Enter your W-2 EXACTLY as you received it and let TurboTax sort out the states. Enter Indiana first. Then, enter Kentucky.
INDIANA: You will be filing Form IT-40PNR; you may owe a County Tax for where you worked.
For the first 8 days, you were an Indiana resident.
For the rest of the year, you were a reciprocal nonresident. But page three of the Indiana IT-40PNR Booklet can be downloaded from this cite and states you will need to file the Form IT-40PNR because you did have the first 8 days as a resident. You may owe Indiana County Tax. Was it withheld? There are special rules you can read about on page 69. Download the CT-40PNR and scroll to page 2 for the code.
KENTUCKY: You will pay tax on all the income.
Your states have "reciprocity." That means that you can set it up to only pay state taxes for the state you live in. However, Kentucky only allows that if you lived in Kentucky for 183 days or less. See page 11 of the Kentucky Form 740-NP Instructions.
And from the Kentucky Form 740 Instructions Packet page 20:
Kentucky does not allow a credit for tax paid to a reciprocal state on the above income (In part, it lists: Indiana—wages, salaries and commissions). If tax was withheld by a reciprocal state, you must file directly with the other state for a refund of those taxes.
Hi! Thanks for the quick response. Seems my post was cut off though.
For Indiana, Box 16 State wages, my full years salary was listed though I only should be subjected to 8 days worth of state taxes. For Kentucky Box 16, the value is (full salary - Indiana 8 day salary of 1700$).
So overall, both Box 16's total to over a hundred thousand. When using the part-resident for both States, starting with IN first, TurboTax says I owe Indiana another 1400 for state. I assume this is due to Box 16 listing full salary rather than 1700 made in those 8 days?? I had 2x more IN county tax taken out than I should've already.
I recommend contacting your employer then. They may need to issue you a corrected W-2 Form to correctly reflect the wages earned in each state. The overall total should not change for your federal return. But this will ensure you are only paying taxes on the wages actually earned within each state.
Be sure to enter Indiana first and then Kentucky. If you did Kentucky first, delete them both and re-add with Indiana first.
There should be a space to back out the taxes paid to Kentucky on the Indiana return. The double amount of the Indiana county tax should be refunded, as well.
The employer will need to get this straight for future years.