Kentucky Individual Income Tax Forms - 2011 (Page 4 of 60) in pdf

What’s New

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 2011 threshold amount is $10,890 for a family size of one,

$14,710 for a family of two, $18,530 for a family of three and $22,350 for a family of four or more.

STANDARD DEDUCTION—For 2011, the standard deduction is $2,240.

KENTUCKY SMALL BUSINESS INVESTMENT CREDIT—For taxable years beginning after December 31, 2010, a small

business may be eligible for a nonrefundable credit of up to one hundred percent (100%) of the Kentucky income tax

imposed under KRS 141.020 or 141.040, and the limited liability entity tax imposed under KRS 141.0401.

The small business development credit program authorized by KRS 154.60-020 and KRS 141.384 was amended to

allow the credit to apply to taxable years beginning after Dec. 31, 2010. The definition of base year for purposes of the

credit computation was changed to the first full year of operation that begins on or after Jan.1, 2009 and before Jan.

1, 2010.

Small businesses are eligible to apply for credits and receive final approval for these credits one (1) year after the

small business:

•

Creates and fills one (1) or more eligible positions over the base employment, and that position or positions are

created and filled for twelve (12) months; and

•

Invests five thousand dollars ($5,000) or more in qualifying equipment or technology.

The small business shall submit all information necessary to the Kentucky Economic Development Finance Authority

to determine credit eligibility for each year and the amount of credit for which the small business is approved.

The maximum amount of credits that may be committed in each fiscal year by the Kentucky Economic Development

Finance Authority shall be capped at three million dollars ($3,000,000). The maximum amount of credit for each small

business for each year shall not exceed twenty-five thousand dollars ($25,000). Unused credits may be carried forward

for up to five (5) years.

ENDOW KENTUCKY TAX CREDIT—Effective for taxable years beginning on or after Jan. 1, 2011, the Endow Kentucky

Tax Credit was created to encourage donations to community foundations across the Commonwealth. KRS 141.438

was created to allow a nonrefundable income tax and limited liability entity tax credit of 20 percent of the value of the

endowment gift, not to exceed $10,000. Unused credit may be carried forward for use in a subsequent taxable year,

for a period not to exceed five years. The total amount of credit that may be awarded by the Department of Revenue

in each fiscal year is $500,000. An application for preliminary authorization for the credit must be submitted to the

Department of Revenue.

If preliminary approval is received from the department, the taxpayer must make an endowment gift within 30 days

of preliminary approval to a qualified community foundation, county-specific component fund, or affiliate community

foundation which has been certified by the Endow Kentucky Commission created by KRS Chapter 147A. The taxpayer

has ten days after making the gift to provide the department with proof of the gift. The department will issue a final

tax credit letter to the taxpayer if the gift is approved after receipt of the proof.

NEW MARKETS DEVELOPMENT PROGRAM TAX CREDIT—The New Markets Development Program Tax Credit was

created in KRS 141.432 to 141.434 to encourage taxpayer investment in low-income communities. A taxpayer that makes

a qualified equity investment in a qualified community development entity may be eligible for a credit that may be

taken against the corporation income tax, individual income tax, insurance premiums taxes and limited liability entity

tax. The qualified community development entity must first submit an application to the Department of Revenue for

approval. The person or entity actually making the loan or making the equity investment will be able to claim a credit,

subject to a $5 million credit cap each fiscal year, by completing Form 8874(K)-A.

Any unused approved credit may be carried forward for use in any subsequent tax year. Additional information regarding

this new credit program will be provided via our Web site at

CERTIFIED REHABILITATION TAX CREDIT—The certified rehabilitation credit cap has been increased from $3 million

to $5 million effective for applications received on or after April 30, 2010. Effective for applications for preliminary

approval received on or after April 30, 2010, the credit will be refundable if a proper election form is filed. The refundable

credit is reported on Form 740, Page 2, Line 30(c). (KRS 171.396, 171.397 and 141.382)

Kentucky Individual Income Tax Forms - 2011 Page 4

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