Instructions For Forms 740 And 740-Ez - Kentucky Individual Income Tax Return - 2011 Page 21
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30Lines 9 through 14—Interest Expense
Lines 4 through 8—Taxes
You may deduct interest that you have paid during the tax-
Taxes You MAY Deduct
able year on a home mortgage. You may not deduct interest
paid on credit or charge card accounts, a life insurance loan,
Line 4, Local Income Taxes—Enter the total amount of local
an automobile or other consumer loan, delinquent taxes or
occupational (payroll) tax paid. Do not include state or federal
on a personal note held by a bank or individual.
income taxes paid or withheld; they are not deductible.
Interest paid on business debts should be deducted as a
Line 5, Real Estate Taxes—Enter the amount of local and state
business expense on the appropriate business income
property taxes you paid on real estate owned by you. Do not
schedule.
report real estate taxes here that were paid in connection
You may not deduct interest on an indebtedness of another
with a business or profession and have been deducted on
person when you are not legally liable for payment of the
Schedule C, E or F .
interest. Nor may you deduct interest paid on a gambling
Line 6, Personal Property Taxes—Enter property taxes paid
debt or any other nonenforceable obligation. Interest paid
on automobiles, intangible property (accounts receivable,
on money borrowed to buy tax-exempt securities or single
premium life insurance is not deductible.
bonds, etc.) or other personal property.
Line 9—List the interest and points (including “seller-paid
Line 7, Other Taxes—Enter other taxes that are deductible.
points”) paid on your home mortgage to financial institutions
Do not deduct on Schedule A taxes paid in connection with
and reported to you on federal Form 1098.
a business or profession which are deductible on Schedule
C, E or F .
Line 10—List other interest paid on your home mortgage and
not reported to you on federal Form 1098. Show name and
Taxes You MAY NOT Deduct
address of individual to whom interest was paid.
Foreign income taxes paid.
Line 11—List points (including “seller-paid points”) not
reported to you on federal Form 1098. Points (including loan
Sales and use taxes.
origination fees) charged only for the use of money and paid
New motor vehicle taxes.
with funds other than those obtained from the lender are
deductible over the life of the mortgage. However, points
Usage taxes on motor vehicles.
may be deducted in the year paid if all three of the following
State or federal income taxes.
apply: (1) the loan was used to buy, build or improve your
main home, and was secured by that home, (2) the points
State or federal inheritance or estate taxes.
did not exceed the points usually charged in the area where
the loan was made, and were figured as a percentage of the
State gasoline taxes.
loan amount, and (3) if the loan was used to buy or build the
Federal excise taxes on your personal expenditures, such
home, you must have provided funds (see below) at least
as taxes on theater admissions, furs, jewelry, cosmetics,
equal to the points charged. If the loan was used to improve
tires, telephone service, airplane tickets, etc.
the home, you must have paid the points with funds other
than those obtained from the lender.
Federal Social Security taxes.
Funds provided by you include down payments, escrow
Hunting, fishing or dog licenses.
deposits, earnest money applied at closing, and other
Auto inspection fees.
amounts actually paid at closing. They do not include
amounts you borrowed as part of the overall transaction.
Auto license fees.
Seller-Paid Points—If you are the buyer, you may be able to
Cigarette or liquor taxes.
deduct points the seller paid in 2011. You can do this if the
Taxes paid by you for another person.
loan was used to buy your main home and the points meet
item 2 above. You must reduce your basis in the home by
Motorboat registration fees.
those points, even if you do not deduct them.
Drivers’ license fees.
If you are the seller, you cannot deduct the points as interest.
Sewer assessments.
Instead, include them as an expense of the sale.
School taxes based on electric, water, sewer, gas and
This generally does not apply to points paid to refinance your
telephone bills.
mortgage. Federal rules apply. See federal Publication 936
for more information.
Local or state insurance premiums taxes or surcharges.
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