If my daughter goes to school and works in Tennessee during the semester does she have to claim that income on her ky state tax return?

[dcolwick]

She lives with me in KY when not in school.  She also worked in KY during the summer.

[Hal_Al · Accepted solution]

Q. Does she have to claim the TN income on her ky state tax return?

A. Yes.

 The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state.

Since TN does not have an income tax, you do not have a non-resident return to file. But you still have to pay tax on that income to your home state.

When you worked in a state without an income tax (e.g. TN), there will be no credit, since there was no TN tax. In other words, having worked in a state without an income tax does not get you out of paying state tax on that income, to your home state.