How do I complete the out of state tax credit worksheet? It is asking me to fill in amount of tax paid to another state from your state return- what does that mean?

It depends.  If you worked only in your resident state there is nothing to enter. If your state has a reciprocal agreement with an adjacent state there is nothing to enter.

• What states have reciprocal agreements?

If you worked in a nonresident state and were taxed on money earned in that state, you may have a credit for taxes paid to another state.  

 

The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.  As the resident state all worldwide income must be included.

 

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state

If you do qualify for this credit you will need the amount of income taxed by another state, and the amount of the tax liability on that income in the other state.  If the nonresident state is completed first, TurboTax will carry the information. You can also enter it when asked if you did do your resident state return first.