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42A740(I) (10-21)2021 Kentucky Individual Income TaxInstructions for Form 740General InformationWhich form should I file?File Form 740 if you are a full-yearKentucky resident and meet the filingrequirements in the Instructions forForm 740.File Form 740-NP if you are a nonresidentand: had income from Kentucky sources.or are a part-year Kentucky resident and: moved into or out of Kentucky duringthe taxable year. had income while a Kentucky resident. had income from Kentucky sourceswhile a nonresident.File Form 740-NP-R if you are a residentof a reciprocal state: Illinois, Indiana,Michigan, Ohio, Virginia, West Virginiaand Wisconsin and you had Kentuckyincome tax withheld and had no otherincome from Kentucky sources.Computer–GeneratedReturns and 2–DBarcodeMost software packages produce a 2-Dbarcode. The Department of Revenuescans the barcode that contains all ofthe information needed to process yourreturn. The barcode is printed in theupper right–hand corner of the returnwhen you prepare your return usingan approved software package. Lastminute changes should be entered intothe program and the entire return printedagain so that the barcode also containsthe correct information. This barcodeshould not be covered up or markedthrough. Using the barcode reducesdata entry errors for the department andresults in a faster refund for you.C h e ck t o b e s u r e y o u r s o ft wa r egenerates an acceptable form. A listof vendors whose software has beenapproved is posted on the Internetat revenue.ky.gov, the Department ofRevenue’s website.Free Electronic FilingOptionsYou may visit ftware.aspx for free electronic filing options.You may qualify to file your federal andKentucky individual income tax returnsfor free depending on your income level.Some offers require state and federalreturns to be filed at the same time.The Kentucky Department of Revenuedoes not endorse any specific tax filingproduct. Each software company isresponsible for the accuracy of thesof tware program instructions andcalculations. However, all sof twarepackages will produce a return whichcontains the required data fields. TheKentucky Department of Revenue doesnot offer technical assistance for thesesoftware products. You should contactthe tax sof tware customer ser vicedepartment if you have issues using anyof the software products.Kentucky also offers another option forfiling your state return electronically,free of charge. If you would like to fillout your Kentucky forms and scheduleswithout software help or assistanceyou may use the KY File website.KY File allows you to file current yearKentucky individual income tax returnsand is designed to be the simpleelectronic equivalent of a paper form.It will provide basic mathematical anderror checks but unlike most othersoftware it does not ask about or explaintax situations. Your federal formsshould be completed before accessingthe KY File website. You can access theKY File website at Filetaxes.ky.gov .Where to Get FormsForms and instructions are availableonline from the Depar tmentof Revenue’s website at revenue.ky.gov and at all Kentucky TaxpayerService Centers. They may also beobtained by writing FORMS, KentuckyDepar tment of Revenue, 501 HighStreet, Station 23B, Frank for t, K Y40601, or by calling (502) 564-3658.Address ChangeIf you move after you file your tax return,please notify the Kentucky Department ofRevenue of your new address. This canbe done by sending a change of addresscard (available at your local post office) to:Taxpayer Assistance Section, KentuckyDepartment of Revenue, P.O. Box 181,Station 56, Frankfort, KY 40602-0181.Notification can also be made to anyKentucky Taxpayer Service Center. A listof locations is included in your packet.Refund InquiriesYou may check the status of yourrefund at refund.ky.gov. This system isavailable 24 hours a day, 7 days a week,and is updated nightly. The followinginformation from your return will berequired: Your Social Security Number shown onthe return. The exact whole-dollar amount to berefunded to you.Information about electronically filedreturns should be available within 72hours of receipt. Information about otherrefund requests filed on paper will beavailable after the return has completedinitial processing (approximately 12weeks).Need a Copy ofYour Tax Return?If you need a copy of your tax return,you must send your request in writing to:Taxpayer Assistance Section, KentuckyDepartment of Revenue, P.O. Box 181,Station 56, Frankfort, KY 40602-0181 orfax to (502) 564-3392. Please includeyour name(s) as it appeared on yourreturn, Social Security number(s), yourcomplete mailing address, and a photoID. To ensure confidentiality, all requestsmust include your signature.3

How Long ShouldRecords be Kept?Keep a copy of your tax return, worksheetsand records of all items appearing on it(such as Forms W-2 and 1099 or otherreceipts) until the statuteof limitations runs outfor that return. Usually,this is four years from thedate the return was due orfiled (with extensions), orthe date the tax was paid,whichever is later. Youshould keep some recordslonger. For example, keep propertyrecords (including those on your home)as long as they are needed to figurethe basis of the original or replacementproperty.Filing as an InjuredSpouse on YourFederal Form 1040?Kentucky does not recognize the federalinjured spouse form. Income tax refundsmay be withheld by the departmentif you owe money to the KentuckyDepartment of Revenue, another stateagency or the Internal Revenue Service.Kentucky law requires the offset ofthe entire refund if a joint return isfiled. If spouses want to keep their taxliabilities and/or refunds separate, eachmust file a separate tax form. If youchoose to file separately on a combinedreturn, for agencies other than theDepartment of Revenue, the refund willbe apportioned between spouses, basedon each spouse’s income. The indebtedspouse’s refund will then be paid to theappropriate agency.Death of a TaxpayerIf a taxpayer died before filing a returnfor 2021, the taxpayer’s spouse orpersonal representative may have tofile and sign a return for that taxpayer.A personal representative can be anexecutor, administrator or anyone whois in charge of the deceased taxpayer’sproperty. If the deceased taxpayer didnot have to file a return but had taxwithheld, a return must be filed to get arefund. The person who files the return4should check the applicable deceasedbox at the top of the return.If your spouse died in 2021 and you didnot remarry in 2021, you can file jointlyor separately on a combined return. Thereturn should show your spouse’s 2021income before death and your incomefor all of 2021. You can also file jointlyor separately on a combined return ifyour spouse died in 2022 before filing a2021 return. Write “Filing as survivingspouse” in the area where you sign thereturn. If someone else is the personalrepresentative, he or she must also sign.Death of MilitaryPersonnel Killedin Line of DutyKRS 141.019(k) exempts all incomeearned by soldiers killed in the line ofduty from Kentucky tax for the yearduring which the death occurred and theyear prior to the year during which thedeath occurred.The exemption applies to tax yearsbeginning after December 31, 2001. Theincome exclusion applies to all incomefrom all sources of the decedent, not justmilitary income. The exclusion includesall federal and state death benefitspayable to the estate or any beneficiaries.Amended returns may be filed for theyear the soldier was killed in the lineof duty and the year prior to the yearof death. The amended returns mustbe filed within the statute of limitationsperiod; four years from the due date, theextended due date or the date the taxwas paid, whichever is later.If a combined return was filed, theexclusion would apply to the incomereported in Column A or Column B ofthe Kentucky return attributable to themilitary member. If a joint return wasfiled, the income must be separatedaccordingly. Refunds will be issuedin the names on the original return.Beneficiaries or estates that receiveddeath benefits that were included in aKentucky return may file an amendedreturn to request a refund of taxes paidon the benefit.The Department of Revenue will use theVeterans Administration definition for“in the line of duty,” which states that asoldier is in the line of duty when he orshe is in active military service, whetheron active duty or authorized leave; unlessthe death was the result of the person’sown willful misconduct.Income Tax Withholdingfor 2022Yo u m a y e l e c t t o i n c r e a s e y o u rwithholding by updating your K-4 withyour employer. Or if you do not expectto have any tax liability for the currentyear or you meet the modified grossincome requirement, you may be entitledto claim an exemption from withholdingof Kentucky income tax.2022 Estimated TaxPaymentsIndividuals who can reasonably expectto have income of more than 5,000from which no Kentucky income taxwill be withheld may be required tomake es timated tax payment s onForm 740-ES. However, if the amountof estimated tax is 500 or less, noestimated payments are required.Individuals who do not prepay at least90% of the tax to be shown on the 2022tax return, or 100% of the tax shown onthe 2021 tax return, may be subject to apenalty for underpayment of estimatedtax. For more information on calculatingthe penalty, please refer to Form 2210‑K.Prepayments for 2022 may be madethrough withholding, a credit forwardof a 2021 overpayment or estimated taxinstallment payments.Estimated tax installments maynow be made electronically atrevenue.ky.gov, using Form EPAY, orwhen electronically filing your returnusing Form 8879-K, or through mailinga 740-ES with payment.The ins truc tions for Form 74 0 - ESinclude a worksheet for calculatingthe amount of estimated tax due andfor making installment payments.These forms may be obtained from theKentucky Department of Revenue, P. O.Box 518, Frankfort, KY 40602-0518, orany Kentucky Taxpayer Service Center,or by calling (502) 564-3658.

Return AdjustmentsConfidentialityIf the Department of Revenue adjustsyour return and you do not understandthe adjustment ( s ) , you may writeto Taxpayer Assistance, Kentuck yDepartment of Revenue, P.O. Box 181,Station 56, Frankfort, KY 40602-0181,fax your request to Taxpayer Assistance(502) 564-3392, or call (502) 564-4581.Please include your name (s) as itappears on your return, complete SocialSecurity Number(s), notice number(s),and day time contac t information.If you disagree with an adjustmentmade to your return, you must appealthe adjustment by submitting a writtenprotest within 60 days of notification.Kentuck y Revised Statute 131.190requires the Department of Revenueto maintain strict confidentiality of alltaxpayer records. No employee of theDepartment of Revenue may divulgeany information regarding the taxreturns, schedules or reports requiredto be filed. However, the Department ofRevenue is not prohibited from providingevidence to or testifying in any courtof law concerning official tax records.Also, Department of Revenue employeesor any other person authorized toaccess confidential state information areprohibited from intentionally viewingsuch information without an officialneed to view.Amended ReturnsIf you discover that you omitteddeductions or otherwise improperlyprepared your return, you may obtaina refund by filing an amended returnwithin four years of the due date of theoriginal return. You are required to filean amended return to report omittedincome. For 2017 and later use form740 and check the box for amended. For2016 and prior, use Form 740-X. Youmay obtain these forms by contactinga Kentucky Taxpayer Service Center orwriting FORMS, Kentucky Departmentof Revenue, P. O. Box 518, Frankfort, KY40602-0518. You may also downloadforms at revenue.ky.gov the Departmentof Revenue’s website.Federal AuditAdjustmentsTaxpayers who have received a finaldetermination of an Internal RevenueService audit must submit a copy tothe department within 180 days of itsconclusion. The information should besubmitted to the Individual GovernmentalProgram Section, Kentucky Departmentof Revenue, P.O. Box 1074, Station 68,Frankfort, KY 40602-1074.The department may provide officialinformation on a confidential basis to theInternal Revenue Service or to any othergovernmental agency with which it hasan exchange of information agreementwhereby the department receives similaror useful information in return.Extension of Timeto FileTaxpayers who are unable to file a returnby April 18 may request an extension oftime to file their return. Taxpayers mayelect to file this request electronicallyor by mailing the extension to theDepartment of Revenue on or beforethe due date of the return. The requestmust state a reasonable cause forthe inability to file. Inability to pay isnot an acceptable reason. Acceptablereasons include, but are not limited to,destruction of records by fire or floodand serious illness of the taxpayer.Extensions are limited to six months.A copy of the Kentucky extensionrequest must be enclosed with yourpaper return. If you file your returnelectronically, you must indicate thatan extension was filed by checking theappropriate box in the software.Individuals who receive a federalextension are not required to request aseparate Kentucky extension. They canmeet the requirements by enclosing acopy of the application for automaticfederal extension to the Kentucky return.IRS extensions by e-file (by personalcomputer or a tax professional) —Enclose a copy of Form 4868 withthe confirmation numberin the lower right-handcorner of the form or ac opy of the elec tronicacknowledgment.Military Personnel—Kentucky residentswho are in the military are often grantedextensions for tax filings when servingoutside the United States. Any extensiongranted for federal income tax purposeswill be honored for Kentucky income taxpurposes.Combat Zone Extension—Membersof the Army, Navy, Marines, Air Force,or Public Health Service of the UnitedStates government who serve in anarea designated as a combat zone bypresidential proclamation shall not berequired to file an income tax return andpay the taxes, which would otherwisebecome due during the period of service,until 12 months after the service iscompleted. Members of the NationalGuard or any branch of the Reservescalled to active duty to serve in a combatzone are granted the same extension.Interest and Penalties—Interest at the“tax interest rate” applies to any incometax paid after the original due date ofthe return. If the amount of tax paidby the original due date is less than 75percent of the tax due, a late paymentpenalty may be assessed (minimumpenalty is 10).Interest and penalty charges can beavoided or reduced by sending paymentwith your extension request by the duedate. If you wish to make a paymentprior to the due date of your return whenusing the:(1) Kentuck y Extension—CompleteSection II, Kentuck y ExtensionPayment Voucher, of the Applicationfor Extension of Time to File, Form740EXT, and send with payment.Write “KY Income Tax—2021” andyour Social Security number(s) onthe face of the check.(2) Federal Automatic Extension—Makea copy of the lower portion of thefederal Application for AutomaticExtension, Form 4868, and sendwith payment. Make check payableto Kentucky State Treasurer, write“KY Income Tax–2021” and yourSocial Security number on the faceof the check. Enclose the check,Federal extension and send toKentucky Department of Revenue,Frankfort KY 40620-0009.5

Personal PropertyFormsKentuck y business taxpayer s arereminded to report all taxable personalproperty, except motor vehicles, ownedon January 1 to either the propertyvaluation administrator in the county ofresidence (or location of business) or theOffice of Property Valuation in Frankfort.Tangible personal propertyis to be reported on theTangible Personal PropertyTax Return, Form 62A500.The due date for this return is May 15.Do not mail this return with your incometax return; use a separate envelope. Kentucky StateTreasury—UnclaimedPropertyI n d i v i d u a l s—T h e Ke n t u c k y S t a t eTreasury may be holding unclaimedproperty for you or your family. TheTreasury holds hundreds of millionsof dollars from bank accounts,payroll checks, life insurance, utilitydeposits, and other types of propertythat have been unclaimed by theowners. Please visit treasury.ky.govor www.missingmoney.com for moreinformation on how to locate and claimany funds that may belong to you.Businesses—Kentucky businesses arerequired to comply with the KentuckyRevised Uniform Unclaimed PropertyAct, codified as KRS Chapter 393A.If you have uncashed vendor checks,payroll checks, unclaimed customerdeposits or refunds, or other types ofproperty belonging to third–parties,you may b e required to turn theproperty over to the Kentucky StateTreasury.  Please review KRS Chapter393A, or visit treasury.ky.gov for moreinformation.6

2021 FEDERAL/KENTUCKY INDIVIDUAL INCOME TAX DIFFERENCESKentucky income tax law is based on the federal income tax law ineffect on December 31, 2018. The Department of Revenue generallyfollows the administrative regulations and rulings of the InternalRevenue Service in those areas where no specific Kentucky law exists.PROVISIONThe chart below provides a quick reference guide to the major federal/Kentucky differences. It is not intended to be all inclusive. Items notlisted may be referred to the Department of Revenue to determineKentucky tax treatment.FEDERALTAX TREATMENTKENTUCKYTAX TREATMENTTaxableExemptCommonwealth of Kentucky Retirement SystemsTaxableKentucky Local Government Retirement SystemsTaxableFederal and Military Retirement SystemsTaxablePartially exempt if retiredafter December 31, 1997;exempt if retired beforeJanuary 1, 1998;Schedule P may be required3-year recovery rule eliminated3-year recovery rule retainedTaxable100% excludable up to 31,110per taxpayer; Schedule P may berequired5. Benefits from U.S. Railroad Retirement BoardMay be taxableExempt; Schedule P may berequired6. Social Security BenefitsMay be taxableExemptTaxableExempt8. Other States’ Municipal Bond Interest IncomeExemptTaxable9. Kentucky Local Government Lease Interest PaymentsTaxableExempt10. Capital Gains on Property Taken by Eminent DomainTaxableExempt11.TaxableExemptNoncash contribution allowed asitemized deductionAppraised value allowed asitemized deduction or adjustmentto incomeDeductibleNondeductible14. Leasehold Interest—Charitable ContributionMay be deductibleDeductible; Schedule HH required15. Work Opportunity Credit (federal Form 5884)Tax credit allowed; wage expensereduced by amount of creditNo credit allowed; entire wageexpense is deductible16. Welfare to Work Credit (federal Form 8861)Tax credit allowed; wage expensereduced by amount of creditNo credit allowed; wage expensereduced by amount of federal credit1.Interest from Federal Obligations2. Retirement Income from:3. Pensions and Annuities Starting After 7/1/86 and Before 1/1/904. Other Pension and Annuity Income7.Capital Gains on Sale of Kentucky Turnpike BondsElection Workers—Income for Training or Working at ElectionBooths12. Artistic Contributions13. State Income Taxes17.Child and Dependent Care Credit18. Family Size Tax Credit19. Education Tuition Tax Credit20. Child’s Income Reported by ParentTax credit based on expensesNo credit allowedTax credit based on expenses20% of federal credit, completeForm 2441-KDecreasing tax credit allowedCredit allowedForm 8863-K requiredPermitted; taxed at parent’s rateNot permittedTaxableExempt22. Certain Business Expenses of ReservistsDeductibleNondeductible23. Moving Expenses for Members of the Armed ForcesDeductibleNondeductible24. Medical and Dental ExpensesDeductibleNondeductible25. Local Income TaxesDeductible—limitedNondeductible26. Real Estate deductibleNondeductible21. Active Duty Military PayPersonal Property Taxes28. Casualty and Theft Losses29. Job Expenses and Other Miscellaneous Deductions7

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INSTRUCTIONS2021 FORM 740Do You Have to File a Kentucky Return?If you were a Kentucky resident for the en

revenue.ky.gov COMMONWEALTH OF KENTUCKY DEPARTMENT OF REVENUE FRANKFORT, KENTUCKY 40620 42A740(PKT) (10-21) . Louisville 600 West Cedar Street 2nd Floor West, 40202-2310 (502) 595-4512 Northern Kentucky Turfway Ridge Office Park 7310 Turfway Road, Suite 190 Florence, 41042-4871