Questions & Answers
Is my income taxable by Kentucky if I'm a resident of a reciprocal state?
Kentucky has reciprocal agreements with
specific states. These agreements provide for taxpayers to
be taxed by their state of residence, and not the state where
income is earned. Reciprocity does not apply to persons who
live in Kentucky for more than 183 days during the tax year.
The states and types of exemptions are as follows:
Taxpayers who qualify for this exemption and have no other Kentucky taxable income should file Form 740-NP-R , Kentucky Income Tax Return, Nonresident-Reciprocal State, to obtain a refund.
- Illinois, West Virginia-wages and salaries
- Indiana-wages, salaries and commissions
- Michigan, Wisconsin-income from personal services (including salaries and wages)
- Ohio-wages and salaries. Note: Wages which an S corporation pays to a shareholder-employee if the shareholder-employee is a "twenty (20) percent or greater" direct or indirect equity investor in the S corporation shall not be exempt under the reciprocity agreement.
- Virginia-commuting daily, salaries and wages
Taxpayers who qualify for this exemption and have no other Kentucky taxable income should file Form 740-NP-R , Kentucky Income Tax Return, Nonresident-Reciprocal State, to obtain a refund.
