HELP! Can't efile because keep getting error to file Non-resident reciprocal form 740-NP-R for Kentucky. Help!

[JennsTrueStory]

my husband lives in indiana and works in ky.

there are 2 lines on the bottom of his w-2 (numbers are examples)

line 1 - box 15 state is blank employers state id blank Box16 state wages is blank Box17 state income tax is blank Box18 local wages $1000  Box 19 Local Income Tax $1000  Box 20 LOUISVIL (Louisville is in Kentucky)

line 2 - IN  Employers state id 12346789 Box 16 $100,000 Box 17 $2000 Box 18 $100,000 Box 19 $.00 Box 20 Jeff Co (Jefferson County is in Kentucky)

We paid indiana state taxes and $0 indiana local taxes

We pay $0 Kentucky state taxes and $1000(per example above) Kentucky Local taxes for Louisville

and local taxes to louisville. 

When I select Non-resident reciprocal State for Kentucky it calculates that we do not owe kentucky anything and kentucky does not owe us anything. 

Please see screenshots of W-2 form and image of the federal tax return has state income entered.

Please advise on what needs to be resolved by who where etc.

Thanks,

[JamesG1]

You live in Indiana and work in Kentucky where you paid the Jefferson County Kentucky Occupational Tax.

You will file an Indiana Resident tax return.  On the Indiana Resident tax return, you will be liable for an Indiana County Tax for the county where you reside even though the W-2 did not withhold Indiana County Tax.

You will not have to file a Kentucky income tax return.  The Jefferson County Kentucky Occupational Tax may be deducted on your Indiana Resident tax return as a Credit for Non-Indiana Local Taxes.

Kentucky has a reciprocal agreement with Indiana.  If only W-2 income is involved, an Indiana resident working in Kentucky does not have to file a Kentucky income tax return.