I work and live in OK during the work days and in KS during weekends. I get the OK aerospace credit, but when i do KS taxes, I pay KS tax on the full income.

[mqcao]

The OK aerospace tax credit is not beneficial because KS taxes the the full amount as if it were the only state.  Is this correct?

[DanielV01]

Is all of the income being reported to Kansas in Box 16 of your W2 for Kansas?

[mqcao]

Yes

[mqcao]

The allocation in box 16 is defined by the employer provided W2. The W2 allocates the full taxable amount to both OK and KS.  Is it acceptable to differ from the W2 allocation for the two states when preparing the tax return?

[DanielV01]

You don't allocate there, but on the KS and Oklahoma interviews.  Only in the case that there is no allocation or apportionment or "income earned"  screens on the return would you need to come back to the W2 screen, but changing that information will disqualify e-filing.

[DanielV01]

You'll allocate income in Kansas.  When you allocate, you are telling Kansas how much income you actually made in Kansas.  If you don't know the exact amount, you will need to use a prorate method to determine the amount.  A way to do so is to divide the number of days in Kansas by the number of total work days in the year, and then multiply this number by the total income to arrive at the Kansas amount.  This reduces the amount of income taxed in Kansas, allowing you to get more value out of the OK credit you mention above.

Oklahoma taxes all of your income, but will give you a credit for the tax you pa to Kansas on the income earned there.  Prepare the Kansas return first so that the credit can be accurately calculated.