I live in Indiana but I work in Kentucky, I paid Carroll County (KY) taxes, Switzerland County (IN) taxes, then Federal, and Indiana State income tax. But I owed KY?

Forum|Forum|3 months ago
April 16, 2026
1 reply
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Something is wrong bc other guys I work with didn't have to pay a full compliment of state taxes to BOTH Indiana & Kentucky

TurboTax Online

Hal_Al

Level 15

Q. Something is wrong bc other guys I work with didn't have to pay a full compliment of state taxes to BOTH Indiana & Kentucky. Right?

A. Yes. You should not even be preparing a KY return.

In the personal info section, when it asks if you made money in another state, answer NO, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file a KY return.

IN & KY have a reciprocal agreement, on wages.. No KY state taxes are withheld or due and you do not normally need to file a return for KY. But IN will tax you on your KY state income.

If KY STATE tax was mistakenly withheld, you then have to file a KY return to get a refund. IN will not give you a credit.

KY has a specific form (740 NP-R ) for a reciprocal state refund. Rather than paying TurboTax for KY software, you should try filing that form by hand. It looks pretty simple.

https://revenue.ky.gov/Forms/740-NP-R%20(2025).pdf

However the reciprocity agreement does not apply to local county taxes. You can not get KY county tax, that was withheld, refunded.

Most IN counties (but not the state) allow a credit, or partial credit for tax paid to a KY county. That will come up in the IN state interview.