I live in Indiana but work in Kentucky, it says I owe Kentucky state tax and Indiana state tax . Is this correct. I thought I just pay the state I live in. Please help.

[IsabellaG · Accepted solution]

No, that's not correct.Kentucky has a reciprocal agreement with Indiana, so if you live in Indiana but work in Kentucky, and the only income you have from Kentucky is wages, then you will only pay tax in your home state. You are supposed to give Form 42A809, Certificate of Nonresidence to your employer to have on file so they won't withhold taxes from your pay.

If there was no KY withholding on your W-2, don't file a KY tax return. If there was withholding, you'll have to file a return with Kentucky to get it back.

Please comment back here if you have more information for me.

[hblock867]

Thank you.....

[Latazia]

I resently filed my tax return and found out I owe both KY and Indian state taxes. When I discussed this with my employer he stated that he spoke with Kentucky department of Revenue and they told him that his employees do not have to pay Kentucky taxes. I know not much can be done since I already submitted my return but i want to know what I need to look for so this does not happen next year.

[Valerierenee812]

If a return is filed already is there anything you can do in this situation? 

[BrittanyS]

If you filed a nonresident return for Kentucky and a resident return for Indiana TurboTax would have asked you questions about the income received from Kentucky.  You can review your returns in TurboTax to see if the income was excluded or if you claimed the credit for taxes paid to another state.  If not, you can amend your Indiana return and exclude the Kentucky wages or claim the credit.  To amend your return you will follow these steps:

1. Wait until your returns are accepted and processed.  If receiving a refund, do not amend until your refund is received.
2. Sign in to TurboTax
3. On the home screen, scroll down to Your tax returns & documents and select the year you want to amend
4. Select Amend (change) return, then Amend using TurboTax Online
   • If you're told to amend your return via TurboTax Desktop, follow the steps for TurboTax CD/Download below instead
5. On the screen OK, let's get a kickstart on your amended return, select the reason(s) you're amending and Continue
6. When you reach Here's the info for your amended federal return, select Start next to the info you need to change
7. Continue through the screens, make the changes you need to make, and carefully answer the remaining questions to finish amending your return

@Valerierenee812 

[eddieknapp2]

Thanks for this reply. Why does the program tell me I need to file a KY return? Did I fill something out wrong?

[AmyC]

@eddieknapp2  I don't see any other posts from you on this thread. I will assume your an IN resident. If you had KY tax withheld, you would want to file a nonresident return to claim a refund.

You will want to submit this form, 42A809 3-07, to your KY employer so no more KY tax is withheld.

[Hal_Al]

In the personal info section, when it asks if you made money in another state, answer NO, per the reciprocal state instructions, on that page. This will prevent TurboTax from thinking you need to file a KY return.