If I live in ohio and work in Kentucky, and my tax returns say I owe taxes in ohio. Shouldn't Kentucky give the taxes I paid to them to ohio ? I'm confused on this.

Forum|Forum|7 years ago
June 5, 2019
2 replies
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Best answer by SteamTrain

No..they (KY) doesn't....but it depends on what you mean

KY and OH have a reciprocal tax agreement whereby each state agrees not to assess income taxes on cross-border W-2 workers from the other state..

What you are supposed to do, as an OH resident, is to give your employer a special form declaring that you are a resident of OH. Then that employer will actually withhold OH taxes (double check your W-2...maybe that is what the did...maybe they did withhold OH taxes and you just owe some more), or the employer will withhold no state taxes for either state.

https://revenue.ky.gov/Forms/42A809.pdf

IF KY taxes were withheld by the KY employer, then you should prepare the KY for 740-NP-R to get those KY withholdings back (do it manually, don't use Turbotax. Delete the KY tax return and don not indicate you worked in another state in the My Info section)

https://revenue.ky.gov/Forms/Form%20740-NP-R%202018.pdf

....and you have to pay OH the whole amount yourself separately then. OH expects you to get that refund from KY on your own.

Get that form 42A809 in to your employer if KY taxes are really being withheld.

_____________

But if OH taxes were only withheld...then in the tax software..you do not indicate that you worked in another state..because your KY income is then properly being considered as-if you only worked in OH. AND putting the sate section of your W-2 in properly....using your paper forms...if "OH" is in box 15...then you get credit for that OH withholding automatically when you do the OH tax return..

________________

...I seem to recall that city/county-KY taxes are not a part of reciprocity, but don't recall how they are dealt with though....if at all. I think most are deducted as a flat % by the employer and no extra tax filing is required. Check with other employees from OH that have been working there for many years..they may have it figured out by now.

SteamTrainAnswer

Level 15

No..they (KY) doesn't....but it depends on what you mean

KY and OH have a reciprocal tax agreement whereby each state agrees not to assess income taxes on cross-border W-2 workers from the other state..

What you are supposed to do, as an OH resident, is to give your employer a special form declaring that you are a resident of OH. Then that employer will actually withhold OH taxes (double check your W-2...maybe that is what the did...maybe they did withhold OH taxes and you just owe some more), or the employer will withhold no state taxes for either state.

https://revenue.ky.gov/Forms/42A809.pdf

IF KY taxes were withheld by the KY employer, then you should prepare the KY for 740-NP-R to get those KY withholdings back (do it manually, don't use Turbotax. Delete the KY tax return and don not indicate you worked in another state in the My Info section)

https://revenue.ky.gov/Forms/Form%20740-NP-R%202018.pdf

....and you have to pay OH the whole amount yourself separately then. OH expects you to get that refund from KY on your own.

Get that form 42A809 in to your employer if KY taxes are really being withheld.

_____________

But if OH taxes were only withheld...then in the tax software..you do not indicate that you worked in another state..because your KY income is then properly being considered as-if you only worked in OH. AND putting the sate section of your W-2 in properly....using your paper forms...if "OH" is in box 15...then you get credit for that OH withholding automatically when you do the OH tax return..

________________

...I seem to recall that city/county-KY taxes are not a part of reciprocity, but don't recall how they are dealt with though....if at all. I think most are deducted as a flat % by the employer and no extra tax filing is required. Check with other employees from OH that have been working there for many years..they may have it figured out by now.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

Hal_Al

Level 15

The reciprocity agreement does not apply to local city and county taxes. 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.

If you are subject to Ohio School District Income Tax (SDIT), you can not get a credit for KY local taxes withheld on an SDIT return.