Instructions For Forms 740 And 740-Ez - Kentucky Individual Income Tax Return - 2011 Page 14
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30Credit for Taxes Paid to Other State Worksheet
Line 4, Nonrefundable Certified Rehabilitation Credit—This
Kentucky residents/part-year residents only. Complete a
credit is available to owner–occupied residential and
separate worksheet for each state. See instructions for Form
commercial preservation projects for structures that are listed
740, Section A, Line 5.
in the National Register of Historic Places, or in a National
Register historic district, up to $3 million annually. The credit
TIP—Credit for taxes paid to another state may
is 30 percent of certified rehabilitation expenses for owner–
be reduced or eliminated if gambling losses
occupied residential properties, not to exceed $60,000 per
are claimed on Schedule A.
project, and 20 percent for commercial and income-producing
Name of other state ......................................
properties. To qualify, an owner must spend at least $20,000
on rehabilitation.
1. List Kentucky taxable income from
Form 740, Line 11 ................................... ________________
Individuals or businesses can apply the credit against their
2. List any gambling losses from
state income tax liability, carry the credit forward up to
Schedule A, Line 29 ............................... ________________
seven years or transfer it to a banking institution to leverage
3. Add Lines 1 and 2 and enter
total here ................................................ ________________
financing. For applications submitted on or after April 30,
4. List income reported to other state
2010, the credit shall be refundable if the taxpayer makes
included on Kentucky return ................ ________________
an election under KRS 171.397(2)(b). For more information
5. Subtract Line 4 from Line 3 and
regarding this credit, visit the Kentucky Heritage Council’s
enter total here ...................................... ________________
Web site at , or call (502) 564–7005.
6. Adjusted gambling losses. Compute
gambling losses allowed on Kentucky
return if income from other state is
Line 5, Credit for Tax Paid to Another State—Kentucky
ignored ................................................... ________________
residents are required to report all income received including
7. Subtract Line 6 from Line 5 and
income from sources outside Kentucky. Within certain
enter total here ...................................... ________________
limitations, a credit for income tax paid to another state may
8. Enter Kentucky tax on income
be claimed. The credit is limited to the amount of Kentucky
amount on Line 7 .................................. ________________
tax savings had the income reported to the other state
9. Enter Kentucky tax on income
been omitted, or the amount of tax paid to the other state,
amount on Line 1 .................................. ________________
10. Subtract Line 8 from Line 9. This is
whichever is less.
the tax savings on return if other
state’s income is ignored ...................... ________________
You may not claim credit for tax withheld by another state.
11. Enter tax paid to other state on
You must file a return with the other state and pay tax on
income claimed on Kentucky return .... ________________
income also taxed by Kentucky in order to claim the credit.
12. Enter the lesser of Line 10 or Line 11.
A copy of the other state’s return including a schedule of
This is your credit for tax paid to
income sources must be attached to verify this credit. If you
other state. Carry this total to
owe tax in more than one state, the credit for each state must
Form 740, Section A, Line 5 .................. ________________
be computed separately.
Line 6, Employer’s Unemployment Tax Credit—If you hired
unemployed Kentucky residents to work for you during the
Reciprocal States—Kentucky has reciprocal agreements with
last six months of 2010 or during 2011, you may be eligible
specific states. These agreements provide for taxpayers to
to claim the unemployment tax credit. In order to claim a
be taxed by their state of residence, and not the state where
credit, each person hired must meet specific criteria. For
income is earned. Persons who live in Kentucky for more
each qualified person, you may claim a tax credit of $100.
than 183 days during the tax year are considered residents
The period of unemployment must be certified by the Office
and reciprocity does not apply. The states and types of
of Employment and Training, Education Cabinet, 275 East
exemptions are as follows:
Main Street, 2-WA, Frankfort, KY 40621-0001, and you must
Illinois, West Virginia—wages and salaries
maintain a copy of the certification in your files. A copy of
Schedule UTC must be attached to your return.
Indiana—wages, salaries and commissions
Line 7, Recycling and/or Composting Tax Credit—Individuals
Michigan, Wisconsin—income from personal services
who purchase recycling or composting equipment to be
(including salaries and wages)
used exclusively in Kentucky for recycling or composting
Ohio—wages and salaries. Note: Wages which an S
postconsumer waste materials, are entitled to a credit
corporation pays to a shareholder–employee if the
against the tax equal to 50 percent of the installed cost of the
shareholder–employee is a “twenty (20) percent or
equipment pursuant to KRS 141.390. Application for this credit
greater” direct or indirect equity investor in the S
must be made on Schedule RC, which may be obtained from
corporation shall not be exempt under the reciprocity
the Department of Revenue. A copy of Schedule RC and/or
agreement.
Schedule RC (K-1) reflecting the amount of credit approved by
Virginia—commuting daily, salaries and wages
the Department of Revenue must be attached to the return.
Kentucky does not allow a credit for tax paid to a reciprocal
Line 8, Kentucky Investment Fund Tax Credit—Limits on
state on the above income. If tax was withheld by a reciprocal
Kentucky Investment Fund Act (KIFA) Credits—An investor
state, you must file directly with the other state for a refund
whose cash contribution to an investment fund has been
of those taxes.
certified by the Kentucky Economic Development Finance
Authority (KEDFA) is entitled to a nonrefundable credit
against Kentucky income tax equal to 40 percent of the cash
contribution. For investments before July 1, 2002, the amount
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