Superchicken
Level 2
04-29-2021
02:46 PM
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Client who is KY resident received unemployment from Indiana and Indiana state tax was withheld. KY and IN are reciprocal states. Does Indiana tax the KY resident for the unemployment paid to KY resident by Indiana Division of Unemployment?
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sjrcpa
Level 15
04-29-2021
03:21 PM
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Reciprocity generally only applies to wages.
Look at the Indiana instructions for nonresident returns and see what they say.
Even if IN doesn't tax it, client will need to file to get a refund of the IN withholding.
The more I know the more I don’t know.
dkh
Level 15
04-29-2021
09:38 PM
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Indiana does tax unemployment but Indiana does not tax residents of reciprocal states for Indiana unemployment. You will need to complete ITPNR to get refund for any state/county taxes withheld.
see page 2 for unemployment info https://www.in.gov/dor/files/dor-tax-season-faqs.pdf
