Usually, you can take a credit on your resident return as a ''credit for taxes paid to another state''. When you go through the credit section on your resident return, look for the Credits section and search for Credit for Taxes Paid to Another State. The reciprocity form you give your employer usually does not cover the local tax part like it does the state tax. What states are involved - living in and working in?
Local earned income tax is not covered by state reciprocal state agreements.
You can deduct those taxes as an “other state tax credit” on your resident state return. Each state program is set up differently. In general, each will have a screen asking whether you paid tax to another state.
Say yes. Then enter the state corresponding with the local tax. There will usually be a box to check to show you are claiming a local tax credit instead of a state tax credit. Either way, enter the local wages (Box 18) and local income tax (Box 19) from your W-2.
If you file a local tax return and the tax is less than the amount on your W-2, enter your actual tax liability.