Kentucky Moving Expense & Reimbursement Form 42A740-NP-ME
Extracted from PDF file 2020-kentucky-schedule-me-740-np.pdf, last modified April 2021
Moving Expense & Reimbursement Form 42A740-NP-MECOMMONWEALTH OF KENTUCKY DEPARTMENT OF REVENUE FRANKFORT, KENTUCKY 40620 42A740-NP(P) (10-20)(REV. 4-21) 740-NP 2020 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—www.revenue.ky.gov Refund Inquiries—You may check the status of your refund at www.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 Owensboro Corporate Center 401 Frederica Street Building C, Suite 201, 42301 (270) 687–7301 Frankfort 501 High Street, 40601-2103 (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. 2020 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. FEDERAL TAX TREATMENT PROVISION KENTUCKY TAX TREATMENT 1. Interest from Federal Obligations Taxable 2. Retirement Income from: Commonwealth of Kentucky Retirement Systems Partially exempt if retired after December 31, 1997; Taxable exempt if retired before January 1, 1998; Taxable Schedule P may be required Taxable Kentucky Local Government Retirement Systems Federal and Military Retirement Systems Exempt 3. Pensions and Annuities Starting After 7/1/86 3-year recovery rule eliminated 3-year recovery rule retained and Before 1/1/90 4. Other Pension and Annuity Income 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 Taxable Exempt Eminent Domain 11. Election Workers—Income for Training or Taxable Exempt Working at Election Booths 12. Artistic Contributions Noncash contribution allowed as Appraised value allowed as itemized deduction itemized deduction or adjustment to income 13. State Income Taxes 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 No credit allowed; entire wage reduced by amount of credit expense is deductible 16. Welfare to Work Credit (federal Form 8861) Tax credit allowed; wage expense No credit allowed; wage expense reduced by amount of credit reduced by amount of federal credit 17. Child and Dependent Care Credit Tax credit based on expenses 20% of federal credit 18. Family Size Tax Credit No credit allowed Decreasing tax credit allowed 19. Education Tuition Tax Credit Tax credit based on expenses Credit allowed Form 8863-K required 20. Child’s Income Reported by Parent Permitted; taxed at parent’s rate Not permitted 21. Active Duty Military Pay 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 28. Casualty and Theft Losses Deductible Nondeductible 29. Job Expenses and Other Miscellaneous Deductions Nondeductible Nondeductible 30. Excess Business Loss Suspended Complete Form 461-K, if applicable 31. Net Operating Loss - 80% Limitations Suspended Complete Schedule KNOL, if applicable 1 This page has been intentionally left blank. 2 What’s New STANDARD DEDUCTION—For 2020, the standard deduction is $2,650. INTERNAL REVENUE CODE UPDATE—HB 354 updated KRS 141.010(15) to change the Internal Revenue Code (IRC) reference date from December 31, 2017, to December 31, 2018, for purposes of computing corporation and individual income taxes. However, taxpayers who placed property into service after September 10, 2001 are required to compute Kentucky depreciation under IRC Section 168 according to the provisions in effect on December 31, 2001. Taxpayers who placed property into service after September 10, 2001 but before January 1, 2020 are required to compute the expense deduction under IRC Section 179 according to provisions in effect on December 31, 2001. Taxpayers who placed property into service on or after January 1, 2020 are required to compute the expense deduction under IRC Section 179 according to provisions in effect on December 31, 2003, except that the phase-out provisions of IRC Section 179, limiting the qualifying investment in property, shall not apply. INDIVIDUAL ESTIMATED TAX PAYMENTS 2019 estimated tax rules changed to generally follow federal guidelines for individuals: • Four installments at 25% of the estimated tax due each; April 15*, June 15*, September 15, and January 15 of the following tax year • Allow Annualized Income Installments • Declaration Penalty replaced with Estimated Tax Penalty * Due July 15, 2020 At the direction of Governor Beshear and SB 150, the Kentucky Department of Revenue adopted the income tax relief set forth in Internal Revenue Service (IRS) Notice 2020-18, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, as well as the additional relief provided in IRS Notice 2020-20 and Notice 2020-23. This income tax relief was applicable to individual, corporate, limited liability, fiduciary and pass-through filers with filing and payment deadlines of on or after April 15, 2020 and before July 15, 2020. This relief includes: • Kentucky income tax return filings currently due on April 15, 2020, May 15, 2020, and June 15, 2020 for individual, corporate, limited liability, fiduciary and pass-through filers, shall now be due July 15, 2020; • Kentucky income tax payments currently due on April 15, 2020, May 15, 2020, and June 15, 2020 for individual, corporate, limited liability, fiduciary and pass-through filers, shall now be due July 15, 2020. Estimated payments due on these dates are included in the deferral; and • The calculation and application of penalties, fees and interest corresponding to Kentucky income tax filings and payments now due on July 15, 2020 for individual, corporate and limited liability filers shall begin on July 16, 2020. REFUNDS—HB 351 updated KRS Chapter 141 to require that no refund shall be made of any estimated tax paid unless a return is filed. 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 2020 threshold amount is $12,760 for a family size of one, $17,240 for a family of two, $21,720 for a family of three, and $26,200 for a family of four or more. INCOME GAP TAX CREDIT—This credit is only available to taxpayers who are eligible to take the Family Size tax credit and have a family size of three or less. This credit was created for those taxpayers whose tax rate increased after HB 487 implemented a flat tax rate of 5%. This credit will be available for tax years 2019 and 2020. UNEMPLOYMENT COMPENSATION—Kentucky does not conform to the Federal American Rescue Plan Act of 2021 which allows up to $10,200 of unemployment compensation received in 2020 to be excluded from gross income. All unemployment compensation earned as a Kentucky resident is subject to Kentucky income tax. Any amount excluded up to the $10,200 on the federal income tax return is required to be added back on the Kentucky individual income tax return. Kentucky residents will add back on Schedule M, Line 5 as an “Other Addition” and part-year Kentucky residents will include on 740-NP, Section B, Column B, line 13 as unemployment compensation. CHARITABLE CONTRIBUTIONS—Kentucky does not conform to the federal Cares Act provision which created a $300 “Above the Line” deduction for qualified charitable contribution. Kentucky also does not conform to the federal Cares Act provision which suspended limits on charitable contributions. The “Above the Line” contribution claimed on Federal form 1040 or 1040SR, line 10(b) should be reflected as an other deduction on Form 740-NP, page 4, line 30, Column A. This “Above the Line” deduction should not be claimed on Form 740-NP, page 4, line 30, Column B. If you itemize deductions for Kentucky you may deduct your contributions on Kentucky Schedule A. Your charitable contributions will be limited to 60% of your Kentucky AGI. See instructions for Kentucky Schedule A. SCHEDULE KNOL—Net operating losses generated on or after January 1, 2018, are limited to 80% of the taxable income, but any unused amount are available for carryforward indefinitely. Schedule KNOL must be completed if you are claiming a Kentucky Net Operating Loss deduction on Kentucky Schedule M. Kentucky did not adopt the CARES Act amendment for the suspension of the 80% net operating loss limitation. 3 EXCESS BUSINESS LOSS LIMITATION—Kentucky did not adopt the CARES Act amendment for the suspension of the excess business loss limitation. If you are an individual taxpayer and your net losses from your trades or businesses are more than $255,000 ($510,000 for married taxpayers filing jointly or married filing separately on a combined return) you will need to complete Kentucky Form 461-K. For 740 filers you will enter the amount calculated from Form 461-K, line 16 on Form 740, Schedule M, line 5 and 740-NP Filers will enter the calculated amount from Form 461-K, line 16 on From 740-NP, page 4, line 16, Column B. The Kentucky excess business loss will be added to your net operating loss (NOL) carryforward. KENTUCKY SELLING FARMERS TAX CREDIT—A nonrefundable and nontransferable credit is allowed beginning January 1, 2020 for qualified selling farmers. This credit must be approved by the Kentucky Economic Development Finance Authority. This credit must be claimed on the tax return in the first year that the credit was approved. You cannot claim more than the credit approved by the Kentucky Economic Development Finance Authority. The credit also cannot exceed $25,000 in any taxable year. Finally, the credit cannot exceed $100,000 over the lifetime of the selling farmers credit. Any unused credit in a taxable year may be carried forward up to five (5) years. If the credit is not utilized within the five (5) year period, the credit is lost. NEW WAY TO FILE—Kentucky is now offering a new way of filing your return free of charge. If you would like to fill out your Kentucky forms and schedules without software help or assistance you may use the new KY File website at filetaxes.ky.gov . This website is designed to be the simple electronic equivalent of a paper form. It will provide basic mathematical and error checks but unlike most software it does not ask about or explain tax situations. Your federal forms should be completed before accessing the new KY File website. You will have the option to submit the completed return electronically or print the return and mail it in. ADDRESS UPDATES— For returns requesting a refund or returns with no payment mail to: KENTUCKY DEPARTMENT OF REVENUE FRANKFORT KY 40618-0006 For returns with a payment mail to: KENTUCKY DEPARTMENT OF REVENUE FRANKFORT KY 40619-0008 Do not use the following addresses, which are no longer valid. PO Box 856970 Louisville, KY 40285-6970 PO Box 856980 Louisville, KY 40285-6980 Reminders TAX RATE—For tax years beginning on or after January 1, 2018, the individual income tax rate is a flat 5%. KENTUCKY SCHEDULE A—The following itemized deductions claimed on Schedule A have been restored for taxable years beginning on or after January 1, 2019: • Investment Interest deduction under IRC Section 163 • Gambling loss deduction under IRC Section 165(d) YMCA YOUTH ASSOCIATION FUND—KRS 141.4425 allows an individual to contribute all or part of their refund to the YMCA Youth Association Fund. Designated funds provide scholarships to Kentucky schools and students attending the Kentucky Youth Assembly (KYA). CHARITABLE CONTRIBUTIONS—If you receive or expect to receive a state or local tax credit for making a charitable contribution, you must deduct the amount of the credit from the amount of the charitable contribution you claim on your tax return. You do not have to deduct the state or local credits if dollar-for-dollar the credit or fair market value of the property transferred is less than 15% of the charitable contribution (see Federal Publication 526 for additional information). INVENTORY TAX CREDIT—A nonrefundable and nontransferable income tax credit is allowed for ad valorem taxes timely paid on inventory described in KRS 132.020(1)(n) or 132.099 on or after January 1, 2018. The credit is phased-in as follows. • • • • 2018 – 25% of tax paid 2019 – 50% of tax paid 2020 – 75% of tax paid 2021 – 100% of tax paid 4 42A740-NP(I) (10-20) 2020 Kentucky Individual Income Tax Instructions for Form 740-NP General Information • Your Social Security Number shown on 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 Bar Code New Way to File Kentucky is now offering a new way of filing your return free of charge. If you would like to fill out your Kentucky forms and schedules without software help or assistance you may use the new KY File website to file your current year return.This website is designed to be the simple electronic equivalent of a paper form. It will provide basic mathematical and error checks but unlike most software it does not ask about or explain tax situations. Your federal forms should be completed before accessing the new KY File website. You can access the KY File website at Filetaxes.ky.gov . Where to Get Forms Forms and instructions are available online from the Department of Revenue’s Website at www.revenue.ky.gov and at all KentuckyTaxpayer 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. Most software packages produce a 2-D bar code. The Department of Revenue scans the bar code that contains all of the information needed to process your return. The bar code 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 bar code also contains the correct information. This bar code should not be covered up or marked through. Using the bar code reduces data entry errors for the department and results in a faster refund for you. Address Change Check to be sure your software generates an acceptable form. A list of vendors whose software has been approved is posted on the Internet at www.revenue.ky.gov, the Department of Revenue’s Web site. Refund Inquiries If you move after you file your tax return, please notify the Kentucky Department of Revenue of your 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. You may check the status of your refund at www.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: 5 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 406020181. 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? Keep a copy of your tax return, 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? Death of Military Personnel Killed in Line of Duty 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. 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. 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. 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. Death of a Taxpayer If a taxpayer died before filing a return for 2020, 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 2020 and you did not remarry in 2020, you can file jointly or separately on a combined return. The return should show your spouse’s 2020 income before death and your income for all of 2020. You can also file jointly or separately on a combined return if your spouse died in 2021 before filing a 2020 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. 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. Income Tax Withholding for 2021 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. 6 2021 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 2021 tax return, or 100% of the tax shown on the 2020 tax return, may be subject to a penalty for underpayment of estimated tax. For more information on calculating the penalty, please refer to Form 2210K. Prepayments for 2021 may be made through withholding, a credit forward of a 2020 overpayment or estimated tax installment payments. Estimated tax installments may now be made electronically at www.revenue. ky.gov, using Form EPAY, or when electronically filing your return using Form 8879-K, or through mailing a 740ES with payment. The instructions for Form 740-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 If the Department of Revenue adjusts your return and you do not understand the adjustment, you may write to Taxpayer Assistance, Kentucky Department of Revenue, P.O. Box 181, Station 56, Frankfort, KY 40602-0181 or call (502) 564-4581. If you disagree with an adjustment made to your return, you may appeal that adjustment by submitting a written protest within 60 days of notification. 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. 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, Kentucky Department of Revenue, P. O. Box 518, Frankfort, KY 40602-0518. You may also download forms at www.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. Confidentiality 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. 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 15 may request an extension. 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 the return. 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 extension to the Kentucky return. 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 righthand corner of the form or a copy of the electronic acknowledgment. Military Personnel—Kentucky residents who are in the military are often 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: 7 (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—2020” 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. Write “KY Income Tax—2020” and your Social Security number(s) on the face of the check. Personal Property Forms Kentuck y business 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 reported 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 Individuals—The Kentucky StateTreasury 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 www.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. This page has been intentionally left blank. 8 42A740-NP(I) 10-20 INSTRUCTIONS FOR 2020 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 (1) they had 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. Individuals who are residents of Kentucky for the entire tax year must use Form 740. Persons who maintain a permanent residence in Kentucky (i.e., are domiciled in Kentucky) are considered residents. Persons not domiciled in Kentucky but who live in Kentucky for more than 183 days during the tax year are also considered residents. 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. 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. Residents moving out of Kentucky during the year must report income from all sources while a resident and from Kentucky sources while a nonresident. 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. 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. 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: A military spouse’s income is not taxable to Kentucky if all of these requirements are met: • the active duty servicemember is present in Kentucky in compliance with military orders; Illinois, West Virginia—wages and salaries • Indiana—wages, salaries and commissions 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. 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. 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. 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 reciprocal states above). Any income from nonmilitary Kentucky sources is also taxable. 9 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. 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. MODIFIED GROSS INCOME AND FAMILY SIZE (Use With Chart A) 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: • Relationship—The taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these. • 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. • 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. 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. Chart A Your Modified Gross If Your Family Size is: Income is greater than: One.............................. and ............................. $ 12,760 Two............................. and ............................. $ 17,240 Three........................... and ............................. $ 21,720 Four or More.............. and ............................. $ 26,200 WHEN TO FILE—April 15, 2021, is the filing deadline for persons reporting income for calendar year 2020. To avoid penalties and interest, returns must be postmarked no later than April 15, 2021. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. When filing an amended return, check the box on Form 740-NP and enclose a detailed explanation of the changes to income, 10 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 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. INSTRUCTIONS FOR COLUMN B Line 1, Wages, Salaries, Tips, etc.—Enter all wages, salaries, tips, bonuses, commissions or other compensation received for personal services from Kentucky 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. 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. Moving Expense Reimbursement Worksheet 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. 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 phase-out 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 phase out 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, strike through 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. 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. 11 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% ___ ___ ___. ___% 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. 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: 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). 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. 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: 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. 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. 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. 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 720S, Line B(2); Form 765, Line D(2) and Form 765-GP, Line C(2). 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. 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. 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. 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). 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. 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. 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. Note: If your net operating loss occurred in 2019, 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. Excess Business Loss Limitation—Complete 461-K if your net losses from your trades or businesses are more than $255,000 ($510,000 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.” The Kentucky excess business loss will be added to your net operating loss(NOL) carryforward. 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. 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. 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. (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. 12 (c) The contribution must be made to a qualified tax-exempt organization. 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 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. 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. Line 21, Moving Expenses for Members of the Armed Forces—Moving expenses are not deductible. 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 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 selfemployment earnings. 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 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. 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. 13 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 29, Tuition and Fees Deduction—Federal limitations apply. The tuition and fees 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 tuition and fees deduction from your federal return. Enter in Column B, the allowable deduction with the above limitation. Line 30, Other Deductions—List any other adjustments to total income not listed above on lines 18 through 29. 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. Nonresident military members filing to report nonmilitary income to Kentucky must subtract their military income on line 30, 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 30, 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. “Above the Line” Charitable Deduction—Include on Line 30, Column A the federal $300 “Above the Line” charitable deduction reflected on Federal form 1040 or 1040-SR, line 10(b). Kentucky did not conform to this Federal Cares Act provision; therefore, this deduction cannot be claimed for Kentucky on Line 30, Column B. INCOME/TAX Note: These items are reported on page 1, Form 740-NP. Line 7—Enter the percentage from page 4, line 33. Line 8—Enter federal Adjusted Gross Income from page 4, Column A, Line 32. Line 9—Enter Kentucky Adjusted Gross Income from page 4, Column B, Line 32. Line 10—Nonitemizers, enter the standard deduction of $2,650. If filing a joint return, only one $2,650 standard deduction is allowed. 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 $2,650 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 13—Subtract either line 10 or 12 from line 9. This is your Taxable Income. Line 14—Tax Computation: Multiply line 13 by 5% (.05). This is your tax. 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. 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
Schedule ME (740-NP)
More about the Kentucky Schedule ME (740-NP) Individual Income Tax Nonresident TY 2020
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 May 2021, so this is the latest version of Schedule ME (740-NP), fully updated for tax year 2020. You can download or print current or past-year PDFs of Schedule ME (740-NP) directly from TaxFormFinder. 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 May 2021.
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 four 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:
Schedule ME (740-NP)
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.