I accidentally filed a nonresident return in a reciprocal state for multiple years. Am I able to fix this or get my money back?

[KaylaW]

I live in Kentucky (have never left) and have been working in Ohio since 2021. When I started working with my current employer (2022-present), I submitted a Withholding Exemption Certificate IT 4 certifying that I am not eligible for Ohio or school district income tax withholding because I am a full-time resident of Kentucky. However, every year TurboTax has asked if I made income in another state. Unfortunately, I was not aware of the reciprocal agreement between Kentucky and Ohio so I claimed I did make income in another state. I only make an income in Ohio. Every year, I've owed on my Ohio state tax which I have paid in full. Since learning that I wasn't supposed to be filing with Ohio, I want to know if I can fix this and/or get the money I paid back.

[MaryK4]

Yes, you can file amended returns to correct your state income taxes.  If you filed in Ohio as nonresident  and paid the income tax, you could amend the Ohio returns to claim the zero income; or amend your Kentucky returns t claim the credit paid to another state.

[Hal_Al]

When you filed those erroneous Ohio non resident returns, did you also claim a credit, on your KY return, for the tax you paid to OH?

Normally a  state will not allow a credit for tax paid to another state that they are reciprocal with.  I don't know for sure that KY follows that rule, but it would be unusual if they didn't. 

[TomD8]

@KaylaW --

From page 20 of the Kentucky tax instructions:

"Kentucky does not allow a credit for tax paid to a reciprocal state on the above income. If tax was withheld by a reciprocal state, you must file directly with the other state for a refund of those taxes."

https://revenue.ky.gov/Forms/740%20instructions%20packet%20(2025).pdf

In order to obtain a refund of the taxes paid to Ohio, you must file an amended non-resident Ohio tax return, claiming zero Ohio income, for each year in which the mistake occurred.

If you haven't already done so, you should file Ohio Form IT-4NR with your Ohio employer.  Here's a link to that form:

https://dam.assets.ohio.gov/image/upload/tax.ohio.gov/forms/employer_withholding/Generic/WTH_IT4NR.p...

[Hal_Al]

The reciprocity agreement does not apply to local city taxes. You are not required to file an Ohio local city return, but you are also not entitled to a refund of the city withholding (box19 on your W-2), unless there was an error in the amount. If you are subject to a KY county or city tax, you should check to see if the KY city will give you a credit for the OH city tax withheld. KY does allow an itemized deduction (Schedule A) for local tax paid.