I had a question regarding this. I am moving to Indiana in October or November however I will still be working in Kentucky as I have my own business there and will be commuting back. I pay myself on payroll and withhold Kentucky taxes currently. I know they are reciprocal states but I am wondering if I need to switch to withholding Indiana as soon as I move. And if so, how will I go about filing my taxes since I will have been a resident of Kentucky through move (and withholding Kentucky) and then a resident of Indiana (withholding Indiana rest of year)? My husband is filing with me too but he’s a student so he has 0 income.
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What type of business do you have; sole proprietor (you file Schedule C), S corp or C corp?
The reciprocal agreement applies to wages, salaries and commissions. It does not apply to self employment income. So, most likely, you still withhold KY. IN will give you a credit for tax paid to KY.
I am a S Corp. I pay myself on payroll.
I get a W-2 as well.
Since you will be moving this year, for 2024 you will file a part-year resident tax return in each of the two states. Since you are receiving W-2 compensation, the IN-KY reciprocity does apply. KY can tax all your income prior to the move; IN can tax all your income after the move. So yes, after the move you should begin withholding for IN.
How do I file a part-year state return? (intuit.com)
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