Why is turbo tax telling me to file a non-resident tax return in Kentucky if Kentucky and Indiana are reciprocal states?

[kwiggins1]

I am having to pay taxes in both states according to the returns that turbo tax has recommended.  I work in KY but my employer did pay state taxes to Indiana.  The only taxes I paid to KY was the city taxes to Owensboro.

[TomD8 · Accepted solution]

If you're a resident of IN, and your only income from KY is W-2 wages, then you do not have to file a KY tax return.  Your income is taxable only by your home state of IN.

If that's your situation, then answer No in the My Info section to having income from another state.

Note that reciprocity applies only to W-2 wages, not to other types of income.