Kentucky Moving Expense & Reimbursement Form 42A740-NP-ME
Extracted from PDF file 2021-kentucky-schedule-me-740-np.pdf, last modified December 2021
Moving Expense & Reimbursement Form 42A740-NP-MECOMMONWEALTH OF KENTUCKY DEPARTMENT OF REVENUE FRANKFORT, KENTUCKY 40620 42A740-NP(P) (10-21) 740-NP 2021 Kentucky Income Tax Return Nonresident or Part-Year Resident Who must file Form 740-NP? • • • Full-year nonresidents with income from Kentucky sources Persons moving into Kentucky Persons moving out of Kentucky Electronic Filing—It’s to your advantage! Choose one of these easy methods! Federal/State Electronic Filing—Individuals who use a professional tax practitioner to prepare their Kentucky income tax return can file both their state and federal returns by using the E-File Program. With no data entry, you can have your refund in just a few short weeks. Federal/State Online Filing—This filing method offers the same benefits as the Federal/State E-Filing Program, but you prepare and file your return from the convenience of your own home computer. TAXPAYER ASSISTANCE—revenue.ky.gov Refund Inquiries—You may check the status of your refund at revenue.ky.gov. This system is available 24 hours a day, 7 days a week and is updated nightly. The following information from your return will be required: • Your Social Security number shown on the return. • The exact whole-dollar amount to be refunded to you. Kentucky Taxpayer Service Centers—Information and forms are available in the following locations: Ashland 1539 Greenup Avenue, 41101–7695 (606) 920–2037 Louisville 600 West Cedar Street 2nd Floor West, 40202–2310 (502) 595–4512 Bowling Green 201 West Professional Park Court, 42104–3278 (270) 746–7470 Northern Kentucky Turfway Ridge Office Park 7310 Turfway Road, Suite 190 Florence, 41042–4871 (859) 371–9049 Corbin 15100 North US 25E, Suite 2, 40701–6188 (606) 528–3322 Frankfort 501 High Street, 40601–2103 Owensboro Corporate Center 401 Frederica Street Building C, Suite 201, 42301–6295 (270) 687–7301 (502) 564–5930 (Taxpayer Service Center) (502) 564–4581 (General Information) (502) 564–3658 (Forms) Paducah Clark Business Complex, Suite G 2928 Park Avenue, 42001–4024 (270) 575–7148 Hopkinsville 181 Hammond Drive, 42240–7926 (270) 889–6521 Pikeville Uniplex Center, Suite 203 126 Trivette Drive, 41501–1275 (606) 433–7675 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. 2021 FEDERAL/KENTUCKY INDIVIDUAL INCOME TAX DIFFERENCES Kentucky income tax law is based on the federal income tax law in effect on December 31, 2018. The Department of Revenue generally follows the administrative regulations and rulings of the Internal Revenue Service in those areas where no specific Kentucky law exists. The chart below provides a quick reference guide to the major federal/ Kentucky differences. It is not intended to be all inclusive. Items not listed may be referred to the Department of Revenue to determine Kentucky tax treatment. PROVISION 1. Interest from Federal Obligations FEDERAL TAX TREATMENT KENTUCKY TAX TREATMENT Taxable Exempt 2. Retirement Income from: Commonwealth of Kentucky Retirement Systems Taxable Kentucky Local Government Retirement Systems Taxable Federal and Military Retirement Systems Taxable Partially exempt if retired after December 31, 1997; exempt if retired before January 1, 1998; Schedule P may be required 3-year recovery rule eliminated 3-year recovery rule retained Taxable 100% excludable up to $31,110 per taxpayer; Schedule P may be required 5. Benefits from U.S. Railroad Retirement Board May be taxable Exempt; Schedule P may be required 6. Social Security Benefits May be taxable Exempt 7. Capital Gains on Sale of Kentucky Turnpike Bonds Taxable Exempt 8. Other States’ Municipal Bond Interest Income Exempt Taxable 9. Kentucky Local Government Lease Interest Payments Taxable Exempt 10. Capital Gains on Property Taken by Eminent Domain Taxable Exempt 11. Election Workers—Income for Training or Working at Election Booths Taxable Exempt Noncash contribution allowed as itemized deduction Appraised value allowed as itemized deduction or adjustment to income Deductible Nondeductible 14. Leasehold Interest—Charitable Contribution May be deductible Deductible; Schedule HH required 15. Work Opportunity Credit (federal Form 5884) Tax credit allowed; wage expense reduced by amount of credit No credit allowed; entire wage expense is deductible 16. Welfare to Work Credit (federal Form 8861) Tax credit allowed; wage expense reduced by amount of credit No credit allowed; wage expense reduced by amount of federal credit 3. Pensions and Annuities Starting After 7/1/86 and Before 1/1/90 4. Other Pension and Annuity Income 12. Artistic Contributions 13. State Income Taxes 17. Child and Dependent Care Credit Tax credit based on expenses 18. Family Size Tax Credit No credit allowed 19. Education Tuition Tax Credit Tax credit based on expenses 20. Child’s Income Reported by Parent 20% of federal credit, complete Form 2441-K Decreasing tax credit allowed Credit allowed Form 8863-K required Permitted; taxed at parent’s rate Not permitted Taxable Exempt 22. Certain Business Expenses of Reservists Deductible Nondeductible 23. Moving Expenses for Members of the Armed Forces Deductible Nondeductible 24. Medical and Dental Expenses Deductible Nondeductible 25. Local Income Taxes Deductible—limited Nondeductible 26. Real Estate Taxes Deductible—limited Nondeductible 27. Personal Property Taxes Deductible—limited Nondeductible Deductible Nondeductible Nondeductible Nondeductible 21. Active Duty Military Pay 28. Casualty and Theft Losses 29. Job Expenses and Other Miscellaneous Deductions 1 This page has been intentionally left blank. 2 What’s New STANDARD DEDUCTION—For 2021, the standard deduction is $2,690. FAMILY SIZE TAX CREDIT—This credit provides benefits to individuals and families at incomes up to 133 percent of the threshold amount based on the federal poverty level. The 2021 threshold amount is $12,880 for a family size of one, $17,420 for a family of two, $21,960 for a family of three, and $26,500 for a family of four or more. INCOME GAP TAX CREDIT—This credit has expired. It was only available for tax years 2019 and 2020. NEW FORM 2441–K, CHILD AND DEPENDENT CARE CREDIT—Kentucky does not conform to the federal American Rescue Plan (ARP) of 2021, which enhanced the federal child and dependent care credit. The ARP increased the amount of child and dependent care credit, made the credit refundable, increased the percentages of employment‑related expenses for qualifying care considered in calculating the credit, and modified the phase‑out of the credit for higher income earners. Since Kentucky conforms to the Internal Revenue Code as of December 31, 2018, Kentucky did not adopt these federal changes. A new form 2441-K was created to calculate the allowable Kentucky child and dependent care credit. KENTUCKY 8863–K, KENTUCKY EDUCATION AND TUITION TAX CREDIT—Kentucky does not conform to the federal Consolidated Appropriations Act of 2021, which (CAA) made changes to the federal lifetime learning credit. The CAA increased the phase out limits when calculating the federal lifetime learning credit. Since Kentucky conforms to the Internal Revenue Code as of December 31, 2018, Kentucky Form 8863-K was updated to add lines 9(a) through 9(e) using the phase out limits in effect as of Kentucky’s IRC conformity date for the Kentucky lifetime learning credit. PPP LOANS AND EIDL GRANTS AND ADVANCES—Expenses paid with proceeds from forgiven Paycheck Protection Program (PPP) loans or Economic Injury Disaster Loans (EIDL) grants and advances are authorized to be deducted for Kentucky income tax purposes and federal income tax purposes. 2021 House Bill 278 updated KRS 141.019 to allow the same treatment afforded by Pub. L. No. 116-260, sec. 276 and sec. 278, related to the tax treatment of forgiven covered loans, deductions attributable to those loans, and tax attributes associated with those loans for taxable years ending on or after March 27, 2020, but before January 1, 2022. Loans forgiven under the CARES Act PPP and EIDL grants and advances that are excluded from gross income for federal income tax purposes are also excluded for Kentucky income tax purposes. DISASTER RESPONSE EMPLOYEES/BUSINESSES—2021 House Bill 84 provides an exemption for qualified disaster response employees and disaster response businesses from income tax for tax years beginning on or after January 1,2021 but before January 1, 2025. A disaster response business is exempt from income tax under KRS 141.040 (corporations) and KRS 141.020 (sole proprietorships) if the disaster response business has no presence in Kentucky and conducts no business in Kentucky, except for disaster or emergency-related work during a disaster response period, whose services are requested by a registered business or by a state or local government for purposes of performing disaster or emergency-related work in Kentucky during a disaster period and has no registrations, tax filings or nexus in Kentucky other than disaster or emergency-related work during the calendar year immediately preceding the declared state disaster or emergency. Disaster response employees are exempt from individual income tax if the employee does not work or reside in Kentucky, except for disaster or emergency-related work during the disaster response period. Disaster or emergency-related work means repairing, renovating, installing, building, or rendering services that are essential to the restoration of critical infrastructure that has been damaged, impaired, or destroyed by a declared state disaster or emergency. The disaster or emergency-related work must take place up to 10 days prior and up to 30 days after the declared state disaster or emergency (“the disaster response period”). NOTE: This exemption does not apply to the LLET or to taxes imposed under KRS 141.206 on pass-through entities, such as nonresident withholding. RENEWABLE CHEMICAL PRODUCTION TAX CREDIT—For taxable years beginning on or after January 1, 2021, and ending on or before December 31, 2024, a nonrefundable and nontransferable credit allowed against the taxes imposed by KRS 141.020 or KRS 141.040 and KRS 141.0401 is available for taxpayers that produce renewable chemicals. Preliminary approval is obtained through the Department of Agriculture. Schedule CHEM is due to the Department of Revenue by March 1 each year. The Department of Revenue will issue the credit certificate (Schedule CHEM) by April 15 each year. The annual biodiesel, renewable diesel, and renewable chemical production tax credit cap is $10,000,000 annually. There is a carryforward of three (3) years for any unused credit. The credit certificate must be attached to the tax return claiming the credit per KRS 141.4231 and KRS 246.700(8). 3 HB 563–EDUCATION OPPORTUNITY ACCOUNT PROGRAM—Pursuant to Franklin Circuit Court’s October 8, 2021 Opinion and Order addressing a challenge to the constitutionality of HB 563, which, in part, established a tax credit for a limited pool of Kentuckians to pay for private school tuition, the Department of Revenue was ordered to cease administering the programs established by the bill. Accordingly, the Department of Revenue shall not approve the creation or operation of any Account-Granting Organizations, the establishment of any Educational Opportunity Accounts, or grant any tax credits to fund such organizations and accounts under the legislation enacted in House Bill 563. See KRS 141.500 et seq. The Department of Revenue will update its website, revenue.ky.gov, to notify the public of any future changes based upon subsequent judicial decisions and/or legislative enactments. Reminders INTERNAL REVENUE CODE DATE—Kentucky’s Internal Revenue Code (IRC) reference date is December 31, 2018, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in effect on December 31, 2018, that would otherwise terminate. INVENTORY TAX CREDIT—The inventory tax credit increases to 100 percent of the ad valorem taxes timely paid for property described in KRS 132.020(1)(e) or KRS 132.099 for taxable years beginning on or after January 1, 2021. KY FILE—Kentucky also offers another option for filing your state return electronically, free of charge. If you would like to fill out your Kentucky forms and schedules without software help or assistance you may use the KY File website. KY File allows you to file current year Kentucky individual income tax returns and is designed to be the simple electronic equivalent of a paper form. It will provide basic mathematical and error checks but unlike most other software it does not ask about or explain tax situations. Your federal forms should be completed before accessing the KY File website. You can access the KY File website at Filetaxes.ky.gov 4 42A740-NP(I) (10-21) 2021 Kentucky Individual Income Tax Instructions for Form 740-NP General Information Which form should I file? File Form 740 if you are a full-year Kentucky resident and meet the filing requirements in the Instructions for Form 740. File Form 740-NP if you are a nonresident and: • had income from Kentucky sources. or are a part-year Kentucky resident and: • moved into or out of Kentucky during the taxable year. • had income while a Kentucky resident. • had income from Kentucky sources while a nonresident. File Form 740-NPR if you are a resident of a reciprocal state: Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin and you had Kentucky income tax withheld and had no other income from Kentucky sources. Computer–Generated Returns and 2–D Barcode Most software packages produce a 2-D barcode. The Department of Revenue scans the barcode that contains all of the information needed to process your return. The barcode is printed in the upper right-hand corner of the return when you prepare your return using an approved software package. Last minute changes should be entered into the program and the entire return printed again so that the barcode also contains the correct information. This barcode should not be covered up or marked through. Using the barcode reduces data entry errors for the department and results in a faster refund for you. C h e ck t o b e s u r e y o u r s o ft wa r e generates an acceptable form. A list of vendors whose software has been approved is posted on the Internet at revenue.ky.gov, the Department of Revenue’s website. Free Electronic Filing Options You may visit https://revenue.ky.gov/ Individual/Pages/FreeFileSoftware. aspx for free electronic filing options. You may qualify to file your federal and Kentucky individual income tax returns for free depending on your income level. Some offers require state and federal returns to be filed at the same time. The Kentucky Department of Revenue does not endorse any specific tax filing product. Each software company is responsible for the accuracy of the sof tware program instructions and calculations. However, all sof tware packages will produce a return which contains the required data fields. The Kentucky Department of Revenue does not offer technical assistance for these software products. You should contact the tax sof tware customer ser vice department if you have issues using any of the software products. Kentucky also offers another option for filing your state return electronically, free of charge. If you would like to fill out your Kentucky forms and schedules without software help or assistance you may use the KY File website. KY File allows you to file current year Kentucky individual income tax returns and is designed to be the simple electronic equivalent of a paper form. It will provide basic mathematical and error checks but unlike most other software it does not ask about or explain tax situations. Your federal forms should be completed before accessing the KY File website. You can access the KY File website at Filetaxes.ky.gov . Where to Get Forms Forms and instructions are available o n l i n e f r o m t h e D e p a rt m e n t o f Revenue’s website at revenue.ky.gov and at all Kentucky Taxpayer Service Centers. They may also be obtained by writing FORMS, Kentucky Department of Revenue, 501 High Street, Station 23B, Frankfort, KY 40601, or by calling (502) 564-3658. 5 Address Change If you move after you file your tax return, please notif y the Kentuck y D e p a r t m e n t o f R e ve n u e o f yo ur new address. This can be done by sending a change of address card (available at your local post office) to: Taxpayer Assistance Section, Kentucky Department of Revenue, P.O. Box 181, Station 56, Frankfort, KY 40602-0181. Notification can also be made to any Kentucky Taxpayer Service Center. A list of locations is included in your packet. Refund Inquiries You may check the status of your refund at refund.ky.gov. This system is available 24 hours a day, 7 days a week, and is updated nightly. The following information from your return will be required: • Your Social Security Number shown on the return. • The exact whole-dollar amount to be refunded to you. Information about electronically filed returns should be available within 72 hours of receipt. Information about other refund requests filed on paper will be available after the return has completed initial processing (approximately 12 weeks). Need a Copy of Your Tax Return? If you need a copy of your tax return, you must send your request in writing to: Taxpayer Assistance Section, Kentucky Department of Revenue, P.O. Box 181, Station 56, Frankfort, KY 40602-0181 or fax to (502) 564-3392. Please include your name(s) as it appeared on your return, Social Security number(s), your complete mailing address, and a photo ID. To ensure confidentiality, all requests must include your signature. How Long Should Records be Kept? Ke e p a c opy o f yo ur t a x r e t ur n, worksheets and records of all items appearing on it (such as Forms W-2 and 1099 or other receipts) until the statute of limitations runs out for that return. Usually, this is four years from the date the return was due or filed (with extensions), or the date the tax was paid, whichever is later. You should keep some records longer. For example, keep property records (including those on your home) as long as they are needed to figure the basis of the original or replacement property. Filing as an Injured Spouse on Your Federal Form 1040? Kentucky does not recognize the federal injured spouse form. Income tax refunds may be withheld by the department if you owe money to the Kentucky Department of Revenue, another state agency or the Internal Revenue Service. Kentucky law requires the offset of the entire refund if a joint return is filed. If spouses want to keep their tax liabilities and/or refunds separate, each must file a separate tax form. If you choose to file separately on a combined return, for agencies other than the Department of Revenue, the refund will be apportioned between spouses, based on each spouse’s income. The indebted spouse’s refund will then be paid to the appropriate agency. Death of a Taxpayer If a taxpayer died before filing a return for 2021, the taxpayer’s spouse or personal representative may have to file and sign a return for that taxpayer. A personal representative can be an executor, administrator or anyone who is in charge of the deceased taxpayer’s property. If the deceased taxpayer did not have to file a return but had tax withheld, a return must be filed to get a refund. The person who files the return should check the applicable deceased box at the top of the return. If your spouse died in 2021 and you did not remarry in 2021, you can file jointly or separately on a combined return. The return should show your spouse’s 2021 income before death and your income for all of 2021. You can also file jointly or separately on a combined return if your spouse died in 2022 before filing a 2021 return. Write “Filing as surviving spouse” in the area where you sign the return. If someone else is the personal representative, he or she must also sign. Death of Military Personnel Killed in Line of Duty KRS 141.019(k) exempts all income earned by soldiers killed in the line of duty from Kentucky tax for the year during which the death occurred and the year prior to the year during which the death occurred. The exemption applies to tax years beginning after December 31, 2001. The income exclusion applies to all income from all sources of the decedent, not just military income. The exclusion includes all federal and state death benefits payable to the estate or any beneficiaries. Amended returns may be filed for the year the soldier was killed in the line of duty and the year prior to the year of death. The amended returns must be filed within the statute of limitations period; four years from the due date, the extended due date or the date the tax was paid, whichever is later. If a combined return was filed, the exclusion would apply to the income reported in Column A or Column B of the Kentucky return attributable to the military member. If a joint return was filed, the income must be separated accordingly. Refunds will be issued in the names on the original return. Beneficiaries or estates that received death benefits that were included in a Kentucky return may file an amended return to request a refund of taxes paid on the benefit. The Department of Revenue will use the Veterans Administration definition for “in the line of duty,” which states that a soldier is in the line of duty when he or she is in active military service, whether on active duty or authorized leave; unless the death was the result of the person’s own willful misconduct. 6 Income Tax Withholding for 2022 Yo u m a y e l e c t t o i n c r e a s e y o u r withholding by updating your K-4 with your employer. Or if you do not expect to have any tax liability for the current year or you meet the modified gross income requirement, you may be entitled to claim an exemption from withholding of Kentucky income tax. 2022 Estimated Tax Payments Individuals who can reasonably expect to have income of more than $5,000 from which no Kentucky income tax will be withheld may be required to make es timated tax payment s on Form 740-ES. However, if the amount of estimated tax is $ 500 or less, no estimated payments are required. Individuals who do not prepay at least 90% of the tax to be shown on the 2022 tax return, or 100% of the tax shown on the 2021 tax return, may be subject to a penalty for underpayment of estimated tax. For more information on calculating the penalty, please refer to Form 2210‑K. Prepayments for 2022 may be made through withholding, a credit forward of a 2021 overpayment or estimated tax installment payments. Estimated tax installments may now be made electronically at revenue.ky.gov, using Form EPAY, or when electronically filing your return using Form 8879-K, or through mailing a 740-ES with payment. The ins truc tions for Form 74 0 - ES include a worksheet for calculating the amount of estimated tax due and for making installment payments. These forms may be obtained from the Kentucky Department of Revenue, P. O. Box 518, Frankfort, KY 40602-0518, or any Kentucky Taxpayer Service Center, or by calling (502) 564-3658. Return Adjustments Confidentiality If the Department of Revenue adjusts your return and you do not understand the adjustment ( s ) , you may write to Taxpayer Assistance, Kentuck y Department of Revenue, P.O. Box 181, Station 56, Frankfort, KY 40602-0181, fax your request to Taxpayer Assistance (502) 564-3392, or call (502) 564-4581. Please include your name (s) as it appears on your return, complete Social Security Number(s), notice number(s), and daytime contact information. Kentuck y Revised Statute 131.190 requires the Department of Revenue to maintain strict confidentiality of all taxpayer records. No employee of the Department of Revenue may divulge any information regarding the tax returns, schedules or reports required to be filed. However, the Department of Revenue is not prohibited from providing evidence to or testifying in any court of law concerning official tax records. Also, Department of Revenue employees or any other person authorized to access confidential state information are prohibited from intentionally viewing such information without an official need to view. If you disagree with an adjustment made to your return, you must appeal the adjustment by submitting a written protest within 60 days of notification. Amended Returns If you discover that you omit ted deductions or otherwise improperly prepared your return, you may obtain a refund by filing an amended return within four years of the due date of the original return. You are required to file an amended return to report omitted income. For 2017 and later use form 740 and check the box for amended. For 2016 and prior, use Form 740-X. You may obtain these forms by contacting a Kentucky Taxpayer Service Center or writing FORMS, Kentuck y Department of Revenue, P. O. Box 518, Frankfort, KY 40602-0518. You may also download forms at revenue. ky.gov the Department of Revenue’s website. Federal Audit Adjustments Taxpayers who have received a final determination of an Internal Revenue Service audit must submit a copy to the department within 180 days of its conclusion. The information should be submitted to the Individual Governmental Program Section, Kentucky Department of Revenue, P.O. Box 1074, Station 68, Frankfort, KY 40602-1074. The department may provide official information on a confidential basis to the Internal Revenue Service or to any other governmental agency with which it has an exchange of information agreement whereby the department receives similar or useful information in return. Extension of Time to File Taxpayers who are unable to file a return by April 18 may request an extension of time to file their return. Taxpayers may elect to file this request electronically or by mailing the extension to the Department of Revenue on or before the due date of the return. The request must state a reasonable cause for the inability to file. Inability to pay is not an acceptable reason. Acceptable reasons include, but are not limited to, destruction of records by fire or flood and serious illness of the taxpayer. Extensions are limited to six months. A copy of the Kentucky extension request must be enclosed with your paper return. If you file your return electronically, you must indicate that an extension was filed by checking the appropriate box in the software. Individuals who receive a federal extension are not required to request a separate Kentucky extension. They can meet the requirements by enclosing a copy of the application for automatic federal ex tension to the Kentuck y return. 7 IRS extensions by e-file (by personal computer or a tax professional)— Enclose a copy of Form 4868 with the confirmation number in the lower right–hand corner of the form or a copy of the electronic acknowledgment. Military Personnel—Kentucky residents who are in the militar y are of ten granted extensions for tax filings when serving outside the United States. Any extension granted for federal income tax purposes will be honored for Kentucky income tax purposes. Combat Zone Extension—Members of the Army, Navy, Marines, Air Force, or Public Health Service of the United States government who serve in an area designated as a combat zone by presidential proclamation shall not be required to file an income tax return and pay the taxes, which would otherwise become due during the period of service, until 12 months after the service is completed. Members of the National Guard or any branch of the Reserves called to active duty to serve in a combat zone are granted the same extension. Interest and Penalties—Interest at the “tax interest rate” applies to any income tax paid after the original due date of the return. If the amount of tax paid by the original due date is less than 75 percent of the tax due, a late payment penalty may be assessed (minimum penalty is $10). Interest and penalty charges can be avoided or reduced by sending payment with your extension request by the due date. If you wish to make a payment prior to the due date of your return when using the: (1) Kentuck y Extension—Complete Section II, Kentuck y Extension Payment Voucher, of the Application for Extension of Time to File, Form 740EXT, and send with payment. Write “KY Income Tax—2021” and your Social Security number(s) on the face of the check. (2) Federal Automatic Extension—Make a copy of the lower portion of the federal Application for Automatic Extension, Form 4868, and send with payment. Make check payable to Kentucky State Treasurer, write “KY Income Tax–2021” and your Social Security number on the face of the check. Enclose the check, Federal extension and send to Kentucky Department of Revenue, Frankfort KY 40620-0009. Personal Property Forms Kentuc k y busines s taxpayer s are reminded to report all taxable personal property, except motor vehicles, owned on January 1 to either the property valuation administrator in the county of residence (or location of business) or the Office of Property Valuation in Frankfort. Tangible personal property is to be repor ted on the Tangible Personal Property Tax Return, Form 62A500. The due date for this return is May 15. Do not mail this return with your income tax return; use a separate envelope. Kentucky State Treasury—Unclaimed Property I n d i v i d u a l s—T h e Ke n t u c k y S t a t e Treasury may be holding unclaimed property for you or your family. The Treasury holds hundreds of millions of dollars from bank accounts, payroll checks, life insurance, utility deposits, and other types of property that have been unclaimed by the owners. Please visit treasury.ky.gov or www.missingmoney.com for more information on how to locate and claim any funds that may belong to you. Businesses—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 treasury. ky.gov for more information. 8 42A740-NP(I) 10-21 INSTRUCTIONS FOR 2021 KENTUCKY FORM 740-NP NONRESIDENT OR PART–YEAR RESIDENT INCOME TAX RETURN WHO MUST FILE FORM 740-NP—Form 740-NP must be used by full-year nonresidents who had income from Kentucky sources and by part-year residents who had income while a Kentucky resident or from Kentucky sources while a nonresident. These persons must file Form 740-NP if they had (1) any gross income from Kentucky sources and gross income from all sources in excess of modified gross income for their family size, or (2) Kentucky gross receipts from self–employment in excess of modified gross income for their family size. See Chart A on page 10. reciprocal states above). Any income from nonmilitary Kentucky sources is also taxable. Military Pay Exclusion—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. (KRS 141.019(l)) Soldiers will claim the exemption by excluding military pay when filing a Kentucky individual income tax return starting with the 2010 return. Provided the military member has no income other than military pay, he or she would not be required to file a Kentucky income tax return. The military pay exemption applies to all Kentucky military members regardless of where the member is stationed. Kentucky income tax should no longer be withheld from checks received for military pay, beginning January 1, 2010. If Kentucky income tax is incorrectly withheld from a soldier’s military pay in 2010 and after, the Department of Revenue will refund the tax withheld. Individuals who maintain a permanent residence in Kentucky (i.e., are domiciled in Kentucky) for the entire tax year are considered full-year residents and must use Form 740. Persons not domiciled in Kentucky but who live in Kentucky for more than 183 days during the tax year are also considered residents; however, since they are not full-year residents they must use Form 740-NP. Individuals who established or abandoned Kentucky residency are considered part-year residents. Persons moving into Kentucky must report income received from Kentucky sources prior to becoming residents and income received from all sources after becoming Kentucky residents. Military Spouse—Effective for tax years beginning 2018 and after, the Veterans Benefits and Transition Act allows the same tax benefits, permitted to military personnel under the Servicemembers Civil Relief Act (SCRA) to also apply to a military spouse’s nonmilitary service income under certain circumstances. This new law expands those rights originally granted to military spouses beginning tax year 2009 under the Military Spouse Residency Relief Act (MSRRA), by now allowing military spouses to choose the same state of legal residence as their servicemember for tax purposes, regardless of whether the military spouse has ever lived in that state. Residents moving out of Kentucky during the year must report income from all sources while a resident and from Kentucky sources while a nonresident. Full-year nonresidents must report all income from Kentucky sources (including distributive share income, Schedule K-1), from activities carried on in Kentucky or from the performance of services in Kentucky, and from property located in Kentucky. Reciprocal States—Kentucky has reciprocal agreements with specific states. These agreements provide for taxpayers to be taxed by their state of residence, and not the state where income is earned. Reciprocity does not apply to persons who live in Kentucky for more than 183 days during the tax year. The states and types of exemptions are as follows: Illinois, West Virginia—wages and salaries Indiana—wages, salaries and commissions A military spouse’s income is not taxable to Kentucky if all of these requirements are met: Michigan, Wisconsin—income from personal services (including salaries and wages) Ohio—wages and salaries. Note: Wages which an S corporation pays to a shareholder-employee if the shareholder-employee is a “twenty (20) percent or greater” direct or indirect equity investor in the S corporation shall not be exempt under the reciprocity agreement. • the active duty servicemember is present in Kentucky in compliance with military orders; • the military spouse is in Kentucky solely to be with the active duty servicemember; and • the active duty servicemember maintains legal residence in a state other than Kentucky and the military spouse chooses to claim that same state as his/her state of legal residence, too. If the servicemember’s spouse qualifies for military spouse relief but his or her employer withholds income tax, he or she should file Form 740-NP Kentucky Individual Income Tax Nonresident or Part-Year Resident Return to request a refund of Kentucky income tax withheld. Please check the box labeled “Military Spouse”. Your income will not be reported as taxable on the Kentucky income tax return. A military spouse who meets all of the requirements for his/her income to not be taxable to Kentucky should file a new Form K-4 with his or her employer to claim the exemption from withholding of Kentucky income tax for future years. Virginia—commuting daily, salaries and wages Taxpayers who qualify for this exemption and have no other Kentucky taxable income should file Form 740-NP-R, Kentucky Income Tax Return, Nonresident–Reciprocal State, to obtain a refund. Also, nonresidents who qualify for the exemption should file Form 42A809, Certificate of Nonresidence, with their employer to exempt their future wages from Kentucky withholding. Military Personnel Eligible for Combat Zone Extension— Members of the Army, Navy, Marines, Air Force, or Public Health Service of the United States government who serve in an area designated as a combat zone by presidential proclamation shall not be required to file an income tax return and pay the taxes, which would otherwise become due during the period of service, until 12 months after the service is completed. Members of the National Guard or any branch of the Reserves called to active duty to serve in a combat zone are granted the same extension. Gambling income and distributive share income (Schedule K-1) are not exempt under reciprocal agreements. This income is fully taxable. A complete return must be filed if filing requirements are met. Military Personnel—Nonresident military personnel with civilian jobs in Kentucky are required to report this income on Form 740-NP except residents of reciprocal states (see 9 MODIFIED GROSS INCOME AND FAMILY SIZE (Use With Chart A) When filing an amended return, check the box on Form 740-NP and enclose a detailed explanation of the changes to income, deductions and tax. Submit a completed Kentucky return and corrected federal schedules, if applicable. If you do not enclose the required information, processing of your amended return may be delayed. Family Size—Consists of yourself, your spouse if married and living in the same household and qualifying children. Family size is limited to four. Qualifying Dependent Child—Means a qualifying child as defined in Internal Revenue Code Section 152(c), and includes a child who lives in the household but cannot be claimed as a dependent if the provisions of Internal Revenue Code Section 152(e)(2) and 152(e)(4) apply. In general, to be a taxpayer’s qualifying child, a person must satisfy four tests: CONFIDENTIALITY—Kentucky Revised Statute 131.190 requires the Department of Revenue to maintain strict confidentiality of all taxpayer records. No employee of the Department of Revenue may divulge any information regarding the tax returns, schedules or reports required to be filed. However, the Department of Revenue is not prohibited from providing evidence to or testifying in any court of law concerning official tax records. • Relationship—The taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these. The department may provide official information on a confidential basis to the Internal Revenue Service or to any other governmental agency with which it has an exchange of information agreement whereby the department receives similar or useful information in return. • Residence—Has the same principal residence as the taxpayer for more than half the tax year. A qualifying child is determined without regard to the exception for children of divorced or separated parents. Other federal exceptions apply. REPORTING PERIODS AND ACCOUNTING PROCEDURES— Kentucky law requires taxpayers to report income on the same calendar or fiscal year and to use the same methods of accounting as required for federal income tax purposes. Any federally approved change in accounting period or methods must be reported to the Kentucky Department of Revenue. Enclose a copy of the federal approval. • Age—Must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year. • Support—Did not provide more than one-half of his/her own support for the year. Changes to federal income tax law made after the Internal Revenue Code reference date contained in KRS 141.010(15) shall not apply for purposes of Chapter 141 unless adopted by the General Assembly. Modified Gross Income—Modified gross income is the greater of federal adjusted gross income adjusted to include interest income derived from municipal bonds (non-Kentucky) and lump-sum pension distributions not included in federal adjusted gross income; or Kentucky adjusted gross income adjusted to include lump-sum pension distributions not included in federal adjusted gross income. POLITICAL PARTY FUND DESIGNATION—You may designate that a portion of your taxes will be paid to either the Democratic or Republican parties if you have a tax liability of at least $2 ($4 for married persons filing joint returns). This designation will not increase your tax or decrease your refund. You may make this designation by checking the applicable box. A taxpayer and spouse may each make a designation. Persons making no designation should check the "No Designation" box. Chart A Your Modified Gross If Your Family Size is: Income is greater than: FILING STATUS—Legal liabilities are affected by the choice of filing methods. Married persons who file joint returns are jointly and severally liable for all income taxes due for the period covered by the return. If married, you may file separate or joint returns. One.............................. and ............................. $ 12,880 Two............................. and ............................. $ 17,420 Three........................... and ............................. $ 21,960 Four or More.............. and ............................. $ 26,500 Filing Status 1, Single—Use this filing status if you are unmarried, divorced, widowed, legally separated by court decree, or if you filed as "Head of Household" or "Qualifying Widow(er)" on your federal return. WHEN TO FILE—April 18, 2022, is the filing deadline for persons reporting income for calendar year 2021. To avoid penalties and interest, returns must be postmarked no later than April 18, 2022. Filing Status 2, Married Filing Joint Return—Use this filing status if you and your spouse choose to file a joint return even if one spouse had no income. Jointly means that you and your spouse add your incomes together and report the total on page 4, Column B, Lines 1 through 31. Social Security Number—You are required to provide your Social Security number per Section 405, Title 42, of the United States Code. This information will be used to establish your identity for tax purposes only. Filing Status 3, Married Filing Separate Returns—If using this filing status, you and your spouse must file two, separate tax forms. The taxpayer's income is reported on one tax form, the spouse's on the other. When filing separate returns, the name and Social Security number of each spouse must be entered on both returns. Enter the spouse's Social Security number in the block provided, and enter the name on page 1, line 3. AMENDED RETURNS—If you discover that you omitted deductions or otherwise improperly prepared your return, you may obtain a refund by filing an amended return within four years of the due date of the original return. You are required to file an amended return to report omitted income. 10 Line 1, Wages, Salaries, Tips, etc.—Enter all wages, salaries, tips, bonuses, commissions or other compensation received for personal services from Kentuck y sources while a nonresident and from all sources while a resident of Kentucky. Do not include in this amount any reimbursement for moving expenses included in Kentucky wages on your wage and tax statement. DETERMINING YOUR INCOME SECTION B—INCOME/ADJUSTMENTS TO INCOME A copy of your federal income tax return and all supporting schedules must be filed with Kentucky Form 740-NP. Please clearly identify as "Copy." INSTRUCTIONS FOR COLUMN A Line 2, Moving Expense Reimbursement—Any payments made to you or on your behalf by any employer for moving expenses are considered income. These payments may be included in box 1 as wages or shown separately on the wage and tax statements. Persons who were residents of Kentucky for only part of the year are required to report as income only part of the total reimbursement they received. The amount which must be reported to Kentucky as income is based on the percentage of Kentucky earned income to total earned income. Earned income is income you received for services you provided. It includes wages, salaries, tips, etc. It also includes income earned from self-employment (Schedules C, C-EZ and F and partnerships). Use the following worksheet to calculate the taxable percentage of your reimbursement. All entries in Column A should be amounts reported for federal income tax purposes. Depreciation—Assets Purchased After September 10, 2001 Effective for taxable years ending after September 10, 2001, an individual that for federal income tax purposes elects to utilize the 30 percent or the 50 percent special depreciation allowance or the increased 179 deduction will have a different depreciation and Section 179 deduction for Kentucky purposes than for federal purposes. The differences will continue through the life of the assets.There will be recapture and basis differences for Kentucky and federal income tax purposes until the assets are sold or fully depreciated. Moving Expense Reimbursement Worksheet INSTRUCTIONS FOR COLUMN B 1. Enter total Kentucky earned income (do not include moving expense reimbursement) _______________ 2. Enter total earned income from federal return (do not include moving expense reimbursement) _______________ 3. Divide line 1 by line 2. Enter result. If amount is equal to or greater than 100%, enter 100% ___ ___ ___. ___% Depreciation, Section 179 Deduction and Gains/Losses From Disposition of Assets—Important: Follow the instructions for Reporting Depreciation and Section 179 Deduction Differences if you have elected for federal income tax purposes to take the 30 percent or the 50 percent special depreciation allowance or the increased Section 179 deduction for property placed in service after September 10, 2001. A copy of the federal Form 4562 if filed for federal income tax purposes must be submitted with Form 740-NP to verify that no adjustments are required. Multiply your total federal reimbursement in Column A by the percentage on line 3 of the worksheet and enter in Column B. This is your Kentucky taxable portion of your moving expense reimbursement. Reporting Depreciation and Section 179 Deduction Differences for property placed in service after September 10, 2001—Create a Kentucky Form 4562 by entering Kentucky at the top center of a federal Form 4562 above Depreciation and Amortization. For property placed into service from September 10, 2001 through December 31, 2019: In Part I, Line 1 enter the Kentucky limit of $25,000 and in Part I, Line 3 enter the Kentucky phaseout amount of $200,000. For property placed into service on or after January 1, 2020: in Part I, line 1, enter the Kentucky limit of $100,000 and the phaseout threshold does not apply for purposes of determining Kentucky depreciation. For property placed into service between September 10, 2001 and December 31, 2019, the maximum allowable IRC §179 deduction for Kentucky purposes is reduced dollar–for– dollar by the amount by which the cost of qualifying IRC §179 property placed in service during the year exceeds the threshold. In determining the IRC §179 deduction for Kentucky for property placed into service between September 10, 2001 and December 31, 2019, the income limitation on Line 11 should be determined by using Kentucky net income before the IRC §179 deduction instead of federal taxable income. In Part II, strikethrough and ignore Line 14, Special depreciation allowance for qualified property placed in service during the tax year. Use the created Kentucky Form 4562 to compute Kentucky depreciation and Section 179 deduction in accordance with the IRC in effect on December 31, 2001. For property placed into service from September 10, 2001 through December 31, 2019, or the IRC in effect on December 31, 2003 for property placed into service on or after January 1, 2020. Line 3, Interest—Interest income received while a Kentucky resident must be reported, except for the following: (a) income from bonds issued by the Commonwealth of Kentucky and its political subdivisions; and (b) income from U.S. government bonds or securities. Interest income from bonds issued by other states and their political subdivisions is taxable to Kentucky and must be included on line 3. Line 4, Dividends—Report dividends received while a resident of Kentucky and the distributive share of the dividend income reflected on the Schedule K-1. Line 5, Taxable Refunds, Credits or Offsets of State or Local Income Taxes—Enter the amount of taxable local income tax refund or credit reported on your federal return only if you received a tax benefit in a prior year. Do not include state income tax refunds. Line 6, Alimony Received—Enter alimony payments received while a Kentucky resident. Lines 7 and 12, Profit or (Loss) from Business or Farming—For income taxable to Kentucky, complete and enclose federal Schedule C or C-EZ for business income or federal Schedule F for farming and Form 4562, Depreciation and Amortization. Do not adjust wages by the federal work opportunity credit from federal Form 5884. For passive activities, see Form 8582-K. Do not include income from the national tobacco settlement agreement. Adjust income for the difference in allowable depreciation and report in Column B. Note: In determining the Section 179 deduction for Kentucky, the income limitation on line 11 is Kentucky net income before the Section 179 deduction, instead of federal taxable income. Adjust federal Schedules C, E and F for the difference in allowable depreciation and report in Column B the Kentucky income (loss) from business, farming or rental property. Enclose Kentucky Form 4562 and, if filed, federal Form 4562. Note: Individual owners of disregarded single member LLCs (SMLLCs) that file on Schedules C, E, or F for federal income tax shall file Form 725, Kentucky Single Member LLC Individually Owned Income and LLET Return, to compute and 11 pay the limited liability entity tax.The individual member shall report income or loss from the entity and determine credit in the same manner as other pass-through entities (PTEs). Line 13, Unemployment Compensation—Report unemployment compensation received while a resident of Kentucky. You must include any amount that was excluded on the federal Form 1040 or 1040-SR as part of the American Rescue Plan Act. Lines 8 and 9, Gain or (Loss) from Sale or Exchange of Assets— Gains (losses) on sales of assets (including installment sales) while a Kentucky resident must be reported on the Kentucky return. Gains (losses) on sales of tangible assets located in Kentucky must be reported regardless of state of residence. Generally, gains (losses) on sales of intangible assets are reported to the state of residence. Line 14, Taxable Social Security Benefits—Social Security benefits are not taxable for Kentucky. Line 15, Gambling Winnings—Report income from lottery winnings and gambling received while a Kentucky resident or from Kentucky sources while a nonresident. Line 16, Other Income—Report income from prizes, awards, or any sources not listed above while a Kentucky resident or from Kentucky sources while a nonresident. Determining and Reporting Differences in Gain or Loss From Disposition of Assets—If during the year you dispose of assets placed in service after September 10, 2001, on which the 30 percent or the 50 percent special depreciation allowance or the increased Section 179 deduction was taken for federal income tax purposes, you will need to determine and report the difference in the amount of gain or loss on the assets as follows: Retirement Income (For persons moving out of Kentucky)— Include differences in pension (3-year recovery rule) and IRA bases received while a resident of Kentucky (also include differences on Schedule P, Line 2). Net Operating Loss Deduction—Net operating losses generated on or after January 1, 2018, are limited to 80% of the Kentucky taxable income without the net operating loss, but any unused amounts are available for carryforward indefinitely. Schedule KNOL, Part II must be completed if you are claiming a Kentucky net operating loss deduction. Create a Kentucky form by entering Kentucky at the top center of a federal Schedule D, federal Form 4797 and other applicable federal forms. Compute Kentucky gain or loss from the disposed assets using the Kentucky basis. Enter the Kentucky gain or loss on the appropriate line. Enclose the created Kentucky Schedule D, Kentucky Form 4797 and other forms or schedules to support the deduction. Note: If your net operating loss occurred in 2021, complete part I of Kentucky Schedule KNOL to determine the amount of loss to be carried forward in any future years. Keep a copy with your records and enclose a copy with your return. Line 10(a), Federally Taxable IRA Distributions, Pensions and Annuities—Enter on Line 10(a), Column A, the total of IRA distributions, pensions and annuities received for the entire year. Enter on Line 10(a), Column B, the total of IRA distributions, pensions and annuities received while a resident of Kentucky. Excess Business Loss Limitation—Complete Form 461-K if your net losses from your trades or businesses are more than $262,000 ($524,000 for married taxpayer filing jointly or married filing separately on a combined return). Enter amount from Form 461-K, line 16. See form and instructions for additional instructions. Please note this addition as “excess business loss.” Line 10(b), Pension Income Exclusion—You may exclude up to $31,110 of pension income per taxpayer reported on line 10(a), Column B. If Line 10(a), Column B, is more than $31,110 and is from the federal government, Commonwealth of Kentucky or Kentucky local governments, complete Schedule P. The Kentucky excess business loss will be added to your net operating loss (NOL) carryforward. Line 11, Income from Schedule E—Enter income from rents, royalties, partnerships, estates, trusts, limited liability companies (LLC), S corporations and REMICs. Nonresident individuals receiving a Kentucky Schedule K-1 from a partnership, estate, trust, LLC or S corporation must report their distributive share of the income, gains or losses, etc., as reflected on the Schedule K-1. Shareholders and partners should multiply their distributive share items by the taxable percentage from Schedule K-1, Form PTE, Line B(2). Employer–Paid Student Loan Repayment Assistance—Enter any employer-paid student loan repayment assistance that is excludable under the CARES Act and expanded upon by the Consolidate Appropriations Act that has not been included on line 1, Column B, wages, salaries, tips, etc. Artistic Charitable Contributions—A deduction is allowed for "qualified artistic charitable contributions" of any literary, musical, artistic or scholarly composition, letter or memorandum, or similar property. Part-year residents not receiving a Kentucky Schedule K-1, but receiving a federal K-1 from a partnership, estate, trust or S corporation, must report the same amount of distributive income, gains or losses, etc., as reported for federal income tax purposes from entities whose taxable years end during their period of residence. An amount equal to the fair market value of the property on the date contributed is allowable as a deduction. However, the deduction is limited to the amount of the taxpayer's Kentucky artistic adjusted gross income for the taxable year. This amount should be included as a negative amount on line 16. Do not include in Column B the net income from an S corporation subject to the franchise tax imposed under KRS 136.505 or the capital stock tax imposed under KRS 136.300. The following requirements for a deduction must be met: (a) The property must have been created by the personal efforts of the taxpayer at least one year prior to the date contributed. The creation of this property cannot be related to the performance of duties while an officer or employee of the United States, any state or political subdivision thereof. Report income from real estate mortgage investment conduits (REMICs) as follows: (1) if the REMIC is a corporation, include only distributions of cash or property during the taxable year; or (2) if other than a corporation, report the same amount as reported for federal income tax purposes for the taxable year. (b) A written appraisal of the fair market value of the contributed property must be made by a qualified independent appraiser within one year of the date of the contribution. A copy of the appraisal must be enclosed with the tax return. Note: Individual owners of disregarded single member LLCs (SMLLCs) that file on Schedules C, E, or F for federal income tax shall file Form 725, Kentucky Single Member LLC Individually Owned Income and LLET Return, to compute and pay the limited liability entity tax.The individual member shall report income or loss from the entity and determine credit in the same manner as other pass-through entities (PTEs). (c) The contribution must be made to a qualified tax-exempt organization. 12 Line 30, Archer MSA Deduction—Federal limitations apply. Archer MSA deduction is limited to the percentage of Kentucky total income (Line 17, Column B) to federal total income (Line 17, Column A). Enter in Column A, the Archer MSA deduction from your federal return. Enter in Column B, the allowable deduction with the above limitation. ADJUSTMENTS TO INCOME KRS 141.019(1) and (2) provide that deductions are limited to amounts allocable to income subject to taxation. If a deduction or an adjustment to gross income is allowable based upon the receipt of certain types of income or is limited to a maximum amount deductible for federal income tax purposes, the Kentucky income used to determine the amount allowable for Kentucky shall be the same type of income used to allow the deduction on the federal return. Persons who move into or out of Kentucky during the year are limited to either the adjustments to gross income paid during the period of residence or that portion of adjustments to gross income that Kentucky income bears to total income. Nonresidents are limited to that portion of adjustments to gross income that Kentucky income bears to total income. Line 31, Other Deductions—List any other adjustments to total income not listed above on lines 18 through 30. List the type of deduction in the space provided. Other deductions, with the exception of military and qualifying military spouse income, are limited to the percentage of Kentucky total income (Line 17, Column B) to federal total income (Line 17, Column A). Enter in Column A, the total of any other adjustments to the total income listed on your federal return. Enter in Column B, the allowable deduction with the above limitation. Line 18, Educator Expenses—Deduct up to $250 for teachers and other educators for their out-of-pocket expenses incurred while a Kentucky resident or expenses for use in an educational classroom. Nonresident military members filing to report nonmilitary income to Kentucky must subtract their military income on line 31, Column A with a notation “nonresident military income.” The qualifying spouse of a military member who has nonmilitary income should subtract their income on line 31, Column A with a notation “military spouse income.” Nonresident military and qualifying military spouse income is not limited to the percentage of Kentucky total income to federal total income. Line 19, Certain Business Expenses of Reservists, Performing Artists and Fee-Basis Government Officials—Do not include out-of-pocket expenses for members of the National Guard or Reserves. Line 20, Health Savings Account (HSA) Deduction—Federal limitations apply. Contributions deducted by full-year nonresidents are limited to the percentage of their Kentucky total income (Line 17, Column B) to their federal total income (Line 17, Column A). Do not claim amounts as an itemized deduction. INCOME/TAX Note: These items are reported on page 1, Form 740-NP. Line 7—Enter the percentage from page 4, line 34. Line 8—Enter federal Adjusted Gross Income from page 4, Column A, Line 33. Line 21, Moving Expenses for Members of the Armed Forces—Moving expenses are not deductible. Line 9—Enter Kentucky Adjusted Gross Income from page 4, Column B, Line 33. Line 22, Deduction for One-Half of Self-Employment Tax— You may deduct one-half of the self-employment tax based upon the self–employment income reported in Column B as Kentucky income for the taxable year. Line 10—Nonitemizers, enter the standard deduction of $2,690. If filing a joint return, only one $2,690 standard deduction is allowed. Line 23, Self-Employed SEP, SIMPLE and Qualified Plans Deduction—Self-employed persons may deduct qualified payments to a Keogh retirement plan, a Simplified Employee Pension (SEP) or a SIMPLE plan based upon Kentucky self‑employment earnings. Line 11—Itemizers, complete Schedule A and enter itemized deductions on line 11. If one spouse itemizes deductions, the other must itemize. See specific instructions for Schedule A. Line 12—Multiply line 11 by the percentage on line 7. If line 12 does not exceed $2,690 and your filing status is 1 or 2, you should elect to take the standard deduction. Married couples filing separate returns, see special rules under instructions for Schedule A. Line 24, Self-Employed Health Insurance Deduction— Self-employed persons may deduct self-employed health insurance based upon Kentucky self-employment earnings. Line 25, Penalty on Early Withdrawal of Savings—You may deduct the interest penalty only if the interest income has been reported to Kentucky. Line 13—Subtract either line 10 or 12 from line 9. This is your Taxable Income. Line 14—Tax Computation: Multiply line 13 by five percent (.05). This is your tax. Line 26, Alimony Paid—The alimony deduction cannot exceed Kentucky income. Alimony paid by full-year nonresidents is limited to the percentage of their Kentucky total income to their federal total income. Enter the recipient's name and Social Security number. Schedule J, Farm Income Averaging—If you elect Farm Income Averaging on your federal return, you may also use this method for Kentucky. Complete and enclose Kentucky Schedule J and include tax in the amount on this line. Line 27, Individual Retirement Arrangements (IRAs)—The deduction cannot exceed income earned in Kentucky. Contributions made by full-year nonresidents are limited to the percentage of their Kentucky earned income to their federal earned income. Use federal worksheets and instructions with the above limitations. If you had a lump-sum distribution from a qualified retirement plan, complete Schedule P and Form 4972-K and enclose copies to Form 740-NP. The amount of tax computed on Form 4972-K should be included in the amount on this line. Also enter on this line any recycling composting income tax credit recapture (enclose Schedule RC-R), distilled spirits income tax credit recapture (enclose Schedule DS-R), and/ or angel investor income tax credit recapture. Line 28, Student Loan Interest Deduction—Federal limitations apply. Student loan interest deduction is limited to the percentage of Kentucky total income (Line 17, Column B) to federal total income (Line 17, Column A). Enter in Column A, the total of student loan interest from your federal return. Enter in Column B, the allowable deduction with the above limitation. Line 15—Enter amount from Schedule ITC, Section A, Line 26. See instructions for Schedule ITC. Line 17—Enter amount from Schedule ITC, Section B. See instructions for Schedule ITC. Line 29, RESERVED 13 NOTE: Use only if 65 or over, blind, or in Kentucky National Guard. Line 27, Kentucky Use Tax—If, while a Kentucky resident, you made any out-of-state purchases of tangible personal property, digital property and extended warranties for use in Kentucky on which sales tax was not charged, you must report Kentucky use tax on th
Schedule ME (740-NP)
More about the Kentucky Schedule ME (740-NP) Individual Income Tax Nonresident
Schedule ME (740-NP) requires you to list multiple forms of income, such as wages, interest, or alimony .
We last updated the Moving Expense & Reimbursement Form 42A740-NP-ME in March 2022, and the latest form we have available is for tax year 2021. This means that we don't yet have the updated form for the current tax year. Please check this page regularly, as we will post the updated form as soon as it is released by the Kentucky Department of Revenue. You can print other Kentucky tax forms here.
Related Kentucky Individual Income Tax Forms:
|Form Code||Form Name|
|Schedule ME||Moving Expense & Reimbursement (OBSOLETE)|
Kentucky usually releases forms for the current tax year between January and April. We last updated Kentucky Schedule ME (740-NP) from the Department of Revenue in March 2022.
Schedule ME (740-NP) is a Kentucky Individual Income Tax form. Many states have separate versions of their tax returns for nonresidents or part-year residents - that is, people who earn taxable income in that state live in a different state, or who live in the state for only a portion of the year. These nonresident returns allow taxpayers to specify which which income is subject to the state's taxes, and which is not.
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 ME (740-NP)
We have a total of five past-year versions of Schedule ME (740-NP) in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
While we do our best to keep our list of Kentucky Income Tax Forms up to date and complete, we cannot be held liable for errors or omissions. Is the form on this page out-of-date or not working? Please let us know and we will fix it ASAP.