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I live in KY but work in Indiana and have taxes from both states taken out each check. How should I file my state returns?

Forum|Forum|3 years ago
December 27, 2022
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I live in Kentucky but work for a company over the bridge in Indiana. Both state taxes are taken out of my check. Do I file two state returns?

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Best answer by TomD8

Indiana and Kentucky have tax reciprocity for W2 income. That means that if you're a resident of KY, your W2 income is not subject to IN state income tax (it may still be subject to IN local taxes).

If IN state tax was mistakenly withheld from your pay, you must file an Indiana tax return, using Indiana Form IT-40RNR, in order to receive a refund of those withholdings.

Since you are a resident of KY, all your income is taxable by KY, regardless of where you earn it.

You should file IN Form WH-47 with your Indiana employer, so that they will cease withholding IN state taxes. The form certifies your Kentucky residency. You can find that form here: https://www.in.gov/dor/tax-forms/withholding-tax-forms/

T

TomD8Answer

Employee

Indiana and Kentucky have tax reciprocity for W2 income. That means that if you're a resident of KY, your W2 income is not subject to IN state income tax (it may still be subject to IN local taxes).

If IN state tax was mistakenly withheld from your pay, you must file an Indiana tax return, using Indiana Form IT-40RNR, in order to receive a refund of those withholdings.

Since you are a resident of KY, all your income is taxable by KY, regardless of where you earn it.

You should file IN Form WH-47 with your Indiana employer, so that they will cease withholding IN state taxes. The form certifies your Kentucky residency. You can find that form here: https://www.in.gov/dor/tax-forms/withholding-tax-forms/

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Hal_Al

Employee

Look at your pay stub (and W-2 when you receive it) carefully to verify that it is Indiana state tax that is being withheld and not Indiana County income tax. The reciprocity agreement exempts you from IN state tax, but not county tax. If only county tax was withheld, you do not need to file an IN return, as you cannot get the county tax refunded.

If you are subject to a KY local (county or city) income tax, where you live, check with your city/county taxing agency. They may be allow a credit for the IN county tax paid.

C

Cdockery

How do I fill out the WH-4? I have not applicable in Indiana county of residence and the county I work in on the next line. 0 on everything else

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TomD8

Employee

@Cdockery --

Are you a Kentucky resident who works in Indiana? If so, you should file Indiana form WH-47 with your employer. You can find a link to that form here:

https://www.in.gov/dor/tax-forms/withholding-tax-forms/

**Answers are correct to the best of my ability but do not constitute tax or legal advice.