2020 ProSeries/Kentucky Readme

Items addressed in this release

Items addressed in previous releases

What's new for ProSeries/Kentucky

Forms

Electronic filing

Items addressed in this release

Kentucky does not conform to the newly enacted federal Unemployment Compensation Exclusion.
All unemployment compensation earned as a Kentucky resident is subject to Kentucky income tax. For Kentucky residents, any amount excluded up to the $10,200 on a taxpayer's federal income tax return is required to be added back on the Kentucky individual income tax return on Schedule M, Line 5 as an "Other Addition". For part-year Kentucky residents, the amount should be included on the Form 740-NP, Section B, Column B, line 13 as unemployment compensation.
The Kentucky return should be amended if a taxpayer previously filed and did not add back the excluded unemployment insurance.

Kentucky has extended the deadline for filing and paying 2020 income tax returns to May 17, 2021.
The extension does not include first quarter estimated payments, which are still due by April 15, 2021.

PDF Attach for Schedule KNOL: The PDF Attach feature has been implemented for the Kentucky Net Operating Loss Deduction.

General Error Messages - An error message was added to prevent the filing of returns with an RRB-1099-R and the newly added Form 8915-E until we can fully update the calculations in the program.

You can file Individual Income Tax Returns with this version of ProSeries/Kentucky.

The following items are new for tax year 2020:

Standard Deduction: Kentucky's Standard Deduction for individual income tax has increased from $2,590 to $2,650.

2020 Estimated Tax Penalty: Estimated tax rules generally follow federal guidelines for individuals. Four installments at 25% of the estimated tax due each; April 15*, June 15*, September 15, and January 15 of the following tax year. Allow Annualized Income Installments. Declaration Penalty replaced with Estimated Tax Penalty. * Due July 15, 2020.

Family Size Tax Credit: The 2020 threshold amount is $12,760 for a family size of one, $17,240 for a family of two, $21,720 for a family of three, and $26,200 for a family of four or more.

Income Gap Tax Credit: This credit is only available to taxpayers who are eligible to take the Family Size tax credit and have a family size of three or less.

Charitable Contributions: Kentucky does not conform to the federal Cares Act provision which created a $300 "Above the Line" deduction for qualified charitable contribution. Kentucky also does not conform to the federal Cares Act provision which suspended limits on charitable contributions. The "Above the Line" contribution claimed on Federal form 1040 or 1040-SR, line 10(b) must be added back to income on Kentucky Schedule M as an "other addition". If you itemize deductions for Kentucky you may deduct your contributions on Kentucky Schedule A. Your charitable contributions will be limited to 60% of your Kentucky AGI. See instructions for Kentucky Schedule A.

Qualified Mortgage Insurance Premiums: Premiums that you pay or accrue for "qualified mortgage insurance" during 2020 in connection with home acquisition debt on your qualified home are deductible as home mortgage insurance premiums.

IRC Section 179 Expense Deduction: For tax years beginning on or after January 1, 2020, the IRC Section 179 expense deduction is increased to $100,000 for Kentucky. The following guidelines apply: Property placed into service from September 10, 2001 through December 31. 2019 - Use December 31, 2001 IRC ($25,000 Section 179 maximum). Property placed into service on or after January 1, 2020 - Use December 31, 2003 IRC ($100,000 Section 179 maximum).

Schedule KNOL: Net operating losses generated on or after January 1, 2018, are limited to 80% of the taxable income, but any unused amount are available for carryforward indefinitely. Schedule KNOL must be completed if you are claiming a Kentucky Net Operating Loss deduction on Kentucky Schedule M. Kentucky did not adopt the CARES Act amendment for the suspension of the 80% net operating loss limitation.

Excess Business Loss Limitation: Kentucky did not adopt the CARES Act amendment for the suspension of the excess business loss limitation. If you are an individual taxpayer and your net losses from your trades or businesses are more than $255,000 ($510,000 for married taxpayers filing jointly or married filing separately on a combined return) you will need to complete Kentucky Form 461-K. For 740 filers you will enter the amount calculated from Form 461-K, line 16 on Form 740, Schedule M, line 5 and 740-NP Filers will enter the calculated amount from Form 461-K, line 16 on Form 740-NP, page 4, line 16, Column B. The Kentucky excess business loss will be added to your net operating loss (NOL) carryforward.

Kentucky Selling Farmers Tax Credit A nonrefundable and nontransferable credit is allowed beginning January 1, 2020 for qualified selling farmers. This credit must be approved by the Kentucky Economic Development Finance Authority. This credit must be claimed on the tax return in the first year that the credit was approved. You cannot claim more than the credit approved by the Kentucky Economic Development Finance Authority. The credit also cannot exceed $25,000 in any taxable year. Finally, the credit cannot exceed $100,000 over the lifetime of the selling farmers credit. Any unused credit in a taxable year may be carried forward up to five (5) years. If the credit is not utilized within the five (5) year period, the credit is lost.

The Kentucky Department of Revenue has approved for filing all forms and schedules included in ProSeries/Kentucky.

You can file returns electronically with this version of ProSeries/Kentucky.

For a list of forms that can be e-filed go to What's New This Year in Help Center.

End of ReadMe file for ProSeries/Kentucky