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limited to the percentage of their Kentucky total income to

Health Coverage Tax Credit, you may not deduct premiums

their federal total income. Enter the recipient's name and

paid on your behalf (advance payments) and you must reduce

Social Security number.

the amount you paid by the amount of health coverage tax

credit. (See federal Form 8885.)

Line 27, Individual Retirement Arrangements (IRAs)—The

Line 33, Other Deductions—List any other adjustments to

deduction cannot exceed income earned in Kentucky. Con-

total income not listed above on lines 18 through 32. List the

tributions made by full-year nonresidents are limited to the

type of deduction in the space provided. Other deductions are

percentage of their Kentucky earned income to their federal

limited to the percentage of Kentucky total income (Line 17,

earned income. Use federal worksheets and instructions with

Column B) to federal total income (Line 17, Column A). Enter

the above limitations.

in Column A, the total of any other adjustments to the total

income listed on your federal return. Enter in Column B, the

Line 28, Student Loan Interest Deduction—Federal limita-

allowable deduction with the above limitation.

tions apply. Student loan interest deduction is limited to the

percentage of Kentucky total income (Line 17, Column B) to

INCOME/TAX

federal total income (Line 17, Column A). Enter in Column

A, the total of student loan interest from your federal return.

Note: These items are reported on page 1, Form 740-NP.

Enter in Column B, the allowable deduction with the above

limitation.

Line 7—Enter the percentage from page 4, Section D, Line

36.

Line 29, Tuition and Fees Deduction—Federal limitations

apply. The tuition and fees deduction is limited to the

Line 8—Enter federal Adjusted Gross Income from page 4,

percentage of Kentucky total income (Line 17, Column B) to

Section D, Column A, Line 35.

federal total income (Line 17, Column A). Enter in Column

A, the tuition and fees deduction from your federal return.

Line 9—Enter Kentucky Adjusted Gross Income from page 4,

Enter in Column B, the allowable deduction with the above

Section D, Column B, Line 35.

limitation.

Line 10—Nonitemizers, enter the standard deduction of

Line 30, Domestic Production Activities Deduction—For

$2,240. If filing a joint return, only one $2,240 standard de-

taxable years beginning on or after January 1, 2010, the

duction is allowed.

amount of the domestic production activities deduction

(DPAD) for Kentucky income tax returns will remain 6 percent

Line 11—Itemizers, complete Schedule A and enter itemized

as allowed in Section 199(a)(2) of the Internal Revenue Code

deductions on Line 11. If one spouse itemizes deductions,

(IRC) for taxable years beginning before January 1, 2010.

the other must itemize. See specific instructions for Sched-

Kentucky does not recognize the 9 percent DPAD calculation

ule A.

rate allowed for federal income tax returns filed for taxable

years beginning on or after January 1, 2010

Line 12—Multiply Line 11 by the percentage on Line 7. If Line

12 does not exceed $2,240 and your filing status is 1 or 2,

Part-year resident or full-year nonresident individuals

you should take the standard deduction. Married couples

shall prorate the allowable federal DPAD based upon the

filing separate returns, see special rules under instructions

percentage of Kentucky domestic production gross receipts

for Schedule A.

to federal domestic production gross receipts. The KDPAD

shall not exceed 50 percent of the Kentucky W-2 wages from

Line 13—Subtract either Line 10 or 12 from Line 9. This is

the entity that generated Kentucky domestic production gross

your Taxable Income.

receipts. This deduction must be recomputed based on the

6 percent allowed for the Kentucky DPAD as opposed to the

Line 14—Use the tax table provided in the instructions to

9 percent allowed for the federal DPAD deduction. A pass-

compute your tax. Enter this amount on Line 14.

through entity is required to attach information containing

each individual par tner's, member's or shareholder's

If you had a lump-sum distribution from a qualified retirement

distributive share of DPGR, KDPGR and Kentucky W-2 wages

plan, complete Schedule P and Form 4972-K and attach copies

allocable to DPGR to each individual partner's, member's or

to Form 740-NP. The amount of tax computed on Form

shareholder's Kentucky Schedule K-1 for purposes of making

4972-K should be included in the amount on this line.

this calculation.

Schedule J, Farm Income Averaging—If you elect Farm

Line 31, Long–Term Care Insurance Premiums—Long-term

Income Averaging on your federal return, you may also use

care insurance premiums deducted by full-year nonresidents

this method for Kentucky. Complete and attach Kentucky

are limited to the percentage of their Kentuck y total

Schedule J and include tax in the amount on this line.

income (Line 17, Column B) to their federal total income

(Line 17, Column A). Do not claim amounts as an itemized

Line 15—Enter amount from page 2, Section A, Line 21. See

deduction.

instructions for Section A.

Line 17—Enter amount from page 3, Section B, Line 4. See

Line 32, Health Insurance Premiums—Medical and dental

instructions for Section B.

insurance premiums deducted by full-year nonresidents

are limited to the percentage of their Kentucky total income

Line 18—Multiply the amount on Line 17 by the percentage

(Line 17, Column B) to their federal total income (Line 17,

on Line 7 and enter result here.

Column A).

Note: This deduction applies to premiums paid with after-tax

dollars. Premiums paid with pretax income (cafeteria plans

and vouchers already excluded from wage income) are not

deductible again. Do not include long-term care insurance

premiums deducted on Line 31. If you are eligible for the

Instructions For Form 740-Np - Nonresident Or Part-Year Resident Income Tax Return - 2011 Page 5

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