My wife and I live in Kentucky and both work in Ohio.

[kipd]

Both KY and OH state taxes were taken out of my wife's pay from the Ohio employer she worked for last year. Her employer admits it was a mistake and are working to correct it going forward.

How do we get the Ohio tax that was deducted from her pay refunded?

Is there a way to handle this situation in TurboTax? When I walk through the steps to file an Ohio non-resident state return in TurboTax, it cautions in bold not to include any income that was taxed by another state. All her income was taxed by both states. Please advise how to proceed.

[KrisD15]

YES

File the non-resident Ohio return, allocate zero income and the tax withheld to get the tax refunded. 

[kipd]

I don't really see how to do this. I am using the online version of TurboTax. When I indicate I am a non-resident, it doesn't even give me an option to enter the amount I was taxed.

[KrisD15]

The program will pickup the Ohio tax withheld from the W-2 you entered in the Federal Section. 

[kipd]

Unfortunately, it is ultimately calculating that we owe Ohio money instead of them owing us the money that was deducted from her checks. I will look to see if there is some way in the online version that would allow me to enter the data manually instead of just pulling it over from what's in the Federal data.

[KrisD15 · Accepted solution]

When you did your Federal return, did you select Kentucky as your resident and no other in the Personal Info Section?

You reported that you did not live in any other state?

When you entered the W-2, did you use the "Add another state" to enter both the Ohio and Kentucky taxes that were withheld?

Was the total wage included for both states on the W-2 or was the income split?

Did you complete your federal return?

Did you first do your resident Kentucky return?

Did you next do your Ohio non-resident return? 

When you started the non-resident Ohio return,  did you say NO you did not make money in Ohio?

Go through the interview making no adjustments, do not report any income attributed to Ohio at all.

The Ohio return should show a refund for the same amount of Ohio state that was withheld on your W-2. 

If you are using Desktop, switch to forms and look at your Ohio return, does it show any income? 

[kipd]

Thank you for your help! On my wife's W2 it had the full amount of income listed for both states. I removed the income amount for Ohio and now it shows we will get a refund for the full amount of tax erroneously paid to Ohio.

[ThomasM125]

I believe your W-2 will show income to Ohio and tax withheld to Ohio. If so, Ohio will assume she earned income there and if you owe tax to Ohio based on what is on the W-2 form, then Ohio will demand that tax regardless of what you enter on your tax return.

Most likely the only way you can convince Ohio that you don't have a tax liability there is to get an amended W-2 form that does not show any income for that state. If your employer can amend the W-2, then they would get a refund of the taxes paid to Ohio which they can then refund to you.