Form 740-Np - Kentucky Income Tax Return Nonresident Or Part-Year Resident - 2012 Page 16
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60share of income as determined for the year during which the
Reciprocal States—Kentucky has reciprocal agreements with
tax credits are approved.
specific states. These agreements provide that taxpayers be
taxed by their state of residence, and not the state where in-
The maximum amount of credits that may be committed
come is earned. Persons who live in Kentucky for more than
in each fiscal year by the Kentucky Economic Development
183 days during the tax year are considered residents and
Finance Authority shall be capped at three million dollars
reciprocity does not apply. The states and types of exemptions
are as follows:
($3,000,000).
Illinois, West Virginia—wages and salaries
The maximum amount of credit for each small business
for each year shall not exceed twenty-five thousand dollars
Indiana—wages, salaries and commissions
($25,000). The credit shall be claimed on the tax return for
the year during which the credit was approved. As per KRS
Michigan, Wisconsin—income from personal services
141.0205, individuals entitled to this credit will claim the
(including salaries and wages)
credit on Line 2, Section A – Business Incentive and Other Tax
Ohio—wages and salaries. Note: Wages which an S
Credits.
corporation pays to a shareholder-employee if the share-
holder-employee is a “twenty (20) percent or greater”
Unused credits may be carried forward for up to five (5)
years.
direct or indirect equity investor in the S corporation
shall not be exempt under the reciprocity agreement.
Line 3, Skills Training Investment Tax Credit—Enter the amount
Virginia—commuting daily, salaries and wages
of credit certified by the Bluegrass State Skills Corporation.
A copy of the Kentucky Schedule K-1 for the year the credit
Kentucky does not allow a credit for tax paid to a reciprocal
was approved must be attached to the return in the first year
state on the above income. If tax was withheld by a reciprocal
the credit is claimed. The excess credit over the income tax
state, you must file directly with the other state for a refund
liability in the year approved may be carried forward for
of those taxes.
three successive taxable years. For information regarding the
application and approval process for this credit, contact the
Credit for Taxes Paid to Other State Worksheet
Cabinet for Economic Development, Bluegrass State Skills
Corporation at (502) 564-2021, for information.
Kentucky residents/part-year residents only. Complete a
separate worksheet for each state. See instructions for Form
Line 4, Nonrefundable Certified Rehabilitation Credit—This
740-NP, Section A, Line 5.
credit is available to owner-occupied residential and
commercial preservation projects for structures that are
Name of other state ...................................
listed in the National Register of Historic Places, or in a
National Register historic district, up to $3 million annually.
1. List Kentucky taxable income from
The credit is 30 percent of certified rehabilitation expenses
Form 740-NP, Line 13 ......................... _________________
for owner-occupied residential properties, not to exceed
$60,000 per project, and 20 percent for commercial and
2. List any gambling losses from
income-producing properties. To qualify, an owner must spend
Schedule A, Line 31 ............................ _________________
at least $20,000 on rehabilitation.
3. Add Lines 1 and 2 and enter
total here ............................................. _________________
Individuals or businesses can apply the credit against their
state income tax liability, carry the credit forward up to
4. List income reported to other state
seven years or transfer it to a banking institution to leverage
included on Kentucky return ............. _________________
financing. For application submitted on or after April 30, 2010,
5. Subtract Line 4 from Line 3 and
the credit shall be refundable if the taxpayer makes an elec-
enter total here ................................... _________________
tion under KRS 171.397(2)(b). For more information regarding
this credit, visit the Kentucky Heritage Council’s Web site at
6. Adjusted gambling losses. Compute
, or call (502) 564-7005.
gambling losses allowed on Kentucky
return if income from other state is
Line 5, Credit for Tax Paid to Another State—Kentucky residents
ignored ................................................ _________________
are required to report all income received including income
from sources outside Kentucky. Within certain limitations, a
7. Subtract Line 6 from Line 5 and
credit for income tax paid to another state may be claimed. The
enter total here ................................... _________________
credit is limited to the amount of Kentucky tax savings had the
8. Enter Kentucky tax on income
income reported to the other state been omitted, or the amount
amount on Line 7 ................................ _________________
of tax paid to the other state, whichever is less.
9. Enter Kentucky tax on income
amount on Line 1 ................................ _________________
TIP—Credit for taxes paid to another state may
10. Subtract Line 8 from Line 9. This is
be reduced or eliminated if gambling losses are
the tax savings on return if other
claimed on Schedule A.
state’s income is ignored ................... _________________
11. Enter tax paid to other state on
You may not claim credit for tax withheld by another state. You
income claimed on Kentucky return . _________________
must file a return with the other state and pay tax on income
12. Enter the lesser of Line 10 or Line 11.
also taxed by Kentucky in order to claim the credit. A copy of
This is your credit for tax paid to
the other state’s return including a schedule of income sources
other state. Carry this total to
must be attached to verify this credit. If you owe tax in more
Form 740-NP, Section A, Line 5 ......... _________________
than one state, the credit for each state must be computed
separately.
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