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Kentucky Kentucky Pension Income Exclusion
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Extracted from PDF file 2023-kentucky-schedule-p.pdf, last modified September 2023Kentucky Pension Income Exclusion
SCHEDULE P KENTUCKY PENSION INCOME EXCLUSION 2023 Enclose with Form 740, 740-NP or 741 Commonwealth of Kentucky Department of Revenue Enter name(s) as shown on tax return. Your Social Security Number Yes Yes Are you retired from the federal government, the Commonwealth of Kentucky, or a Kentucky local government? Did you receive supplemental (Tier 2) U.S. Railroad Retirement Board benefits? You do not need to File Schedule P Is your date of retirement before January 1, 1998? Yes Yes You do not need to file Schedule P. You are limited to $31,110 in excludable retirement. No Complete Part I(1)(a). Your entire pension attributable to service credit earned before January 1, 1998, and supplemental (Tier 2) U.S. Railroad Board benefits are completely excludable above the $31,110. Calculate your exempt percentage using the worksheet attached or the Schedule P caluclator is available at: revenue.ky.gov/Individual Once you have calculated your exempt percentage you may complete Part I(1)(b). No Since your date of retirement is after December 31, 1997, have you calculated your exempt percentage? No No No Did you receive taxable pension or retirement income greater than $31,110? Do You Need to File Schedule P? Yes Complete Part I(1)(b) of Schedule P and enter exempt percentage. PART I—EXEMPT RETIREMENT INCOME (Do Not Include Income From Deferred Compensation Plans) 1 Enter on line (a) or (b) the amount of federal, Kentucky state and Kentucky local government pension income attributable to service credit earned before January 1, 1998, and supplemental (Tier 2) U.S. Railroad Retirement Board benefits included on federal Form 1040 or 1040SR, line 5(b). Also include federal or Kentucky disability retirement income attributable to service credit earned before January 1, 1998. (a) If date of retirement is before January 1, 1998, enter here. Date of Retirement Names of Payers A. (b) If date of retirement is after December 31, 1997, see the instructions. Date Taxable Names of Payers of Retirement Pension A. (c) Add lines 1(a) and 1(b)........................................................................................................... 1(c) Yourself 00 00 00 00 00 00 B. Spouse Total Total Exempt Percentage B. Spouse Yourself 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 PART II—OTHER RETIREMENT INCOME (Amounts Not Included in Line 1(c)) 2 Enter the total of taxable retirement income not included in line 1(c) above as reported on federal Form 1040 or 1040-SR, line 4(b) or 5(b). Also report other disability retirement income or deferred compensation included on federal Form 1040 or 1040-SR, line 1................. 2 PART III—TOTAL TO BE EXCLUDED THIS YEAR 3 4 Enter the lesser of line 2 or $31,110.............................................................................................. 3 Add lines 1(c) and 3. Enter here and on Schedule M, line 9 (Form 740-NP, page 4, line 10(b) or Form 741, line 11)...................................................................................................... 4 Joint filers—Combine lines 4(a) and 4(b) and enter on appropriate form. Stop here unless you have a lump-sum distribution reported on Form 4972-K. Form 4972-K Filers—If line 3 is less than $31,110, enter the amount on Form 4972-K, Part II, line 2. 230019 42A740-P (10-23) Page 1 of 2 INSTRUCTIONS FOR SCHEDULE P Schedule P (2023) Page 2 of 2 Types of Income Subject to Exclusion—All pension and retirement income paid under a written retirement plan is eligible for exclusion. This includes pensions, annuities, IRA accounts, 401(k) and similar deferred compensation plans, death benefits, and other similar accounts or plans. As a general rule, if the income is reported on the federal income tax return, Form 1040 or 1040-SR, line 4(b) or 5(b); Form 4972; or is a disability retirement benefit or deferred compensation distribution reported on Form 1040, line 1, then it qualifies for the exclusion. Note: Subtract the exempt amount from the taxable pension amount and include the difference with other retirement income in Part II. Form 740-NP filers report only pension income received while a resident of Kentucky. PART III—Total to Be Excluded This Year, Line 3—Enter the lesser of the amount on line 2 or $31,110. LINE-BY-LINE INSTRUCTIONS Line 4—Enter the total of lines 1(c) and 3. This is your pension income exclusion. Enter on line 4 and as follows: Schedule M, line 9; Form 740-NP, page 4, line 10(b); or Form 741, page 1, line 11. Column A, Column B—This exclusion is for each taxpayer. A taxpayer and spouse must compute and claim their own exclusion, regardless of filing status. PART I—Exempt Retirement Income—Enter the federally taxable portion of pension income paid by the federal government, by the Commonwealth of Kentucky, or by any Kentucky local government. Also include supplemental (Tier 2) U.S. Railroad Retirement Board benefits reported on Form 1040 or 1040-SR, line 5(b) and federal or Kentucky disability retirement income included on federal Form 1040, line 1. Do not include income from deferred compensation plans in Part I. Use line 1(a) if retired before January 1, 1998, to report fully exempt pension benefits. Use line 1(b) if retired after December 31, 1997, to compute the amount of pension income attributable to service credits earned before January 1, 1998. Multiply the taxable pension by the exempt percentage, enter the result (exempt amount) in Column A or Column B. Use the worksheet below to compute the exempt percentage in the year of retirement. PART II—Other Retirement Income, Line 2—Enter the amount reported on federal Form 1040 of non-lump-sum pension and retirement income not reported on line 1(c). Also include amounts from Schedule M, line 5 (Form 740-NP, page 4, line 16) that reflect pension and IRA bases differences. DEFINITIONS—For use with Schedule P and the worksheet below. Service Credit—Number of months (years) used by your retirement system to determine retirement benefits. Purchased Service Credit—Voluntary purchases of service credit as allowed by your retirement system (i.e., military service or prior service with the same or similar system). Note: Purchased time is credited based on the dates of service. Purchased Service Credit (Air-time)—Certain retirement plans allow for the purchase of up to five years of service credit unrelated to prior work history. These purchases are commonly known as air-time. Air-time is not included in total service earned after December 31, 1997, regardless of when purchased. Worksheet for Federal, Kentucky State and Kentucky Local Government Retirees Who Retired After 12/31/97 Complete this worksheet only if you retired in 2023 or have not computed your exempt percentage in prior years. Keep this worksheet in your records. The percentage will be used this year and in future years to determine the amount of exempt retirement income. For assistance calculating your exempt percentage you may visit revenue.ky.gov Complete this worksheet to determine what percentage of your pension income is exempt. This percentage must be calculated for each pension. If your retirement system has computed the exempt amount (earned before January 1, 1998), enter the amount on page 1, line 1(b), column A or B. If your retirement system has computed the exempt percentage, enter the exempt percentage on page 1, line 1(b) in the exempt percentage column. Use a separate worksheet for each governmental pension. Retain this worksheet with your tax records. Use the percentage on line 4 to compute the exempt portion of your pension in future years. 1 2 Enter total months of service credit including purchased service............................................................... Enter months of service credit earned after 12/31/97. Include sick leave credited at date of retirement, and service credit from purchase of military and other service earned after 12/31/97. Do not include purchased credit unrelated to prior work history (air-time)................................. 3 Subtract line 2 from line 1. Total months of service before January 1, 1998.............................................. 4 Divide line 3 by line 1. Enter here and on page 1, line 1(b), in the exempt percentage column................ Use this percentage to determine the amount of pension attributable to service earned before 1/1/98. 42A740-P (10-23)
Schedule P
More about the Kentucky Schedule P Individual Income Tax TY 2023
In Kentucky, all pension and retirement income paid under a written retirement plan is eligible for exclusion. This includes pensions, annuities, IRA accounts, 401(k) and similar deferred compensation plans, death benefits, and other similar accounts or plans.
We last updated the Kentucky Pension Income Exclusion in January 2024, so this is the latest version of Schedule P, fully updated for tax year 2023. You can download or print current or past-year PDFs of Schedule P directly from TaxFormFinder. You can print other Kentucky tax forms here.
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TaxFormFinder has an additional 129 Kentucky income tax forms that you may need, plus all federal income tax forms.
| Form Code | Form Name |
|---|---|
| Form 740 | Kentucky Individual Income Tax Return |
| Income Tax Instructions | Form 740 Individual Full Year Resident Income Tax Instructions Packet |
| Schedule M (740) | Kentucky Federal Adjusted Gross Income Modifications |
| Form 740-ES | Estimated Income Tax Return |
| Schedule KW-2 | Kentucky Income Tax Withheld |
View all 130 Kentucky Income Tax Forms
Form Sources:
Kentucky usually releases forms for the current tax year between January and April. We last updated Kentucky Schedule P from the Department of Revenue in January 2024.
About the Individual Income Tax
The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.
Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!
Historical Past-Year Versions of Kentucky Schedule P
We have a total of nine past-year versions of Schedule P in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
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