states. You still need to pay city and county tax.

I assume county tax is withheld from your pay. You can file a county tax return to try to get some of that tax refunded. If I understand you correctly, you are reporting that as income on your state return? You don't need to report that as income on your state return, you never claimed it as a credit or deduction, it is just a return of your money. You were already tax on your income BEFORE the county tax was withheld. You don't want to pay tax on what you get returned to you.

Indiana should not give you a credit for the county tax you paid, they only give credit for other STATE tax paid.