I live in Indiana, work in Kentucky. I believe I am exempt from KY state tax. How do I amend my return to reflect a reciprocal state agreement?

[Vanessa A]

When you amend your return, you will simply remove all the income that you earned in KY from your KY return.  Your return should have no income listed.  If you had taxes withheld or paid in taxes, you should see the entire amount listed as a refund. 

In the reason for amending statement area, you will just enter resident of reciprocal state of Indiana. 

[Hal_Al]

In the personal info section, when it asks if you made money in another state, answer No, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file an KY return.

KY has a specific form (740 NP-R ) for a reciprocal state refund. Rather than paying TurboTax for KY software, you should try filing that form by hand. It looks pretty  simple.

https://revenue.ky.gov/Forms/740-NP-R.020521.pdf

You may want to call them and see if you can use this form instead of filing an amendment.  If you already filed an original KY return, wait to see what the state does with it, before filing an amended return. 

Be advised that the reciprocity agreement does not apply to local city & county taxes. You are not required to file a KY local city return, but you are also not entitled to a refund of the city/county withholding (box19 on your W-2), unless there was an error in the amount.  

Most  IN counties (but not the state)  allow a credit, or partial credit for tax paid to a KY county/city. That will come up in the IN state interview. For details, see:

https://ttlc.intuit.com/community/state-taxes/discussion/i-see-no-separate-question-for-school-taxes...