It depends.
Indiana and Kentucky are known as reciprocal states,
which means that if you live in Kentucky, but work in Indiana, you are only
taxed to Kentucky and do not pay taxes to Indiana. There are times, however, that if the correct
form (WH-47) is not filled out in Indiana, then taxes are withheld to
Indiana. See this FAQ for more information:
https://ttlc.intuit.com/replies/4776822
.
What is
your situation?
Check your 1099-G from
Indiana to see if they took out tax to Indiana. If they did not (only withheld taxes to KY), then make
sure in TurboTax that you answer no to the question “Did you work in
another state outside of Kentucky?” You will not be required to file a state
return for Indiana.
If
Indiana did withhold taxes
for Indiana, click yes on the question “Did you work in
another state outside of Kentucky (even though it was unemployment and not
technically “work”?”, and then enter Indiana. You will want to fill out
the Indiana return as a non-resident
reciprocal state. You would then get a refund from Indiana on
the tax you paid, but you would have additional tax to pay to Kentucky.
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