Kentucky State Tax Help

Why do I need to enter my spouse's income information when I am filing Married Filing Separately?

Kentucky requires this information to correctly calculate your modified adjusted gross income for the purpose of calculating your Married Filing Separately Family Credit.

What medical and dental expenses are NOT deductible?

  • Elective cosmetic surgery
  • Hospital, medical, and extra Medicare B insurance
  • The basic cost of Medicare insurance (Medicare A)
    (Note: If you are 65 or over and not entitled to Social Security benefits, you may deduct premiums you voluntarily paid for Medicare A coverage.)
  • Life insurance or income protection policies
  • Long-term care insurance premiums
  • The hospital insurance benefits (Medicare) tax withheld from your pay as part of the Social Security tax or paid as part of Social Security self-employment tax
  • Nursing care for a healthy baby
  • Illegal operations or drugs
  • Medicines or drugs you bought without a prescription
  • Travel your doctor told you to take for rest or change
  • Funeral, burial or cremation costs

Why is only a portion of my qualified medical and dental expenses deductible?

Like the federal Schedule A, the Kentucky Schedule A limits the amount of qualified medical and dental expenses that are deductible. The limitation is 10% of income if you and your spouse were born after January 2, 1950. If you or your spouse was born before or on January 2, 1950, the limitation is 7.5% of income. Enter the total amount of your qualified medical and dental expenses, and we will calculate what portion of the expenses are above the limit and, therefore, deductible.

What is the difference between Married Filing Jointly and Married Filing Separately for Kentucky purposes?

If you choose Married Filing Jointly on your Kentucky return, all of your income and your spouse's income will be added together for the purpose of calculating any tax owed and any credits or refunds due.

If you choose Married Filing Separately on your Kentucky return, your income and your spouse's income will be kept separate for the purpose of calculating any tax owed and any credits or refunds due.

If both you and your spouse had income, it will most likely be to your advantage to file Married Filing Separately on your Kentucky return. This filing status often results in lower total tax when both spouses have income.

What is the National Guard Credit?

The State of Kentucky allows members of the Kentucky National Guard to take an extra exemption credit. This extra exemption credit is treated like a dependent credit would be treated.

Only members of the Kentucky National Guard are eligible. Military reserve members are not eligible.

What is the Nonrefundable Certified Rehabilitation Credit?

This credit is available to owner-occupied residential and commercial preservation projects for structures that are listed in the National Register of Historic Places, or in a National Register historic district, up to $3 million annually. The credit is 30 percent of certified rehabilitation expenses for owner occupied residential properties, not to exceed $60,000 per project, and 20 percent for commercial and income producing properties. To qualify, an owner must spend at least $20,000 on rehabilitation.

Individuals or businesses can apply the credit against their state income tax liability, carry the credit forward up to seven years or transfer it to a banking institution to leverage financing. For applications submitted on or after April 30, 2010, the credit shall be refundable if the taxpayer makes an election under KRS 171.397(2)(b). For more information regarding this credit, visit the Kentucky Heritage Council's website at , or call (502) 564-7005.

What is the Recycling and Composting Credit?

If you purchase recycling or composting equipment to be used exclusively in Kentucky for recycling or composting postconsumer waste materials, you are entitled to a credit against your tax equal to 50 percent of the installed cost of the equipment pursuant to KRS 141.390. Application for this credit must be made on Schedule RC, which may be obtained from the Department of Revenue. A copy of Schedule RC and/or Schedule RC (K-1) reflecting the amount of credit approved by the Department of Revenue must be attached to the return.

What is the Investment Fund Credit?

If you're an investor whose cash contribution to an investment fund has been certified by the Kentucky Economic Development Finance Authority (KEDFA), you're entitled to a nonrefundable credit against your Kentucky income tax equal to 40 percent of the cash contribution.

For investments before July 1, 2002, the amount of credit that may be claimed in any given year is limited to 25 percent of the total amount certified by the Kentucky Economic Development Finance Authority (KEDFA). For investments after June 30, 2002, the credit is claimed on the tax return filed for the tax year following the year in which the credit is granted and is limited in any tax year to 50 percent of the initial aggregate credit apportioned to the investor.

Attach a copy of the certification by KEDFA in the first year claimed. Any excess credit may be carried forward. No credit may extend beyond 15 years of the initial certification.

What are some examples of other subtractions?

  • Income of active duty military pay
  • Income received from the tobacco quota buyout
  • Income received as a result of the Master Tobacco Settlement Agreement, the secondary settlement fund referred to as "Phase II"
  • Income received from the Tobacco Loss Assistance Program (TLAP)
  • Income of precinct workers for election training or working at election booths
  • Capital gains on property taken by eminent domain
  • Passive activity loss adjustment (see Form 8582-K and instructions)
  • Income of a child reported on the parent's return
  • Artistic charitable contributions (if you do not itemize deductions)
  • The Federal Work Opportunity Credit used to reduce wages
  • At-risk limitations
  • Qualified farm networking project differences per KRS 141.0101(15)
  • Differences in the gains (losses) from the sale of intangible assets amortized under the provisions of the Revenue Reconciliation Act of 1993
  • Differences in gains (losses) from assets purchased after September 10, 2001
  • Income of military personnel killed in the line of duty

What medical and dental expenses are deductible?

To the extent you were not reimbursed, you may deduct what you paid for:

  • Medicines and drugs that required a prescription or insulin.
  • Medical doctors, dentists, eye doctors, chiropractors, osteopaths, podiatrists, psychiatrists, psychologists, physical therapists, acupuncturists, and psychoanalysts (for medical care only).
  • Medical examinations, x-ray and laboratory services, insulin treatments, and whirlpool baths your doctor ordered.
  • Nursing help (if you paid someone to perform both nursing duties and housework, you may only deduct the cost of the nursing help).
  • Hospital care (including meals and lodging), clinic costs, and lab fees.
  • Medical treatment at a center for drug or alcohol addiction.
  • Medical aids such as hearing aids (and batteries), false teeth, eyeglasses, contact lenses, braces, crutches, wheelchairs, guide dogs and the cost of maintaining them.
  • Lodging expenses (but not meals) paid while away from home while receiving medical care in a hospital or a medical care facility that is related to a hospital. Do not include more than $50 a night for each eligible person.
  • Ambulance service and other travel costs to get medical care. If you used your own car, you may claim what you spent for gas and oil to go to and from the place you received the care, or you may claim 23.5 cents per mile. Add parking and tolls to the amount you claim under either method.
  • The supplemental part of Medicare Insurance (Medicare B).
  • Surgery to improve vision, including radial keratotomy or other laser eye surgery.

What qualifies as an Artistic Charitable Donation?

The following requirements must be met:
  • 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 or any state or political division thereof.
  • The contribution must be made to a qualified organization.
  • A written appraisal of the fair market value of the property must be made by a qualified independent appraiser within one year of the date of the contribution.

What are estimated tax payments? What do I enter on this screen?

  • Enter any estimated tax payments you made for 2014.
  • Enter any amounts credited from your 2013 return.
  • Enter any amount prepaid with extension requests.

Do NOT enter any amount of your 2014 Kentucky Income Tax withheld by your employer(s) as shown on any wage or tax statements.

How will contributions to the Veterans' Program Trust Fund be used?

Contributions to this fund are administered by a Board of Directors, who are all veterans. The Trust Fund is used to provide services to veterans who are not already resourced by state law or federal appropriation. In an effort to recognize the service and sacrifice of Kentucky's deserving veterans, the fund supports programs such as state veterans nursing homes, state veterans cemeteries, homeless veterans transition facilities, transportation for disabled veterans and other veteran related projects.

Contributions may also be made directly to the Kentucky Veterans' Program Trust Fund, 1111B Louisville Road, Frankfort, KY 40601.

How will contributions to the Breast Cancer Research & Education Trust Fund be used?

Contributions will be used to fund breast cancer research, education, awareness, treatment, and screening. Additional information may be obtained from the Division of Women's Physical and Mental Health, (502) 564-3236 or at .

Contributions may also be made directly to the state Department for Public Health, Division of Administration and Financial Management, 275 East Main Street, HS1GWA, Frankfort, KY 40621, (502) 564-6663.

How will contributions to the Child Victims' Trust Fund be used?

Contributions to this fund finance regional and statewide prevention programs which utilize innovative strategies to provide children with personal safety skills, teach adults how to keep children safe from child sexual abuse and exploitation, and inform the public about mandatory reporting of suspected child abuse. The CVTF also provides partial reimbursement for child sexual abuse medical exams at Children's Advocacy Centers across the state. This fund is administered through the Attorney General's office and relies on tax-deductible contributions and private donations.

Contributions may be made directly to the Child Victims' Trust Fund, Office of Victims Advocacy, 1024 Capital Center Drive, Suite 200, Frankfort, KY 40601. For more information call (502) 696-5312.

How will contributions to the Nature and Wildlife Fund be used?

Contributions to this fund will purchase and protect Kentucky's finest natural areas as state nature preserves and for nongame species protection. The Kentucky Department of Fish and Wildlife Resources and the Kentucky State Nature Preserves Commission work together to protect Kentucky's rare plants and animals; and acquire the most naturally outstanding forests, wetlands and prairies in order to provide a home for Kentucky's diverse wildlife. Your tax deductible contributions play a critical role in protecting the wildlands that make Kentucky famous.

Contributions may also be made directly to the Nature and Wildlife Fund, c/o the Kentucky State Nature Preserves Commission, or c/o the Kentucky Department of Fish and Wildlife Resources, Frankfort, KY 40601.

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