I am confused on whether the local tax is based on work location or residence location. I do not want pay double tax - like paying Cincinnati, OH city tax as well as KY state tax. Please help me with this
All nonresidents of Cincinnati engaged in business within the City of Cincinnati, or whose compensation was earned within Cincinnati and did not have Cincinnati tax withheld from their earnings, must file a tax return whether or not tax is due.
So if you are an employee receiving a W-2, then your employer should be withholding Cincinnati income tax and remitting it on your behalf.
Depending on where you live in KY, you may also have a local tax and most likely will receive a credit to avoid the double local tax on wages.
See the attached from the Cinti Department of Revenue:
Yes, you are subject to Cincinnati city income tax. If city tax was withheld from your pay (box 19 of your W-2) you do not need to fie a city tax return.
Ohio has a reciprocal agreement, on wages, with all neighboring states. No Ohio state taxes are withheld or due and you do not need to file an OH return. But your home state will tax you on your Ohio income.
However the reciprocity agreement does not apply to local city taxes. You are not required to file a 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.