How does Kentucky tax remote workers?

There are a few situations to consider. You may fall into more than one category.

1. I lived in Kentucky.
• If you're considered a full-year or part-year resident of Kentucky, you'll be taxed on all income earned from any source during your time of residency. Be sure to file the appropriate return.
2. I worked remotely from Kentucky.
• Kentucky taxes income earned from personal services performed while in Kentucky (even if you're a nonresident). This includes remote work for an employer or clients based outside Kentucky if you were physically in the state while doing the work.
• You may be able to claim a credit for taxes paid to another state on your resident return for any income required to be reported in multiple states. There is an exception for full year residents of Illinois, West Virginia, Indiana, Michigan, Wisconsin, Ohio, and Virginia. You will need to file Form 740-NPR if you live in these states and have Kentucky state income.
3. My employer was based in Kentucky.
• If your employer was based in Kentucky, they may have withheld Kentucky taxes from your Kentucky wages as shown on your W-2. However, if you didn't live or physically work in Kentucky, you will not owe Kentucky taxes on those wages and can file a nonresident return to claim a refund of those withholdings.
• If you are a Kentucky nonresident, you did not physically work in Kentucky, and your employer did not withhold Kentucky state taxes, you probably don't need to file a Kentucky return at all unless you otherwise have a Kentucky nonresident filing requirement.

If your Kentucky taxable wages were minimal and you didn't do any other business in Kentucky, it's possible you'll be exempt from filing regardless of residency. See the Kentucky 740 and 740-NP instructions for more information.