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during the taxable year. If the dependent meets the require-

These amounts are prorated on Form 740-NP, page 1. If you

ments for a qualifying child under the provisions of IRC 152(c),

do not itemize, a standard deduction of $2,240 is allowed and

check the box; this child qualifies to be counted to determine

does not have to be prorated.

the family size.

Special Rules for Married Couples—If one spouse itemizes

Dependents Who Did Not Live With You

deductions, the other must itemize. Married couples filing

a joint federal return and who wish to file separate returns

Also use Line 2 to claim tax credits for your dependent children

for Kentucky may: (a) file separate Schedules A showing the

who did not live with you and to claim tax credits for other

specific deductions claimed by each; (b) file a joint Schedule

persons who qualify as dependents. These dependents do not

A, divide the total deductions between them based on the

qualify to be counted to determine the family size.

percentage of each spouse's income to total income, and

attach a copy to each return; or (c) each spouse may claim

Children of Divorced or Separated Parents—Attach a copy of

the standard deduction of $2,240.

federal Form 8332 filed with your federal return. Children may

only be counted for family size by the custodial parent.

MEDICAL AND DENTAL EXPENSES

Tax Credits for Individuals Supported by More Than One

Federal rules apply. You may deduct only your medical and

Taxpayer—Attach a copy of federal Form 2120 filed with your

dental expenses that exceed 7.5 percent of Form 740-NP, Line

federal return.

8. Do not include any expenses deducted on Form 740-NP,

page 4, Section D, Column B, Line 31 or Line 32. Married

Kentucky National Guard Members—Persons who were mem-

taxpayers filing separate Forms 740-NP who choose to file

bers of the Kentucky National Guard on December 31, 2011,

one Schedule A and prorate the total must combine the Line

may claim an additional credit on Line 2. Designate this credit

8 amounts from both returns.

with the initials “N.G. ” Kentucky law specifically restricts this

credit to Kentucky National Guard members; military reserve

TAXES

members are not eligible.

You may not deduct new motor vehicle taxes, sales tax, state

or federal income taxes paid or withheld, otherwise federal

rules apply.

INTEREST

SECTION C—FAMILY SIZE TAX CREDIT

You may deduct interest that you have paid during the taxable

Children may only be counted for family size by the custodial

year on a home mortgage. You may not deduct interest paid

parent. Even if you have signed federal Form 8332 and may

on credit or charge card accounts, a life insurance loan, an

not claim the child as a dependent, you may count children

automobile or other consumer loan, delinquent taxes or on

who otherwise meet the requirements for the Family Size Tax

a personal note held by a bank or individual.

Credit.

You must include in Section C the names and Social Security

Interest paid on business debts should be deducted as

numbers of the qualifying children that are not claimed as

a business expense on the appropriate business income

dependents in Section B in order to count them in your total

schedule.

family size.

You may not deduct interest on an indebtedness of another

person when you are not legally liable for payment of the

interest. Nor may you deduct interest paid on a gambling

debt or any other nonenforceable obligation. Interest paid

on money borrowed to buy tax-exempt securities or single

premium life insurance is not deductible.

SIGN RETURN—Be sure to sign on page 3 after completion of

Line 10—List the interest and points (including "seller-paid

pages 1, 2, 3 and 4 of your return. Each return must be signed

points") paid on your home mortgage to financial institutions

by the taxpayer. Joint and combined returns must be signed

and reported to you on federal Form 1098.

by both husband and wife. Returns that are not signed may

be returned to you for signature.

Line 11—List other interest paid on your home mortgage and

not reported to you on federal Form 1098. Show name and

Please enter a telephone number where you can be reached

address.

during regular working hours. You may be contacted for

additional information needed to complete processing of

Line 12—List points (including "seller-paid points") not

your tax return.

reported to you on federal Form 1098. Points (including loan

origination fees) charged only for the use of money and paid

with funds other than those obtained from the lender are

deductible over the life of the mortgage. However, points

may be deducted in the year paid if all three of the following

apply: (1) the loan was used to buy, build or improve your

INSTRUCTIONS FOR SCHEDULE A

main home, and was secured by that home, (2) the points

did not exceed the points usually charged in the area where

FORM 740-NP

the loan was made, and were figured as a percentage of the

loan amount, and (3) if the loan was used to buy or build the

You may itemize your deductions for Kentucky even if you

home, you must have provided funds (see below) at least

do not itemize for federal purposes. Amounts entered on

equal to the points charged. If the loan was used to improve

Schedule A should be total deductions for the taxable period.

Instructions For Form 740-Np - Nonresident Or Part-Year Resident Income Tax Return - 2011 Page 13

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