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Personal Credits
Personal tax credits are reported on Schedule ITC and submitted with Form 740 or 740-NP.
A $40 tax credit is allowed for each individual reported on the return who is age 65 or over. Also, a $40 tax credit is allowed if an individual is legally blind. Persons who are both age 65 or older and legally blind are eligible for both tax credits for a total of $80 per person.
Members of the Kentucky National Guard may claim a tax credit of $20; military reserve members are not eligible.
KRS 141.020
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Nonrefundable Family Size Tax Credit
The family size tax credit is based on modified gross income and the size of the family. If total modified gross income is $39,900 or less for 2023, you may qualify for the Kentucky family size tax credit.
KRS 141.066
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Education Tuition Tax Credit
A credit equal to 25 percent of the amount of the federal American Opportunity Credit 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 (5) years.
KRS 141.069
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Child and Dependent Care Credit
Kentucky taxpayers claiming the child and dependent care credit will claim this credit on Form 740 or 740-NP. The credit is claimed on line 24 of Form 740 or Form 740-NP by entering the amount of the federal credit from federal Form 2441 and multiplying by 20 percent.
KRS 141.067
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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.
FORM 1099-G
If you received a Kentucky income tax refund last year, we’re required by federal law to send Form 1099-G to you to remind you that the state refund must be reported as income on your federal tax return if you itemize deductions.
When you itemize deductions on your federal return you are allowed to deduct state income taxes or sales taxes that you paid during the year. This deduction reduces your federal taxable income. If any part of the state income tax you deducted on your federal return is later refunded to you that amount must be reported as taxable income for the year in which the refund is issued.
Form 1099-G reflects all Kentucky refunds that were credited to you for last year, including refunds from amended returns and prior year returns. The form will include any or all of your refund that was applied to the following:
- estimated tax account
- use tax
- child support debt
- delinquent tax liability or another bill
Even if your refund was applied to offset a bill or make a donation federal law maintains that you received the benefit of the refund and you must report it as income.
You don’t need to attach the Form 1099-G to your federal or state income tax returns. Just keep it for your records. If you use a professional tax preparer, please give the form to your preparer, along with your W-2s and other tax information. If your address on the form is incorrect or you have other questions, please contact the Kentucky Department of Revenue.
Use Tax on Individual Income Tax Return
Kentucky use tax may be due on internet, mail order, or other out-of-state purchases made throughout the year. Please click here to see if you are required to report Kentucky use tax on your individual income tax return.
Also see line 27 of Form 740 and the optional use tax table and use tax calculation worksheet in the 740 instructions. The current year Form 740 and 740 instructions can be found on the Forms Page.