Kentucky Withholding Tax Instructions for Employers

Withholding Tax Instructions for Employers
Form 42A003
42A003 (10-25)

WITHHOLDING
KENTUCKY INCOME TAX

INSTRUCTIONS FOR EMPLOYERS
Revised October 2025

Commonwealth of Kentucky
DEPARTMENT OF REVENUE
Frankfort

Forms

Information

FORMS
501 High Street, Station 23B
Frankfort, KY 40601
564-3658

Withholding Tax Inquiries

(502) 564-7287

Forms and Information on the Internet

revenue.ky.gov

KENTUCKY TAXPAYER SERVICE CENTER LOCATIONS
revenue.ky.gov/Get-Help/Pages/Service-Centers.aspx
Ashland
1539 Greenup Ave., Ste. 501, 41101-7695
(606) 920-2037
Fax: (606) 920-2039

Louisville
600 West Cedar Street, 2nd Floor West, 40202-2310
(502) 595-4512
Fax: (502) 595-4205

Bowling Green
201 West Professional Park Court
Bowling Green, KY 42104-3278
(270) 746-7470

Northern Kentucky
Turfway Ridge Office Park
7310 Turfway Rd., Suite 190
Florence, 41042-4871
(859) 371-9049
Fax: (859) 371-9154

Corbin
15100 North US25E, Suite 2, 40701-6188
(606) 528-3322
Fax: (606) 523-1972

Owensboro
401 Frederica Street, Bldg. C, Suite 201, 42301-6295
(270) 687-7301
Fax: (270) 687-7244

Frankfort
501 High Street, Station 38, 40601
(502) 564-5930
Fax: (502) 564-8946

Paducah
Clark Business Complex, Suite G
2928 Park Avenue, 42001-4024
(270) 575-7148
Fax: (270) 575-7027

Hopkinsville
181 Hammond Drive, 42240-7926
(270) 889-6521
Fax: (270) 889-6563

Pikeville
Uniplex Center
126 Trivette Drive, Suite 203, 41501-1275
(606) 433-7675
Fax: (606) 433-7679

Kentucky Department of Revenue
Mission Statement
As part of the Finance and Administration Cabinet, the mission of the Kentucky
Department of Revenue is to administer tax laws, collect revenue, and
provide services in a fair, courteous, and efficient manner for the benefit of the
Commonwealth and its citizens.
The Kentucky Department of Revenue does not discriminate on the basis of
race, color, national origin, sex, age, religion, disability, sexual orientation, gender
identity, veteran status, genetic information or ancestry in employment or the
provision of services.

2025

YOUR RIGHTS
AS A KENTUCKY TAXPAYER
As part of the Finance and Administration Cabinet, the mission of
the Kentucky Department of Revenue (DOR) is to administer tax
laws, collect revenue, and provide services in a fair, courteous,
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its citizens.

Consideration
You have the right to consideration of:
9

waiver of penalties or collection fees if “reasonable cause” for
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KRS 131.010(9) as: “an event, happening, or circumstance
entirely beyond the knowledge or control of a taxpayer who
KDVH[HUFLVHGGXHFDUHDQGSUXGHQFHLQWKH¿OLQJRIDUHWXUQRU
report or the payment of monies due the department pursuant
to law or administrative regulation”);

9

installment payments of delinquent taxes, interest, and
penalties;

9

waiver of interest and penalties, but not taxes, resulting from
incorrect written advice from the DOR if all facts were given
and the law did not change or the courts did not issue a ruling
to the contrary;

Privacy

9

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You have the right to privacy with regard to information you provide
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9

SD\PHQWRIFKDUJHVLQFXUUHGUHVXOWLQJIURPDQHUURQHRXV¿OLQJ
of a lien or levy by the DOR.

As a Kentucky taxpayer, you have the right to expect the DOR to
honor its mission and uphold your rights every time you contact
or are contacted by the DOR.
6RPH.HQWXFN\WD[SD\HUULJKWVDUHYHU\VSHFL¿FVXFKDVZKHQ
and how to protest a Notice of Tax Due or the denial of a refund.
Others are more general.
The following is a summary of your rights and the DOR’s
responsibilities to you as a Kentucky taxpayer.
RIGHTS OF TAXPAYER

Assistance
You have the right to advice and assistance from the DOR in
complying with state tax laws.

Guarantee

Explanation

You have the right to a guarantee that DOR employees are not paid,
evaluated, or promoted based on taxes assessed or collected, or a
tax assessment or collection quota or goal imposed or suggested.

You have the right to a clear and concise explanation of:

Damages

9

basis of assessment of additional taxes, interest and penalties,
or the denial or reduction of any refund or credit claim;

9

procedure for protest and appeal of a Notice of Tax Due,
a reduction or denial of a refund, or a denial of a request
IRU DGGLWLRQDO WLPH WR ¿OH D VXSSRUWLQJ VWDWHPHQW DQG

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tax laws and changes in tax laws so that you can comply with
the law.

Protest and Appeal
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a Notice of Tax Due, a reduction or denial of a refund, or a denial
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¿OHDWLPHO\SURWHVW\RXKDYHDULJKWWRDFRQIHUHQFHWRGLVFXVV
WKH PDWWHU ,I \RX DUH QRW VDWLV¿HG ZLWK WKH 'HSDUWPHQW¶V ¿QDO
UXOLQJIROORZLQJ\RXUSURWHVW\RXPD\DSSHDOWKH¿QDOUXOLQJWRWKH
Kentucky Board of Tax Appeals, pursuant to KRS 131.110(5) and
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<RXKDYHWKHULJKWWR¿OHDFODLPIRUDFWXDODQGGLUHFWPRQHWDU\
damages with the Kentucky Board of Tax Appeals if a DOR
employee willfully, recklessly, and intentionally disregards your
rights as a Kentucky taxpayer.
Interest
You may have the right to receive interest on an overpayment of tax.

DEPARTMENT OF REVENUE RESPONSIBILITIES

The DOR has the responsibility to:
9

perform audits and conduct conferences and hearings with
you at reasonable times and places;

You have the right to representation by your authorized agent
(attorney, accountant, or other person) in any hearing or conference
with the DOR. You have the right to be informed of this right prior
WRWKHFRQIHUHQFHRUKHDULQJ,I\RXLQWHQGIRU\RXUUHSUHVHQWDWLYH
to attend the conference or hearing in your place, you will be
required to give your representative a power of attorney before
the DOR can discuss tax matters with your authorized agent. See
Form 20A100.

9

authorize, require, or conduct an investigation or surveillance
of you only if it relates to a tax matter;

9

make a written request for payment of delinquent taxes which
are due and payable at least 30 days prior to seizure and sale
of your assets;

9

conduct educational and informational programs to help you
understand and comply with the laws;

Recordings

9

You have the right to make an audio recording of any meeting,
conference, or hearing with the DOR. The DOR has the right to
PDNHDQDXGLRUHFRUGLQJLI\RXDUHQRWL¿HGLQZULWLQJLQDGYDQFH
or if you make a recording. You have the right to receive a copy
of the recording.

publish clear and simple statements to explain tax procedures,
remedies, your rights and obligations, and the rights and
obligations of the DOR;

9

notify you in writing when an erroneous lien or levy is released
and, if requested, notify major credit reporting companies in
FRXQWLHVZKHUHOLHQZDV¿OHG

Representation

9

advise you of procedures, remedies, and your rights and
obligations with an original notice of audit or when an original
Notice of Tax Due is issued, a refund or credit is denied or
reduced, or whenever a license or permit is denied, revoked,
or canceled;

9

QRWLI\\RXLQZULWLQJSULRUWRWHUPLQDWLRQRUPRGL¿FDWLRQRID
payment agreement;

9

furnish copies of the agent’s audit workpapers and a written
narrative explaining the reason(s) for the assessment;

9

resolve tax controversies on a fair and equitable basis at the
administrative level whenever possible;

9

notify you in writing at your last known address at least 60 days
prior to publishing your name on a list of delinquent taxpayers
IRUZKLFKDWD[RUMXGJPHQWOLHQKDVEHHQ¿OHGDQG

9

QRWLI\\RXE\FHUWL¿HGPDLOGD\VSULRUWRVXEPLWWLQJ\RXU
name to the relevant agency for the revocation or denial
of professional license, driver’s license, or motor vehicle
registration.
PROTEST AND APPEAL PROCEDURE

Protest
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a tax refund has been reduced or denied, or the DOR denies your
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the right to protest. To do so:
9

submit a written protest within 60 days from the original
notice date (or 45 days if the original notice date is prior to
07/01/2018); notice of refund reduction or denial, or denial of
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9

identify the type of tax involved and give the account number,
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attach a copy of the DOR Notice of Tax Due or refund denial
to support that your protest is timely;

9

explain why you disagree;

9

attach any proof or documentation available to support your
protest or request additional time to support your protest;

9

sign your statement, include your daytime telephone number
and mailing address; and

9

mail to the Kentucky Department of Revenue,
Frankfort, Kentucky 40620.

Conference
You have the right to request a conference to discuss the issue.
Final Ruling
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QRWUHVROYH\RXUSURWHVW\RXKDYHWKHULJKWWRUHTXHVWD¿QDOUXOLQJ
of the DOR so that you can appeal your case further.
Appeal
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ZULWWHQDSSHDOZLWKWKH.HQWXFN\%RDUGRI7D[$SSHDOV,I\RXGR
not agree with the decision of the Kentucky Board of Tax Appeals,
you have the right to appeal their ruling to the Kentucky courts
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WKHQWRWKH.HQWXFN\&RXUWRI$SSHDOVDQG¿QDOO\WRWKH.HQWXFN\
Supreme Court).
NOTE: The above protest and appeal procedures do not apply
for real property which is valued by the local property valuation
administrator (PVA). Contact the local PVA for information about
how to appeal the valuation of real property.

The Taxpayer Ombudsman is your advocate and is there to make
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fairly or if you have a problem or complaint, please contact the
Ombudsman for assistance.
The Taxpayer Ombudsman may be contacted by telephone at
502–564–7822 (between 8:00 a.m. and 5:00 p.m. weekdays). The
mailing address is: Department of Revenue, Taxpayer Ombudsman,
501 High Street, Station 1, Frankfort, Kentucky 40601.
WHERE TO GET ASSISTANCE
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in nine cities and towns throughout Kentucky. DOR employees in
the service centers answer tax questions and provide assistance.
You may obtain assistance by contacting any of the following:
Ashland Taxpayer Service Center
1539 Greenup Avenue, 41101–7695
606–920–2037
Bowling Green Taxpayer Service Center
201 West Professional Park Court, 42104–3278
270–746–7470
Corbin Taxpayer Service Center
1RUWK86(6XLWH±
606–528–3322
Frankfort Taxpayer Service Center
501 High Street, 40601–2103
502–564–5930
Hopkinsville Taxpayer Service Center
181 Hammond Drive, 42240–7926
270–889–6521
Louisville Taxpayer Service Center
600 West Cedar Street, 2nd Floor West, 40202–2310
502–595–4512
Northern Kentucky Taxpayer Service Center
7XUIZD\5LGJH2ႈFH3DUN
7310 Turfway Road, Suite 190
Florence 41042–4871
859–371–9049
Owensboro Taxpayer Service Center
401 Frederica Street, Building C, Suite 201, 42301–6295
270–687–7301
Paducah Taxpayer Service Center
Clark Business Complex, Suite G
2928 Park Avenue, 42001–4024
270–575–7148
Pikeville Taxpayer Service Center
8QLSOH[&HQWHU7ULYHWWH'ULYH6XLWH±
606–433–7675
* * * * * * * * * *
The DOR has an online taxpayer service center where you can
download forms, publications, and obtain general information about
the department. The address is www.revenue.ky.gov.
The information in this brochure merely summarizes your rights as
a Kentucky taxpayer and the responsibilities of the Department of
Revenue. The Kentucky Taxpayers’ Bill of Rights may be found in
the Kentucky Revised Statutes (KRS) at Chapter 131.041-131.083.
Additional rights and responsibilities are provided for in KRS
131.020, 131.110, 131.170, 131.1817, 131.183, 131.190, 131.500,
131.654, 133.120, 133.130, 134.580, and 134.590.

TAXPAYER OMBUDSMAN

The DOR has a Taxpayer Ombudsman whose job is to serve as
an advocate for taxpayers’ rights. One of the main functions of the
Ombudsman is to ensure that your rights as a Kentucky taxpayer
are protected.
Also, an important function of the Taxpayer Ombudsman is to
FRQIHUZLWK'25HPSOR\HHVZKHQ\RXKDYHDSUREOHPRUFRQÀLFW
that you have been unable to resolve. However, it is not the role of
the Ombudsman to intercede in an audit, handle a protest, waive
taxes, penalty or interest, or answer technical tax questions. To
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do not mail your protest to the Ombudsman.

The Kentucky Department of Revenue does not discriminate on the
basis of race, color, national origin, sex, age, religion, disability, sexual
orientation, gender identity, veteran status, genetic information or
ancestry in employment or the provision of services.

Printing costs paid from state funds.

Commonwealth of Kentucky
DEPARTMENT OF REVENUE

10F100 (2023)

TABLE OF CONTENTS
SECTION

PAGE

Kentucky Taxpayer Service Center Locations ................................................................................. inside front cover
Kentucky Department of Revenue Web Page................................................................................. inside front cover
Your Rights as a Kentucky Taxpayer
I.

Wages Subject to Withholding...................................................................................................................................1

II.

Withholding Tax Forms ............................................................................................................................................ 1
Online Filing of Withholding Tax Returns................................................................................................................. 1

III.

Kentucky's Withholding Certificate .......................................................................................................................... 2

IV.

Employer Filing Requirements
Annual Filing............................................................................................................................................................ 2
Quarterly Filing ..................................................................................................................................................... 2-3
Monthly Filing .......................................................................................................................................................... 3
Twice-Monthly Filing ............................................................................................................................................. 3-4
One-Day Deposit ..................................................................................................................................................... 4

V.

Termination of Business .......................................................................................................................................... 4

VI.

Withholding Statements
Withholding Statement Reporting to Employees .....................................................................................................
Withholding Statement Reporting to DOR...............................................................................................................
Web Filing and CD Electronic Filing of W-2 Information .........................................................................................
CD Electronic Filing of W-2G and 1099 Information................................................................................................
Form K-5..................................................................................................................................................................

VII.

Electronic Fund Transfer ......................................................................................................................................... 6

VIII.

Summary of Employer Requirements...................................................................................................................... 6

IX.

Gambling Winnings ................................................................................................................................................. 7

X.

Interest, Penalties, Bond Requirement and Corporate
Officer Liability ......................................................................................................................................................... 7

XI.

Computer Formula (Optional Withholding Method) ................................................................................................. 7

XII.

Taxable/Exempt Chart ............................................................................................................................................. 8

XIII.

Commonly Asked Questions and Answers........................................................................................................... 8-9

XIV.

Forms Available Online............................................................................................................................................ 9

4
4
5
5
5

Notice—Information Concerning Worker's Compensation Insurance ................................................................... 10

WITHHOLDING ON SALARIES AND WAGES
UNDER THE KENTUCKY INCOME TAX LAW
INSTRUCTIONS FOR EMPLOYERS
I.

than cash, the cash amount received by an employee is less
than $150 during the calendar year and employer’s calendar
year labor expense is less than $2,500.

WAGES SUBJECT TO WITHHOLDING

For withholding tax purposes, the terms wages, employee
and employer mean the same as defined in Section 3401 of
the Internal Revenue Code currently in effect for Kentucky.
Therefore, wages or other payments made for services
performed in Kentucky, which are subject to withholding of
federal income tax, are subject to Kentucky withholding.
Wages paid to the following are specifically exempt from
withholding but voluntary withholding by mutual agreement is
permitted:

II.

WITHHOLDING TAX FORMS

Following are the withholding forms which may be used by
the employer. Reference will be made to them throughout this
booklet.
10A100

Kentucky Tax Registration Application

K-1*

Employer’s Return of Income Tax Withheld

K-3*

3. employees of foreign governments and international organizations;

Employer’s Return of Income Tax Withheld
(Annual Reconciliation)

42A801(D)

Amended K-1

4. ministers of a church or members of a religious order;

42A803(D)

Amended K-3

5. newspersons under age 18;

42A804	

Form K-4, Kentucky's Withholding Certificate

42A805C

Form K-5C, Corrected Report of
Withholding Tax Statements

1. household employees;
2. election workers;

6. employees as noncash tips and total cash tips of less than
$20 per month;

42A806
Transmitter Report for CD Submission
*Employers that have been granted an electronic filing waiver
will be mailed forms K-1 or K-3 at the end of each reporting
period. These preprinted forms contain important processing
information and cannot be furnished in blank form. When a
form is misplaced or not received, an employer should request another form be issued. When requesting any of these
forms, please furnish the employer’s correct name, address,
Kentucky withholding account number and the period for
which the form is requested.

7. employees in a form other than in cash for services not in
the course of the employer’s business;
The above payments are the most common types that are not
subject to withholding. However, this list is not all-inclusive. The
Internal Revenue Code and related rulings and regulations
should be consulted for other payments that may be excluded
from withholding.
Regulation 103 KAR 18:010 provides that “Every employer
incorporated in Kentucky, qualified to do business in Kentucky,
doing business in Kentucky, or subject to the jurisdiction of
Kentucky in any manner, and making payment of wages subject
to withholding shall deduct, withhold, and pay to the department
the tax required to be withheld.”

Online Filing of Withholding Tax Returns—To file Kentucky
withholding tax returns and make payments, please visit the
MyTaxes portal at MyTaxes.ky.gov. In the portal you may also
review returns, amend returns, request refunds and credit
forwards, submit W-2's, the K-5, 1099 and W-2G's.

Wages paid to a Kentucky resident as a regular employee in
the conduct of business of an employer required to withhold
taxes, are subject to withholding on services performed both
in and outside Kentucky.

You can view MyTaxes Quick Reference Guides (QRGs) at
MyTaxes — Department of Revenue.
***Bulk Filing of Withholding Tax Returns—The Kentucky
Department of Revenue has a Bulk Filing system for payroll
companies who choose to file a large number of Withholding
Tax Returns in a single file. For details regarding how to become a Bulk Filer; please review the MyTaxesMyTa
portal
at y.gov
xes.k
.

Wages paid to a nonresident of Kentucky to the extent paid
for services rendered in Kentucky are subject to withholding,
except for wages paid to employees of those states that have
entered into reciprocal agreements with Kentucky. (See Section
III.) A completed Form K-4 (42A804), Kentucky's Withholding
Certificate, must be on file for each employee.
Agricultural workers are subject to withholding for Kentucky
purposes unless remuneration is paid in any medium other
1

III.

A. Annual Filing

KENTUCKY'S WITHHOLDING CERTIFICATE
Form K-4—Kentucky’s Withholding Certificate;

Employers withholding less than $400 Kentucky income
tax a year will be required to file a return and remit the tax
annually. The employer will be notified by DOR when the
account is placed on an annual filing basis. The annual
return (Form K-3) is filed with DOR by January 31, following
the close of the calendar year. The tax due is to be paid in
full at the time the return is filed. Tax paid should reconcile
with the total amount of Kentucky tax withheld as shown on
the Wage and Tax Statements (Form W-2). The K-3 return
must be filed even if no tax was withheld during the
period. See Section VI for the withholding statement
requirements.

All Kentucky wage earners are taxed at a flat 3.5% tax rate
with a standard deduction allowance annually adjusted by the
Department of Revenue in accordance with KRS 141.081(2)(a).
There are no personal exemptions. However, an employee may
be exempt from withholding if they meet the criteria defined
on the Form K-4.
•

•

•

•

An Employee may be exempt from withholding for the
current tax year if both of the following apply:
⚪

For the prior tax year; the employee had a right to a
refund of all Kentucky income tax withheld because
they had no Kentucky income tax liability; and

⚪

For the current tax year; the employee expects a
refund of all Kentucky income tax withheld.

Employers assigned to an annual frequency who wish to file
quarterly may be changed by emailing to the Department at
[email protected] or by logging
on to MyTaxes.ky.gov and request through the portal.
Kentucky’s tax law requires employers filing on an annual
frequency to electronically file and pay the income tax
withheld for periods beginning on or after January 2022.

Under the provisions of Public Law 105-261, pay and
compensation earned at the Fort Campbell, Kentucky,
military base is exempt from Kentucky income tax if you
are not a resident of Kentucky. KRS 141.010 (32) defines
“resident” as an individual domiciled within this state or an
individual who is not domiciled in this state, but maintains
a place of abode in this state and spends in the aggregate
more than one hundred eighty-three (183) days of the
taxable year in this state;

B. Quarterly Filing
Employers withholding $400-$1,999 Kentucky income tax
a year must file and pay on a quarterly basis.
Kentucky’s tax law requires employers filing on a quarterly
frequency to electronically file and pay the income tax
withheld for periods beginning on or after January 2022.

An employee may be exempt from withholding, if they meet
the conditions set forth under the Servicemember Civil
Relief Act as amended by the Military Spouses Residence
Relief Act.

1. Form K-1
The quarterly return (Form K-1) must be submitted for
the first three quarters of the calendar year. The return
must be filed with the Department of Revenue on or
before the last day of the month following the end of the
quarter.

An employee may be exempt from withholding if they
work in Kentucky but reside in one of the following
reciprocal states: Illinois, Indiana, Michigan, West Virginia,
Wisconsin, Virginia and commutes daily or Ohio and
are not a shareholder-employee who is a "twenty (20)
percent or greater" direct or indirect equity investor in a
S corporation.

Payment of the tax withheld for the quarter must be
submitted with the return. The return must be filed
even if no income tax was withheld for the period.
2. Form K-3
Employers on a quarterly filing basis must file a quarterly
return and annual reconciliation (Form K-3) for the fourth
quarter. In addition to submitting the tax withheld for the
fourth quarter, an annual reconciliation area is provided
for balancing the employer’s account.

If any of the four criteria are met; the employee is exempt
from Kentucky Withholding. The employee must complete
Form K-4 and file it with the employer before withholding will
be discontinued.
IV.

EMPLOYER FILING REQUIREMENTS

Tax paid for the first three quarters plus the tax due for
the fourth quarter should reconcile with the total amount
of Kentucky tax withheld as shown on the Wage and Tax
Statements (Form W-2).

Employers report and pay Kentucky withholding tax annually,
quarterly, monthly or twice monthly. Employers who accumulate
$100,000 or more tax during any reporting period must remit
payment within one banking day. Regardless of the assigned
reporting and payment frequency, returns must be filed even
when no Kentucky income tax was withheld during the
period. Delinquent returns interrupt normal processing and
often result in assessments which easily could have been
prevented. The filing methods are described below.

If the account is overpaid, credit may be taken against
any tax due for the fourth quarter. All overpayments and
underpayments will be verified by DOR.

2

The K-3 return must be filed even if no income tax
was withheld for the period. See Section VI for the
withholding statement requirements.

The K-3 return must be filed even if no income tax
was withheld for the period. See Section VI for the
withholding statement requirements.

QUARTERLY FILING
Period

MONTHLY FILING

Form

Due Date

Period

Form

Due Date

January–March

K-1

April 30

April–June

K-1

July 31

July–September

K-1

October 31

October–December

K-3

January 31

January
February
March
April
May
June
July
August
September
October
November
December

K-1
K-1
K-1
K-1
K-1
K-1
K-1
K-1
K-1
K-1
K-1
K-3

February 15
March 15
April 15
May 15
June 15
July 15
August 15
September 15
October 15
November 15
December 15
January 31

C. Monthly Filing
Employers withholding $2,000-$49,999 Kentucky income
tax a year must file and pay on a monthly basis. Employers
meeting the monthly filing requirement must notify DOR and
be placed on a monthly filing basis. When an account has
been placed on monthly filing and the employer fails to file
monthly, applicable interest and penalties will be assessed
as described in Section X.

D. Twice-Monthly Filing

Kentucky’s tax law requires employers filing on a monthly
frequency to electronically file and pay the income tax
withheld for periods beginning on or after January 2021.

Employers withholding $50,000 or more Kentucky income
tax a year must file and pay on a twice-monthly basis. Employers meeting the twice-monthly filing requirement must
notify DOR and be placed on a twice-monthly basis. When
an account has been placed on twice-monthly filing and the
employer fails to file twice-monthly, applicable interest and
penalties will be assessed as described in Section X.

1. Form K-1
The monthly return (Form K-1) must be filed for the first
11 months of the year. The return must be filed with
the Department of Revenue on or before the 15th day
of the following month. Payment of tax withheld for the
month must be submitted with the return. The return
must be filed even if no income tax was withheld
for the period.

Kentucky’s tax law requires employers filing on a twicemonthly frequency to electronically file and pay the income
tax withheld for periods beginning on or after January 2021.

2. Form K-3
Employers on a monthly filing basis must file a Form
K-3 for the last month of the calendar year. In addition
to submitting the tax withheld for December, an annual
reconciliation area is provided for balancing the
employer's account.

1. Form K-1
The twice-monthly return (Form K-1) must be filed for
the first through the 15th of the month and is due on or
before the 25th of the month; the 16th through the end
of the month is due on or before the 10th of the following
month. Payment of tax withheld for the reporting period
must be submitted with the return. The return must
be filed even if no income tax was withheld for the
period.

Tax paid for the first 11 months plus the tax due for
December should reconcile with the total amount of
Kentucky tax withheld as shown on the Wage and Tax
Statements (Form W-2).

2. Form K-3
Employers on a twice-monthly filing basis must file a
Form K-3 for the last reporting period of the calendar
year. In addition to submitting the tax withheld for the
last reporting period of the year, an annual reconciliation
area is provided for balancing the employer’s account.

If the account is overpaid, credit may be taken against
any tax due for December. All overpayments and
underpayments will be verified by DOR.

3

Tax paid for the first 11 months plus the tax due for
December should reconcile with the total amount of
Kentucky tax withheld as shown on the Wage and Tax
Statements (Form W-2).

V.

If an employer discontinues business during the year, the
following actions must be taken to close the withholding
account:

If the account is overpaid, credit may be taken
against any tax due for the last reporting period. All
overpayments and underpayments will be verified by
DOR.

1.

Fill out Form 10A104, Update or Cancellation of Kentucky
Tax Account(s) and return to Department of Revenue or
make updates and submit requests on MyTaxes.ky.gov.
This step must be taken. Failure to do so will generate
computer notices which could result in assessments
for delinquent returns.

2.

Provide a Form W-2 for each employee; and report the
withholding statements to DOR electronically, on CD or
on Form K-5.

3.

Prepare and file Form K-3 via MyTaxes.ky.gov.

The K-3 return must be filed even if no income tax
was withheld for the period. See Section VI for the
withholding statement requirements.

TWICE-MONTHLY FILING
Reporting Period

Return and Payment
Due Date

January 1-January 31*

February 10

February 1-February 15

February 25

February 16-February 28

March 10

March 1-March 15

March 25

March 16-March 31

April 10

April 1-April 15

April 25

April 16-April 30

May 10

May 1-May 15

May 25

May 16-May 31

June 10

June 1-June 15

June 25

June 16-June 30

July 10

July 1-July 15

July 25

July 16-July 31

August 10

August 1-August 15

August 25

August 16-August 31

September 10

September 1-September 15

September 25

September 16-September 30

October 10

October 1-October 15

October 25

October 16-October 31

November 10

November 1-November 15

November 25

November 16-November 30

December 10

December 1-December 15

December 26

December 16-December 31**

VI. WITHHOLDING STATEMENTS
Withholding Statement Reporting to Employees
Employers must furnish the designated copies of the Wage and
Tax Statement (Form W-2) to their employees by January 31.
This is required by Regulation 103 KAR 18:050.
If an employee is discharged or terminates his or her
employment during the year and requests a withholding
statement, the employer must provide the employee with
the designated copies of Form W-2 within 30 days of the last
payment of wages or within 30 days of the request.
Employers may use an approved commercially printed sixpart Form W-2. It is important that the Kentucky withholding
account number be listed on the Wage and Tax Statements
(Form W-2). Many employers list only the Federal Identification
Number, which causes processing problems of the employee’s
individual income tax returns.
Commercially printed forms must include:

January 31

* First reporting period of year will be for the entire month of
January and due on February 10.
** Payment and return will be on Form K-3, Annual Reconciliation,
due January 31.

Per 103 KAR 1:060, employers who accumulate $100,000 or
more Kentucky income tax withheld during any reporting period must remit payment within one banking day. Employers
who meet this requirement must pay via EFT.

•

ACH Debit and E-Check – Both are available through
the MyTaxes portal at MyTaxes.ky.gov.

a legible copy for the employee stating that it is to be
attached to his or her Kentucky income tax return;

2.

a copy for the employee’s personal records;

3.

an acceptable format with spaces designated as follows:

e.
f.
g.
h.

Accepted EFT payment methods include:
ACH Credit – For assistance or questions regarding this
method, please contact the EFT Group at (502) 5646020.

1.

a.
b.
c.
d.

E. One-Day Deposit

•

TERMINATION OF BUSINESS

4

taxable wages;
Kentucky taxable wages;
Kentucky tax withheld and federal tax withheld;
employer’s Kentucky withholding account number
and federal identification number;
employee’s Social Security number;
employee’s name and address;
employer’s name and address; and
name of state.

Withholding Statement Reporting to DOR

CD Filing of W-2G and 1099 Information

Withholding statements include Forms W-2, W-2G, and 1099
Series. Do not mail paper copies of the withholding statements
to the DOR. Paper copies of Forms W-2, W-2G, and 1099
Series received by the DOR will not be processed and will
not be considered filed. Retain the paper forms for your
records and only provide copies upon request.

DOR follows the federal Publication 1220 specification
format for filing W-2G and 1099. DOR defined B Records
are required when reporting Kentucky statements.
Specifications are available at https://revenue.ky.gov/ Business/Pages/Employer-Payroll-Withholding.aspx
All CD submissions must accompany a Transmitter Report,
Form 42A806-CD.

The withholding statement information must be either
submitted electronically via the MyTaxes portal as a transmitter
at MyTaxes.ky.gov or reported using Form K-5. Withhholding
statement information must be submitted to DOR by January
31. Failure to furnish the required withholding statement
information may result in penalties in accordance with KRS
131.180(3).

Only report 1099 data to the DOR when Kentucky tax has
been withheld.
Form K-5 Filing of W-2, W-2G, and 1099 Information
Form K-5 must be used to report W-2, W-2G, and 1099
information that is not submitted in the EFW2 or Publication
1220 format. The K-5 can be submitted electronically or printed
and mailed.

Only report 1099 data to the DOR when Kentucky tax has
been withheld.
Electronic Filing Threshold

K-5 Filing Tips

Regulation 103 KAR 18:050(4) requires any employer or payer
issuing twenty-six (26) or more withholding statements require
electronic filing. (Forms W-2, W-2G, and 1099 Series) annually
to file electronically. Employers and payers issuing fewer than
twenty-six (26) withholding statements that are not filed elec-

•

Only report Kentucky Form W-2, Form W-2G, and Form
1099.

•

Only report 1099’s that have Kentucky tax withheld.

Withholding Statement Format and Filing Methods

•

Incomplete forms cannot be submitted or saved.

•

The EFW2 format for W-2 electronic files must be
submitted via the MyTaxes.ky.gov portal as a transmitter
or on CD.

•

Twenty-six (26) or more withholding statements require
electronic filing.

•

The Publication 1220 format for W-2G and 1099 electronic
files must be submitted via the MyTaxes portal as a
transmitter at MyTaxes.ky.gov or on CD.

•

A separate Form K-5 must be filed for each type Form
W-2, Form W-2G, or Form 1099.

•

Form K-5 is required for withholding statements not
reported in an electronic file format.

•

Form W-2C cannot be reported on Form K-5.

•

Form K-5 is completed via the MyTaxes portal
at MyTaxes.ky.gov The K-5 can be submitted
electronically or printed and mailed.

Be sure to retain a copy of the completed Form K-5 for
your records.

•

Tax years prior to 2023 may be reported on Form K-5
(requires electronic filing).

•

Do not mail paper copies of Forms W-2, W-2G, or 1099 to
the DOR. Paper copies of Forms W-2, W-2G, and 1099
received by the DOR will not be processed and will not be
considered filed. Retain the paper forms for your records
and only provide copies upon request.

o

MyTaxes portal and CD Filing of W-2 Information
DOR follows the federal specification format for filing
W-2 data via MyTaxes portal as a transmitter or CD. This
does not mean a duplicate copy of your federal electronic
file is acceptable. There are differences in the data
record requirements and some differences in procedural
requirements between the federal and state formats.

Form W-2C – Corrected Wage and Tax Statement
W-2 corrections can only be made via paper and must be
reported by filing Form W-2C, not Form K-5. Only submit
W-2C’s if it has been submitted to the employee.

Kentucky follows the SSA’s EFW2 specifications with
DOR defined RS Records for filing W-2 information.
Specifications are available at https://revenue.ky.gov/
Business/Pages/Employer-Payroll-Withholding.aspx

Form 1099 and Form W2G – Corrections
Kentucky now accepts corrected 1099 and W2G returns
electronically via the MyTaxes.ky.gov portal. To submit W2Gs
in the portal, you must choose the 1099 option in the dropdown.

CD submission is another filing option to report annual Wage
and Tax Statement (W-2) information. All CD submissions must
accompany a Transmitter Report, Form 42A806.

5

4.	 On or before January 31 of each year, or at the termination
of employment, the employer must give each employee
a wage and tax statement in duplicate using Form
W-2 (Copies No. 2, B and C) or a previously approved
commercially printed wage and tax statement showing:

VII. ELECTRONIC FUND TRANSFER
Employers whose average monthly income tax withholding
exceeds the threshold specified in Regulation 103 KAR 1:060
are required to submit tax payments via Electronic Fund
Transfer (EFT).

a.	
b.	
c.	
d.	

taxable wages;
Kentucky taxable wages;
Kentucky tax withheld and federal tax withheld;
employer’s Kentucky withholding account number and
federal identification number;
e.	 employee’s Social Security number;
f.	 employee’s name and address;
g.	 employer’s name and address; and
h.	 name of state.

Accepted EFT payment methods include:
•	

ACH Credit – For assistance or questions regarding this
method, please contact the EFT Group at (502) 5646020.

•	

ACH Debit and E-Check – Both are available through the
MyTaxes portal at MyTaxes.ky.gov.

5.	 The employer must file Form K-3, Employer’s Return of
Income Tax Withheld, on or before January 31 of each
year. Form K-3 is a combination return reporting income
tax withheld for the period ending December 31, and
reconciling withholding for the year. The employer must
report Wage and Tax Statement information to DOR
by January 31.

The Department of Revenue (DOR) offers businesses the
option to voluntarily pay withholding tax via Electronic Fund
Transfer (EFT) per KRS 131.155.
Mandatory EFT payments are required for:
•	

Businesses with withholding tax payments exceeding
$25,000, as outlined in Regulation 103 KAR 1:060

•	

Reporting agents making aggregate payments exceeding
the threshold

•	

Entities paying on behalf of more than 100 individual accounts

6.	 Income exempt from Kentucky withholding is generally
the same as under federal law. The chief classes exempt
are domestic workers, fees paid to public officials and
ministers.
7.	 Employers required to withhold Kentucky income tax are
generally the same as under federal law. It is necessary
to report W-2 information for each employee even if
there may be no Kentucky income tax withheld.

KRS 131.155(5)

8.	 Employers that have provided reasonable cause that they
are unable to file electronically and have been granted
a waiver by the Department of Revenue, will be mailed
forms K-1 or K-3 at the end of each reporting period.
These preprinted forms contain important processing
information and cannot be furnished in blank form. If a form
is not received contact DOR to request a replacement.
When requesting any of these forms, please furnish the
employer’s correct name, address, Kentucky withholding
account number and the period for which the form is
requested.

Taxpayers and any other persons who are required to collect
and remit taxes administered by the department by electronic
fund transfer shall be entitled to receive refunds for any
overpayment of taxes or fees by electronic fund transfer.
Form 42A815, Withholding Tax Refund Application, can
be submitted via mail to request an electronic refund or by
logging on to MyTaxes.ky.gov portal to make the request.
VIII.

SUMMARY OF EMPLOYER REQUIREMENTS

9.	 Other Employer RequirementsYou may need to register
for a Kentucky Unemployment Insurance account. Please
visit https://kewes.ky.gov for additional information.

1.	 DOR uses a combined application for registration of
withholding, corporation, coal and sales and use taxes.
Employers required to withhold Kentucky income tax must
complete Sections A, B, C and D of this form. A withholding
account number is required when an employer has one or
more employees as defined in Section 3401 of the Internal Revenue Code currently in effect for Kentucky.

Kentucky businesses are required to comply with the
Kentucky Revised Uniform Unclaimed Property Act,
codified as KRS Chapter 393A. If you have uncashed
vendor checks, payroll checks, unclaimed customer
deposits or refunds, or other types of property belonging
to third-parties, you may be required to turn the property
over to the Kentucky State Treasury. Please review KRS
Chapter 393A, or visit https://treasury.ky.gov for more
information.

2.	 The employer must withhold tax according to the tables or
computer formula.
3.	 The employer must send payment of all income tax withheld
for the applicable period to the Department of Revenue
electronically via MyTaxes.ky.gov or a third party vendor.

6

IX.

$100).
5.	 Failure to file returns or statements electronically—Any
taxpayer or tax return preparer who fails or refuses
file a return, report, or statement electronically may be
assessed a processing fee of ten dollars ($10) for each
return.

GAMBLING WINNINGS

Regulation 103 KAR 18:070 establishes the withholding rate
on gambling winnings at the maximum income tax rate in
KRS 141.020. Every person making a payment of gambling
winnings that is subject to federal tax withholding must deduct
and withhold from the payment Kentucky income tax. The
withholding tax rate for gambling winnings is 3.5 percent of
the proceeds paid (the amount of winnings minus the amount
of the bet). The Kentucky tax withheld from gambling winnings
should be reported and paid on the payer's withholding account.
The winnings and tax withheld should be reported and paid on
Form K-1 or K-3 return.

C.	 Criminal Penalty (KRS 141.990)—Any employer who
willfully fails to make a return, or willfully makes a false
return, or who willfully fails to pay the tax owing or collected,
with the intent to evade payment of the tax or amount
collected, or any part thereof, shall be guilty of a Class D
felony.

Gambling winnings of more than $5,000 from the following
sources are subject to income tax withholding.
•	

Any sweepstakes, wagering pool, or lottery.

•	

Any other wager, if the proceeds are at least 300 times
the amount of the bet.

D.	 Criminal Penalty (KRS 514.040)—A person is guilty of
theft by deception when he issues a check or similar sight
order in payment of all or any part of any tax payable to
the Commonwealth knowing that it will not be honored by
the drawee. Theft by deception is a Class A misdemeanor
unless the amount of the check or sight order is $500 or
more but less than $10,000, in which case it is a Class D
felony; or $10,000 or more, in which case it is a Class C
felony.

Gambling winnings from bingo, keno, and slot machines are
generally not subject to income tax withholding.

E.	 Bond Requirement (KRS 141.310(14))—Any employer
may be required to post a bond with DOR. Action to restrain
or enjoin the operation of an employer’s business may be
taken until the bond is posted and/or the tax is paid. The
amount of the bond shall not exceed $50,000.

The definition of wages in KRS 141.010(37) includes gambling
winnings subject to withholding as provided in Section 3402(q)
of the Internal Revenue Code. Additional information is
available in Internal Revenue Service Publication 505, Tax
Withholding and Estimated Tax.
X.

F.	 Corporate Officer Liability (KRS 141.340(2))—Certain
corporate officers shall be held liable for any tax required
to be withheld from wages paid to employees of the

INTEREST, PENALTIES, BOND REQUIREMENT
AND CORPORATE OFFICER LIABILITY

A.	 Interest (KRS 141.985)—If the tax, whether assessed by
DOR or the taxpayer, or any installment or portion of the
tax is not paid on or before the due date prescribed for
its payment, there shall be collected, as a part of the tax,
interest upon the unpaid amount computed from the due
date until paid.

XI.

COMPUTER FORMULA (OPTIONAL
WITHHOLDING METHOD)

The current year Computer Formula example and tax tables
can be found at revenue.ky.gov .

B.	 Penalties (KRS 131.180 and 131.990)—Any employer
who fails to withhold and remit taxes as required by KRS
Chapter 141 may be subject to the following penalties.
1.	 Late filing of return—2 percent of the total tax due for
each 30 days or a fraction thereof the return or report is
late, not to exceed 20 percent (minimum $10).
2.	 Late payment or failure to withhold tax—2 percent of
the tax not timely paid or withheld for each 30 days or
fraction thereof the payment is late, not to exceed 20
percent (minimum $10).
3.	 Failure to timely obtain identification number, permit,
license or other document of authority—10 percent of
any cost or fee required for issuance (minimum $50).
4.	 Failure to file return or furnish information—Any
employer required to furnish a wage and tax statement
who fails to furnish a statement, may for such failure be
subject to civil penalty of $25 for each return (minimum

7

XII.

TAXABLE/EXEMPT CHART

XIII.

1. Who is considered an employee?

Withholding tax law is based on the federal withholding tax
law currently in effect for Kentucky. DOR generally follows the
administrative regulations and rulings of the Internal Revenue
Service in those areas where no specific Kentucky law exists.

An employee is someone who receives wages for services
performed for his or her employer. The term wages includes
all remuneration (other than fees paid to a public official) for
services performed. Therefore, wages earned for services
performed in Kentucky are subject to Kentucky withholding.
Corporate officers are also considered employees.

The Kentucky Legislature has provided for the prospective
adoption of amendments to the Internal Revenue Code
currently in effect for Kentucky, which would extend provisions
that would otherwise terminate, providing any subsequent
federal legislation is limited only to the extension of the statute.

2. How do I obtain a Withholding Tax Account Number?

The chart below has been prepared as a quick reference guide
to the withholding tax treatment of many types of payments
or payees.

Situation

Kentucky Withholding
Treatment

Agricultural Workers—Wages

Required*

Aliens

Required

Bonuses

Required

Cafeteria Plans

Not Required

Clergy

Not Required

Company Cars

Required

Contractors

Not Required

Dependent Care Assistance Programs

Not Required

Directors and Officers	

Required

Dismissal or Severance Pay

Required

Domestic Workers

Not Required

Election Campaign Workers

Not Required

Family Employment

Required

Federal Thrift Savings Fund

Not Required*

Flexible Benefit Plans	

Not Required

Fringe Benefits	

Not Required*

Golden Parachute Payments

Required

Group-Term Life

Not Required*

Health Care Plans

Not Required

IRA

Not Required

Loans

Not Required

Meals and Lodging

Not Required*

Moving Expenses

Required

Nonprofit Organizations	

Required

Pensions

Not Required

Retirement and Pension Plans (401K Plan)

Not Required*

Scholarships and Grants

Not Required

SEP Plan

Not Required*

Sick Pay

Required*

Third-Party Sick Pay

Not Required

Tips

Required (over $20)

Travel Expenses

Not Required*

Vacation Pay

Required

COMMONLY ASKED QUESTIONS AND ANSWERS

•

The employer may register online at MyTaxes.ky.gov.

•

Or, the employer may fill out the Kentucky Tax Registration
Application, Revenue Form 10A100. Once received, the
application will be reviewed and an account number and
filing frequency will be assigned. Applications may be
obtained online at https://revenue.ky.gov/Pages/index.
aspx, by contacting the nearest Kentucky Taxpayer
Department of Revenue
ATTN: FORMS
Station 23B
Frankfort, Kentucky 40601
(502) 564-3658

3. Is an out-of-state employer required to withhold?
Regulation 103 KAR 18:010(2) provides that wages paid to
nonresidents are subject to withholding to the extent that
they earned wages while working in Kentucky unless the
nonresident employee is a resident of a reciprocal state. An
out-of-state employer may voluntarily withhold Kentucky tax
on a Kentucky resident who is working outside of Kentucky.
4. Does an employer have to withhold tax on a spouse or
relative?
Yes. Tax must be withheld on a spouse employed by a
spouse, son or daughter employed by parent, a parent
employed by a son, daughter, or any other employeerelative.
5. What is a K-5?
A K-5 is used to report withholding statement information
from Forms W-2, Forms W-2G, and Forms 1099 that
has not been submitted in an electronic file (EFW2 or
Publication 1220 format). The K-5 can be filed electronically
at MyTaxes.ky.gov or it may be printed and mailed at the
address on the form. For instructions on how to file
the K-5, please see Form K-5 Instructions at:
https://revenue.ky.gov/Business/Pages/Employer-Pay-rollWithholding.aspx The print and mail option is only
available for those reporting fewer than 26 withholding
statements.
6. When to File a K-5C?
To know when to file is K-5C, instructions can be found
at https://revenue.ky.gov/Business/Pages/Employer-Payroll-Withholding.aspx
7. What happens if an employer does not submit copies
of Form W-2 to his or her employees or DOR?
8

Penalties will be assessed per KRS 131.180.

8. Is Form 1099 required to be filed with Kentucky?

XIV.

Form 1099 is only reported to Kentucky when Kentucky tax
has been withheld. 1099 information may be submitted via
the MyTaxes portal as a transmitter at MyTaxes.ky.gov or
on CD in Publication 1220 format. It may also be reported
on Form K-5.

FORMS AVAILABLE ONLINE AT
revenue.ky.gov

Withholding Tax Forms

9. Is tax required to be withheld on agricultural labor?
Kentucky income tax law is based on the Internal Revenue
Code currently in effect for Kentucky. Section 3121(a) of
the Internal Revenue Code includes agricultural wages as
being taxable unless remuneration is paid in any medium
other than cash, the cash amount received by an employee
is less than $150 and the employer’s labor expense is less
than $2,500. Therefore, any agricultural wages taxable
for federal purposes would also be considered taxable for
Kentucky.
10. Is Kentucky tax required to be withheld on pensions?
No. Kentucky tax may be withheld voluntarily, but is not
required.
11. How do I amend information on a previously filed
return?
Previously filed periods can be amended via the MyTaxes
portal at MyTaxes.ky.gov. On the home page you will
choose "File A Form" and choose the Form Type: K-1
Amended or K-3 Amended.
12. When to file a W-2C with Kentucky?
W-2 corrections can only be made via paper and must be
reported by filling Form W-2C, not Form K-5. Only submit
Form W-2C if it has been submitted to the employee.

9

42A801(D)

Amended K-1

42A803(D)

Amended K-3

42A804

Form K-4—Kentucky's Withholding
Certificate

42A806

Transmitter Report for CD Submission of Electronic
Files—EFW2 or Publication 1220 Format

42A815

Withholding Tax Refund Application

42A003

Withholding Tax Book—Instructions for Employers

42A003(T)

Withholding Tax Tables

IMPORTANT INFORMATION FOR KENTUCKY EMPLOYERS
CONCERNING WORKERS COMPENSATION INSURANCE
Every Kentucky employer with one or more employees is required to maintain workers compensation insurance. (KRS
342.630) There are no special exceptions for family member or part-time employees. Out of state employers performing
any work in this state are required to have Kentucky workers compensation insurance. Keep in mind that workers often
referred to as “day laborers (contract labor)” are considered employees under the Workers Compensation Act and must
be covered.
Exempted by statute are farm laborers, domestic servants working in a private home of an employer who has less
than two employees, workers employed by a homeowner for residential maintenance, remodeling and repair lasting
no more than 20 consecutive work days, and employees protected by federal laws, including railroad and maritime
workers. (KRS 342.650)
Compliance with the Act
The Enforcement Branch of the Office of Workers Claims seeks compliance of all employers in the state. This is
accomplished by regular inspections of employers to verify compliance. The Office of Workers Claims can issue a
citation resulting in a fine of $100 to $1,000 for each offense. The fine can be substantial since each employee and each
day of violation shall constitute a separate offense [KRS 342.990(7)(c)]. An injunction prohibiting the employer from
doing business until it comes into compliance can be obtained. The statute also prohibits the employer from deducting
premium from wages or salary of any employee entitled to benefits.
Kentucky does not sponsor a state-run insurance program. Therefore, it is the employer’s responsibility to secure the
insurance from a private carrier. Workers compensation insurance may be obtained by purchasing a policy from an
insurance agent that represents approved insurance companies.
This information form provides a brief explanation of the Workers Compensation Act. Additional information can be
obtained by contacting the Kentucky Education and Labor Cabinet, Department of Workers Claims Enforcement Branch
at 1-502-564-5550 or 1-800-731-5241. Our Internet Web site is https://elc.ky.gov/Workers-Compensation/.

10