Can I override the border state exclusion for KY income earned by VA resident?

If your client was a VA resident who commuted to KY for work, the reciprocal agreement stipulates that only VA has the right to tax the compensation.  You can't voluntarily pay tax to KY and expect a credit from VA.  A K-4 should have been filed with the employer to exempt the compensation from KY withholding.  If any KY tax was withheld, a return may need to be submitted to claim a refund.

Based on the additional information provided here:

https://accountants-community.intuit.com/questions/1839967-my-client-is-a-va-resident-with-a-business-in-ky-from-which-he-receives-a-w-2-and-a-k-1-he-is-not-eligible-for-the-border-state-exclusion-how-can-i-override

I agree that your client cannot use the border state rule since the K-1 income is on Schedule E and not Schedule C.  See this ruling (but sounds like I'm preaching to the choir):

https://tax.virginia.gov/laws-rules-decisions/rulings-tax-commissioner/15-214

"Further, only earned income (wages and salaries) or business income reported on federal form Schedule C is eligible for the special rule.  See P.D. 04-125 (9/16/2004). Because it was reported on federal form Schedule E, the partnership income generated in North Carolina is not eligible for the special border state rule."

I'm assuming you have K-1 income and not a loss that may be suspended for some reason.

I don't know Lacerte though so I don't know how you would indicate not eligible.  Let me shout out to someone else who does use Lacerte and is in one of our border states.

Rick

The box is not checked but the KY income earned by Virginia resident who is NOT eligible for the border state rule because he does not commute to KY (resides over 400 miles from home to KY location).  He works part time for KY company.  Not a daily commuter as envisioned by the rule.   Program won't give income to KY.