Common Kentucky Individual Income Tax Credits

There are four common nonrefundable individual income tax credits
available for taxpayers when the tax return is filed.  For more
detailed information on these credits, please see the instructions for
filing Form 740 or contact the Department of Revenue at (502) 564-4581.  The four credits are:

(1) KRS 141.020—Personal and Dependency Credits
(2) KRS 141.066—Nonrefundable Family Size Tax Credit
(3) KRS 141.069—Education Tuition Credit
(4) KRS 141.067—Household (Child) and Dependent Care

Personal and Dependency Credits—Personal tax
credits are reported in Section B of form 740 and
740NP. A credit of $20 is allowed for each personal
and dependency credit claimed.

Kentucky National Guard Members—Persons who were
members of the Kentucky National Guard on December
31, 2006, may claim an additional credit on Line 2.
Designate this credit with the initials “N.G.” Kentucky
law specifically restricts this credit to Kentucky
National Guard members; military reserve members
are not eligible.

Nonrefundable Family Size Tax Credit—The Family
Size Tax Credit is based on modified gross income
(MGI) and the size of the family. If total MGI is
$28,196 or less for 2008, you may qualify for Kentucky
Family Size Tax Credit.

Education Tuition Tax Credit—A credit equal to 25
percent of the amount of the federal Hope
Scholarship and the lifetime learning credit is
available. The credit applies only to undergraduate
studies, phases out for higher incomes, applies to
most higher education opportunities within Kentucky
and may be carried forward for up to five years.

Child and Dependent Care Credit–Kentucky—
Taxpayers claiming the child and dependent care credit
must file Form 740 or 740-NP as this credit cannot
be taken on Form 740-EZ. The credit is claimed on Line 25
- Form 740 or Form 740 NP by entering the amount
of the federal credit from federal Form 2441 or Form
1040A, Schedule 2 and multiplying by 20%.

To learn more about the credits available on the federal income
tax return, including the earned income tax credit (EITC), please visit www.irs.gov.