Complicated tax situation, 2 states, reciprocal agreement but no corrected paperwork, how to file?

[Killijin]

Ok, I will do my best to explain my difficult tax situation and hopefully somebody can tell me the correct path please and thank you.

1. Wages and income - Made in West Virginia but reside in Kentucky, reciprocal state but no reciprocal state paperwork filed to correct it for 2022.
2. Kentucky gives double filing credit but not on wages and income. So i don't think I would get any credits or adjustments there in my favor.
3. Have two 1099-NEC w/o any state info for taxes listed on them - I understand I only report these federally?
4. Do I need to file in this order for this situation:
a. file return for federal and special non-resident state for WV
b. obtain refunds, and/or pay Kentucky after filing or
c. then file Kentucky with full state penalty absorbing all state taxes payback from WV?

thank you all for any assistance.

[DMarkM1 · Accepted solution]

1.  I understand that on your W2 there was WV withholding but zero KY withholding so assuming none of your self-employment was performed in WV then, yes, you will file the special nonresident WV return.  If some of your self-employment was WV source then you will have to file the full nonresident WV return and pay WV taxes on the WV source income.     

2.  You are correct KY will not give a credit for taxes paid on salaries/wage income to WV as part of the reciprocal tax agreement.  Further, you will be getting all the WV withholding back so no taxes paid there.   If you paid WV taxes on part of the self-employment you could claim a KY credit for that.

3.  You will input the forms 1099-NEC in the federal interview and KY will automatically tax you as your resident state on that income (whether or not you put KY in the state boxes).       

4.  The timing of your payment to KY is your choice.  You can file all the returns when ready.  You could then wait until the deadline (18 Apr) to pay KY with anticipation that your WV refund will be deposited prior to that.  Yes, there may be KY penalties for underpayment depending on the size of the KY tax owed.  

[Killijin]

Hello @DMarkM1 and thank you so much for your in-depth and helpful response. I should of clarified that my income in my first line was, in-fact, a W2 for WV. However all of my 1099-NECs were in WV, but since they didn't report that directly on them, then I am going to have to pay and report for WV correct?. Those NEC may help to give some tax credit for KY since I am non resident paying taxes on them and will not report them for KY correct, or because they do not have the state specifically on them they will automatically be taxed by my resident state? Sorry just trying to dot my I's and line my Ts before I file. I will not be making this mistake this year lol. 

[TomD8]

"Have two 1099-NEC w/o any state info for taxes listed on them - I understand I only report these federally?"

If you received the 1099-NEC's for work you actually performed in WV, then that income is taxable by WV, and must be reported on a non-resident WV tax return as well as on your federal return..

The KY-WV reciprocity agreement applies only to wages and salaries (W-2) income, not to self-employment income.