I live in Ohio, do I have to file a KY state tax form, if I work in KY? I have asked my employer not to hold Kentucky taxes but will I need to file local taxes for KY?

[AlanT · Accepted solution]

If your employer did not withhold Kentucky taxes, you do not have to file a Kentucky income tax return.  

If your employer withheld Kentucky taxes, you will have to file form 740-NP-R to receive a full refund.  Ohio is a reciprocal state, therefore you are not required to pay tax in Kentucky.  

You do not have to file a local tax return as long as your employer withheld income tax for the location of your employment in Kentucky.  Check boxes 19 and 20 on your W-2 for this information.  

[barnwasj]

What if my Employer has not withheld any local taxes for kentucky? Do I need to file the local tax and if so how? Boxes 19 and 20 are blank on my W2. Please advise!

[AlanT]

Where do you work in Kentucky

[barnwasj]

Florence city

[AlanT]

Your Employer is required to withhold 2% for Florence.  Check with your employer to make sure they withheld.  Also check to see if you received a duplicate W-2.  Most times they send 2 for out of state.  1 for Ohio and the other for KY.  

[barnwasj]

Okay, Thank you for your assistance.

[barnwasj]

My employer is saying that they will withhold Kentucky state taxes and Local taxes going forward and will not deduct any from my state of residence Ohio. Will it be fine?

As per them, it is mandatory to pay tax in kentucky but ohio residents are not subjected to ohio state withholding when performing work in a different state if they are subject to the other state's Kentucky income tax withholding requirements

[Hal_Al]

Your employer is wrong.  He is right that he must withhold KY local (city or county) tax.  It is not mandatory to withhold KY state tax on an employee who is a full year resident of a reciprocal state (OH).
Give your employer form  42A809 (<a rel="nofollow" target="_blank" href="https://revenue.ky.gov/Forms/42A809.pdf">https://revenue.ky.gov/Forms/42A809.pdf</a>)

[Hal_Al]

Ohio has a reciprocal agreement, on wages,  with all neighboring states. No state taxes are withheld or due and you do not normally need to file a return for the other state (MI, PA, KY, WV, IN). But OH will tax you on your other state income.

However the reciprocity agreement does not apply to local city & county taxes.  Your employer is required to withhold local income tax (city or county).  You can not get that refunded.  It is the duty of the employer to deduct report and remit all applicable Boone County taxes from employee wages. Employees do not file individual Boone County tax returns personally, thus the employer is responsible for collection and remittance of all three Boone County taxes, when applicable. (Reference: https://www.boonecountyky.org/docs/0906_Quarterly_Return_Instructions_2016.pdf)

  But if you live in an Ohio city with a tax, they may give you a credit or partial credit. Many do.  You need to check with your city.

If you are subject to Ohio School District Income Tax (SDIT), you can not get a credit, for KY local taxes withheld, on an SDIT return.