Should my Ohio nonresident income be zero because I live in Kentucky?

[grantchaffin05]

I live full-time in Kentucky and worked in Ohio. My W-2 shows only Kentucky state withholding, not Ohio. Ohio return shows tax due. Kentucky and Ohio have a reciprocity agreement. Should Ohio taxable income be zero?

[Hal_Al · Accepted solution]

You should not be preparing an Ohio return, at all, since no Ohio state tax was withheld. 

Ohio has a reciprocal agreement, on wages, with all neighboring states. No Ohio state taxes are withheld or due and you do not need to file an OH return. But your home state will tax you on your Ohio income.

Only if Ohio state tax is mistakenly withheld,  do you have to file an Ohio return to get a refund. 

However the reciprocity agreement does not apply to local city taxes. You are not required to file an Ohio local city return, but you are also not entitled to a refund of the OH city withholding (box19 on your W-2), unless there was an error in the amount. If you are subject to a KY county or city tax, you should check to see if the KY city will give you a credit for the OH city tax withheld. KY does allow an itemized deduction (Schedule A) for local tax paid.