I live in Indiana and work in Kentucky. Do I need to file state taxes in Kentucky if I didn't pay Kentucky state taxes BUT employer did withhold Indiana state taxes?

[JulieCo · Accepted solution]

No, if you live in Indiana and your employer did not take out Kentucky taxes, then you do not need to file a non-resident return for Kentucky.  Kentucky and Indiana have a reciprocity agreement between them which is an agreement between two states that allows residents of one state to request an exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.  You will only need to file a resident tax return for Indiana.