KENTUCKY
separate property state

 

Military Income:  Tax exempt. Effective for taxable years beginning on or after January 1, 2010, all military pay received by active duty members of the Armed Forces of the United States, members of reserve components of the Armed Forces of the United States, and members of the National Guard will be exempt from Kentucky income tax.

Military Filing Requirement:  No, if no tax withheld and the military member has no income other than military pay, a return does not have to be filed to maintain residency.

Military Spouse Residency Relief Act:  Service member in state in compliance with military orders. Spouse in state solely to be with service member. Spouse must be a resident of same state as service member.

Forms Used:           

Filing Status:  Joint or separate.

Attach Copy of Federal Return:  No

Not Taxed:

Other State Tax Credit:  Available.  Attach copy of other state return.   

Reciprocity States Illinois, Ohio, West Virginia, Indiana, Michigan, Wisconsin, and Virginia.

Where to Mail:
Refunds: Tax Due:
Kentucky Revenue Cabinet
Frankfort, KY 40618-0006
Kentucky Revenue Cabinet
Frankfort, KY  40619-0008
Forms(502) 564-4581 E-File Helpdesk:  (502) 564-6033 ext 4798

General Information:  (502) 564-4581

Website:  revenue.ky.gov
Refund Inquiry: (502) 564-1600 updated every 7 days
Other Info:

Kentucky Revenue Cabinet
Taxpayer Assistance
P O Box 181, Station 56
Frankfort, KY  40602

E-filing Info:  EROs must retain the 8453-K for 3 years.  The following CANNOT be filed electronically:

  • A Married Filing Separate state return if the Federal is Filed Jointly
Tax Form Instructions:
Resident Instructions Non-Resident Instructions

 

Filing Status Scenarios

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer)
2.  Taxpayer and Spouse Different States of Residence
3.  Taxpayer and Spouse Non-Residents
4.  Taxpayer Non-Resident - Spouse Part-Year Resident
5.  Taxpayer Married or Single - Resident but Income from Other State
6.  Amended Return

 

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer) - Taxpayer and spouse are both Kentucky residents, lived at their present location all year, and one or both had income.

Main Info Screen.

Kentucky 740 Form.  Married taxpayers may file married filing separate on a combined return (status 2), married filing jointly (status 3), or married filing separately (status 4). Check all three options to see which one benefits the taxpayer more.  In this example, the spouse did not have income so the only option available is married filing jointly (status 3).

 

Military income is subtracted out using KY Schedule M. Enter the amount of military income received on Line 19

Complete all other fields and forms with red or required information.

2.  Taxpayer and Spouse - Different States of Residence - Taxpayer or spouse is a resident of Kentucky, while the other member is a resident of a different state.  A Kentucky income tax return must be prepared due to the taxpayer or spouse having Kentucky earned income.

Main Info Screen.  Kentucky residents must file resident tax returns.  Married taxpayers may file married filing separate on a combined return (status 2), married filing jointly (status 3), or married filing separately (status 4).  For this example, the taxpayer is a resident of  Kentucky while the spouse is a resident of North Dakota.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Kentucky 740 Form.  Married taxpayers may file married filing separate on a combined return (status 2) or married filing separately (status 4). Check  both options to see which one benefits the taxpayer more.  In this example, the lowest tax was obtained by using married filing separate (status 4)

Military income is subtracted out using KY Schedule M. Enter the amount of military income received on Line 19. (You may have to override, (<CTRL>ENTER), the Description field to enter narrative.)

Complete all other fields and forms with red or required information.

3.  Taxpayer and Spouse Non-Residents - Taxpayer and spouse are residents of a different state.  The spouse and taxpayer must file a Kentucky tax return due to one or both having Kentucky earned income.

Main Info Screen.  If both members are residents of another state, the parties should file as nonresidents.  For this example, the taxpayer and spouse are both residents of Colorado but must file a Kentucky income tax return because the spouse worked in Kentucky.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Kentucky 740-NP Form.  Married taxpayers may file married filing jointly (status 2), or married filing separately (status 3).  Check both options to see which one benefits the taxpayer more.  The largest refund was given by using married filing separate (status 3). Enter the proper code in the Residency area.

KY NP Page 4. Nonresident military income and monresident military spouse income is listed as an adjustment to income on page 4 of the KY NP. Link line 33, column A to a scratch pad as shown in the example.

Using the example, enter the nonresident military income and the nonresidepent spouse's wages on the scratch pad.

Complete all other fields and forms with red or required information.

4.  Taxpayer Non-Resident - Spouse Part-Year Resident - Taxpayer and spouse moved to or from Kentucky during the tax year.  The taxpayer is a resident of a different state.  The Spouse is a part-year resident of Kentucky.  The Spouse and taxpayer must file a Kentucky tax return due to one or both of them having Kentucky earned income and possibly income from another state.

Main Info Screen.  For this example, the taxpayer is in the military and a resident of Indiana.  The taxpayer and spouse moved from Kentucky to North Dakota during the year.  The spouse was a resident of Kentucky but is now changing their residency to North Dakota for tax purposes.    The spouse therefore was a part-year resident of both Kentucky and North Dakota and must file a Kentucky income tax return because the spouse worked in Kentucky.

Part Year Resident States Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Kentucky 740-NP Form.   A part-year resident tax return should be prepared.  Married taxpayers may file married filing jointly (status 2), or married filing separately (status 3).  Check both options to see which one benefits the taxpayer more.  In this example, the married filing separately resulted in a lower tax. Complete the residency portion of the tax form with the appropriate dates and state abbreviations.

Review the remainder of the Kentucky Form 740-NP to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

5.  Married or Single Military Resident of Kentucky with Income from Another State  - Taxpayer is single.  The taxpayer must file a Kentucky tax return due to him or her having Kentucky earned income.

Main Info Screen.  For this example the taxpayer is a military member stationed in North Dakota but a resident of Kentucky.  The taxpayer had a job in North Dakota therefore having North Dakota earned income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Kentucky 740 Form.  A resident Kentucky income tax return is prepared.  Kentucky taxes residents on income from all sources, even income earned while living in another state (North Dakota as in this example).  

Military income is subtracted out using KY Schedule M. Enter the amount of military income received on Line 19.

KY Wkt A Credit for Taxes Paid to Other States must be prepared to give a credit for taxes paid to another state (North Dakota). Link to this form from Line 5 of Section A on Page 2 of the KY 740.

You must complete the other states tax return first, then enter the required information in the indicated blocks. Enter on line 11 the amount of tax from the other states tax return.  This is not the amount the taxpayer had withheld from his or her pay but the amount of tax imposed on them.  Line 4 is the amount of income tax liability on the other state's, (North Dakota), tax return.  A copy of the other state's return must be attached to the Kentucky return if not e-filed.

Complete all other fields and forms with red or required information.

6.  Amended Return  - An amended Kentucky return must be filed because the taxpayer received new tax information after their Kentucky return was filed.
Federal 1040X Form.  Before making any changes to the tax return add the US 1040X form to the tax return.  You must check the box under Income and Deductions to lock in the entries in Column A - Original amount or as previously adjusted.

Kentucky 740X - Amended Resident Tax Return.  Add the Kentucky 740X Form to the return.  You must check the box to lock in the entries in Column I - As originally reported or as adjusted, before making any changes to the return. You may have to override the taxpayer name field to make it report correctly as was done in this example.

Make whatever changes are required to the federal tax return.  For this example, a new W-2 was received.

Kentucky 740X - Amended Resident Tax Return.  Return to the Kentucky 740X form to determine if the taxpayer is receiving a refund or owes money.

Kentucky 740X - Amended Resident Tax Return, Page 2.  On Page 2 you must enter an explanation for why the Amended Return is being prepared. Enter the current date in the Date field.

Complete any remaining red or required fields.

Amended returns can not be e-filed.  The taxpayer must mail the federal 1040X and any state amended returns if required to be filed.