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Kentucky
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Details:
• STANDARD DEDUCTION:: For 2009, the standard deduction is increased to $2,190.
• FAMILY SIZE TAX CREDIT: This credit provides benefit to individuals and families at incomes up to 133 percent of the threshold amount. The 2009 threshold amount is $10,830 for a family size of one, $14,570 for a family of two, $18,310 for a family of three and $22,050 for a family of four or more.
• ENERGY EFFICIENCY PRODUCTS TAX CREDIT (KRS 141.436): A nonrefundable tax credit against the individual income tax imposed under KRS 141.020 was established by House Bill 2 in the 2008 General Assembly. Installation of energy efficiency products must be in a Kentucky residence. This credit is available for tax periods beginning after 12/31/08 and before 01/01/16. Therefore, the credit may be claimed on 2009 Kentucky Individual Income Tax returns. Form 5695-K has been created to claim this credit.
Requirements and features of this credit include the following:
• Credit is reported and computed on Form 5695-K
• Credit applies in the tax year in which installation is completed
• Credit is equal to 30% of installed costs subject to limitations
• Unused credit may be carried forward 1 year
• Credit may be allowed on:
Upgraded insulation, energy efficient windows, qualified energy property, active & passive solar heating systems, qualified solar water-heating systems, qualified wind turbine or wind machines, and qualified solar photovoltaic systems.
• Form 8863-K KENTUCKY EDUCATION TUITION TAX CREDIT: Because Kentucky has not adopted the American Recovery and Reinvestment Act of 2009, which included provisions that impacted the federal Form 8863. Taxpayers must use the Kentucky form and instructions to correctly compute the allowable Kentucky Education Tuition Tax Credit.
• NEW HOME TAX CREDIT: The New Home Tax Credit is a nonrefundable individual income tax credit that is effective July 26, 2009 and applies to a "qualified buyer" who purchases a "qualified principal residence" during the one-year period of July 26, 2009 through July 25, 2010.
Requirements and features of this credit include the following:
• Qualified buyer(s) approved for the credit will receive a credit allocation letter with a four (4) digit approval code from the Department of Revenue. This letter must be attached to the income tax return filed for the taxable year during which the qualified principal residence was purchased.
• Electronic filers: Information from the credit allocation letter and the New Home Tax Credit Worksheet D (for electronic filers only) must be included with any electronic return submitted. Make sure the software used to submit the return can meet these requirements.
The New Home Tax Credit application and additional information is available on the Department of Revenue website: www.revenue.ky.gov.
• UNEMPLOYMENT COMPENSATION: Under the American Recovery and Reinvestment Act (ARRA), the first $2,400 of unemployment benefits each individual receives in 2009 are tax free for federal purposes. However, because Kentucky has not adopted this legislation, all unemployment compensation will still be considered income for Kentucky purposes and subject to Kentucky tax. Therefore, an adjustment must be made on Schedule M, Part 1, Additions to Federal Adjusted Gross Income, line 6 to report this income.
• COMPOSITE RETURNS: Beginning in tax year 2009 composite returns are no longer filed via Kentucky Form 740-NP. If filing a composite return, use Form 740NP-WH for those electing nonresident individual partners, member or shareholders exempt from withholding as per KRS 141.206(4) (b). A pass-through entity filing a composite return shall make estimated tax payments required by the provisions of KRS 141.300 on Form 740NP-WH.
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MORTGAGE DEBT FORGIVENESS: (not an allowable deduction for Kentucky tax purposes) The Mortgage Forgiveness Debt Relief Act of 2007 has been enacted to provide relief to those families who have been adversely affected by problems in the subprime mortgage market. This act will provide relief to those families by permanently excluding debt forgiven under these circumstances for tax liability for federal purposes. However, because Kentucky has not adopted this legislation, any mortgage debt forgiveness will still be considered income for Kentucky purposes and subject to Kentucky tax. Therefore a Schedule M adjustment must be made on Part 1, Additions to Federal Adjusted Gross Income, line 7 to report this income. |
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Government Link:
http://revenue.ky.gov/NR/rdonlyres/90461418-1A2D-4E8C-AB84-D1AF68AEB8A2/0/2009HandBookforElectronicFiling.pdf
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