AMENDING KENTUCKY INCOME TAX RETURN - LOCALITY W/H NOT CALCULATING

Jacob_Adam
Jacob_Adam Member Posts: 2 Newcomer
in State Filing

Hi, in my original KY part year return filing (Indiana is the other part year state as I moved in 2025), I accidentally forgot to include my KY state W/H and KY local W/H on one of my W2s. I've waited for everything to be processed and have paid all taxes / received all refunds. Now I am amending, when I add the KY state and local W/H, it is giving the state amount to me as a refund, but not including the local amount. Is this a bug?

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Answers

  • TriciaD
    TriciaD FreeTaxUSA Agent Posts: 46 image
    Hello taxtaxkentucky,

    This is actually not a bug - it's how Kentucky handles local withholding by design.

    Kentucky's Form 740 instructions specifically state that "local government occupational, license or income tax must not be included on line 31(a)," which is the line where state tax payments and withholdings are reported. You can see this in the KY instructions here: https://revenue.ky.gov/Forms/740%20Packet%20Instructions%20(2025).pdf (see the Line 31(a) instructions on page 14).

    Because of this, only the state income tax withheld reported in box 17 of your W2 will reduce your KY state tax liability. The local withholding reported in box 19 is considered a separate local tax and is not factored into your KY state return at all - even on an amended return.

    To recover any local withholding that was over-withheld, you would need to file directly with the local taxing jurisdiction (the city or county) that collected those taxes, as that is handled separately from the state return.
  • Jacob_Adam
    Jacob_Adam Member Posts: 2 Newcomer

    Thank you!! This was so helpful!

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