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No. This is the typical way, it is handled; your home state taxes it, not the issuing state. Since, WA doesn't have a tax, you still don't pay KY. This answer assumes that no KY was withheld from the payments.
No. Since you received the benefits while living in WA, they would be taxable to WA, however since WA does not have income taxes, you will not pay state taxes on your benefits.
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