How to file a Kentucky state tax return

This article was fact-checked by our editors and CPA Janet Murphy, senior product specialist with Credit Karma. It has been updated for the 2019 tax year.

Kentucky may be the perfect state for you if you love horse racing, bluegrass music, hunting or fishing, and bourbon.

And you may also love the idea of Kentucky’s flat individual and corporate income tax rate. A flat tax rate can make it easy to calculate how much tax you owe. But if you’re a low-income taxpayer, that flat rate may mean you’re required to pay more of your needed funds to the state, whereas higher earners may be able to more easily afford to pay the same percentage of their income.

The flat tax rate is just one of the rules you need to know if you must pay Kentucky state tax. Let’s look at the rules and some information that can help you file your tax return in the commonwealth of Kentucky.

• What are some basics of Kentucky state taxes?
• What are some Kentucky deductions and credits?
• How can I file a Kentucky state tax return?
• What if I owe and can’t pay?
• How can I track a Kentucky state tax refund?

What are some basics of Kentucky state taxes?

If you live in Kentucky and earn income, or live outside the state and earn income from Kentucky sources, you’ll need to pay Kentucky state income tax.

Kentucky taxes individuals and corporations at 5% on taxable income.

Taxing body

The Kentucky Department of Revenue is the taxing body in Kentucky responsible for enforcing tax laws and processing tax returns. The main office for the Department of Revenue is at 501 High Street in Frankfort, KY 40601. You can call the main office at 1-502-564-4581.

Taxpayers throughout Kentucky can also find a Service Center for the Department of Revenue at 10 locations statewide, including in Frankfort, Louisville, Florence, Owensboro, Corbin, Paducah, Ashland, Pikeville, Bowling Green and Hopkinsville.

Filing and payment deadline

For 2019 state taxes, the state has extended the filing and payment deadline. Kentucky residents now have until July 15, 2020, to file their state returns and pay any state tax they owe for 2019. As with the federal deadline extension, Kentucky won’t charge interest on unpaid balances between April 15 and July 15, 2020.

You don’t need to do anything to get this extension. It’s automatic for all Kentucky taxpayers.

While this year is a bit different, generally the deadline for submitting your income tax forms in Kentucky is April 15, the same as the federal deadline. If the 15th falls on a weekend or a holiday, your return will be due the next business day.

Filing statuses

Kentucky recognizes four filing statuses.

• Single — Unmarried, divorced, widowed, legally separated taxpayers and those who filed as head of household or qualifying widow(er) on their federal returns
• Married filing separately on a combined return — Married taxpayers reporting separate incomes and claiming separate deductions, but filing only one tax return
• Married filing separate returns — Married taxpayers filing two completely separate returns
• Married filing a joint return — Married taxpayers reporting a combined income and filing together on one tax return

When married couples file jointly or a combined return, they are both individually responsible for all income taxes that are due for the time period covered by the return — so both are responsible even if only one spouse owes taxes.

Kentucky state income tax rates

The commonwealth charges a 5% flat tax rate on taxable income for individuals and corporations.

What are some Kentucky deductions and credits?

Standard deduction

Kentucky’s standard deduction for 2019 is $2,590. Married couples filing separately on a combined return can each claim a standard deduction, while joint filers can claim only one.

Itemizing deductions

If you don’t take a standard deduction, you may choose to itemize your deductions on your Kentucky state tax return. But Kentucky eliminated a number of itemized deductions in the commonwealth for 2018.

Deductions that taxpayers may still claim in Kentucky include the following:

• Charitable contributions
• Home mortgage interest and points
• Investment interest
• Gambling losses

Many deductions you were previously able to claim, including premiums paid for health insurance or long-term care insurance, are no longer deductible in Kentucky.

Kentucky tax credits

Here are some tax credits available for the 2019 tax year.

• Personal tax credits are available only for Kentucky taxpayers who are 65 or older, blind or serving in the Kentucky National Guard. The maximum credit amount is $100 for single taxpayers and married taxpayers filing separately, and it’s $200 for those married filing jointly.
• If you qualify for the federal child and dependent care credit, you may also qualify for a Kentucky credit equal to 20% of your federal credit amount.
• Taxpayers who qualify for a federal education credit may also be able to take a Kentucky education tuition tax credit. Calculating the amount of your credit is complex, and you’ll need to complete Form 8863-K to claim the credit if you’re eligible for it.

Lower-income taxpayers may also qualify for the family size tax credit and income gap credit. Both credit amounts are based on family size and modified adjusted gross income.

What’s the difference between a tax credit and a tax deduction?

Both tax credits and tax deductions can reduce your tax bill, but they work in different ways. A tax deduction reduces the amount of income that’s subject to tax, while a tax credit is a dollar-for-dollar reduction in the amount of tax you owe.

How can I file a Kentucky state tax return?

More than 90% of Kentucky residents e-file their income tax returns, which the state of Kentucky recommends. Kentucky taxpayers have multiple options for e-filing their returns.

• KY File — KY File was designed as a simple online version of a paper form. It allows users to complete their tax forms online, have basic calculations done by the system, electronically sign and e-file, and print their complete return. But KY File doesn’t ask questions to help you complete the forms, explain tax situations, perform complex calculations or check for errors.
• Free File Online — Depending on income level and other factors, Kentucky taxpayers may be able to file for free through the Free File Online program. Be sure to access Free File products through Kentucky’s website or the IRS Free File website.

Kentucky residents can also obtain their tax forms online and can submit their return via mail to the following address if they owe taxes:

Kentucky Department of Revenue
P.O. Box 856980
Louisville, KY 40285-6980

If you’re owed a refund (or filing other returns):

Kentucky Department of Revenue
P.O. Box 856970
Louisville, KY 40285-6970

What if I owe and can’t pay?

Taxpayers are expected to pay their taxes by the filing deadline. Those who are unable to pay their taxes on time should pay what they can and contact the Department of Revenue to discuss options for a payment plan.

Those whose tax debt is being handled by the Division of Collection can also set up a payment plan by going online to CACS for Government. The maximum payment term is 24 months and the minimum monthly payment is $50.

If your desired payments exceed these limits or if you want to pay by credit card, you’ll need to contact the Department of Revenue at 1-502-564-4921, extension 5357.

How can I track a Kentucky state tax refund?

Taxpayers who e-file returns can expect to receive their refunds within two to three weeks if they also choose direct deposit. Those who submit paper returns will receive their refund within eight to 12 weeks. It’s possible to check the status of a refund online on the Refund Status page of the Kentucky Department of Revenue’s website. You’ll need to know your Social Security number and refund amount to check the status of your refund.

Bottom line

Residents of the Bluegrass State may feel the need to visit one of Kentucky’s famous bourbon distilleries after trying to navigate all the changes ushered in by changes to the commonwealth’s tax code. While a flat 5% tax rate for everyone may make it easier to calculate your Kentucky state income tax burden, if you’re a lower earner, you might have had a lower marginal tax rate under the old tax system. In fact, the Kentucky Center for Economic Policy says the commonwealth’s tax reform law means the bottom 95% of Kentuckians will pay more in total taxes, and the richest 5% will pay less.

A senior product specialist with Credit Karma, Janet Murphy is a CPA with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.