Notice

Notice Number:15-15
Tax Type:Individual Income Tax
Brief Description:Credit for Taxes Paid to Another State
Keywords:
Effective Date:08/10/2015
Approval Date:08/10/2015


Body:
Notice 15-15

Credit for Taxes Paid to Another State
(August 10, 2015)

Kansas law allows a credit against the individual income tax liability of a Kansas resident for taxes paid to another state. The controlling statute, K.S.A. 79-32,111 provides, in subsection (a):
As noted in the language quoted above, the definition of the term “state” is found in K.S.A. 79-3271. Subsection (i) of that statute provides:
On May 18, 2015, the United States Supreme Court issued its ruling in the case of Maryland v. Wynne (Docket No. 13-485). The Court’s decision indicates that, under state law similar to that in Kansas, an income tax credit for taxes paid to another state should recognize both income or earnings taxes imposed by the other state, and income or earnings taxes imposed by local units of government of the other state.

Although the Court’s decision in Maryland v. Wynne did not specifically address Kansas law, the Department of Revenue is following the Court’s direction going forward. In addition, for refund claims timely filed within the applicable statute of limitations in K.S.A. 79-3230, the Department of Revenue will allow Kansas residents who claim a credit for taxes paid to another state to include income or earnings taxes imposed by and paid to such state government as well as any local jurisdiction within that state when computing the amount of the credit. This will apply to local jurisdictions within the United States and local jurisdictions of a foreign country.

Any taxpayer claiming a credit for income taxes paid to another state which includes tax paid to a local jurisdiction within that state should include with the Kansas return: (1) a copy of the income tax return filed with other state; (2) a copy of the income or earnings tax return filed with the local jurisdiction (or, if not required to be filed with the local jurisdiction, a copy of the completed return showing the amount of tax paid to the local jurisdiction); (3) a copy of the Worksheet for Credit Calculation (from the instructions for Kansas Form K-40), and; (4) a copy the federal W-2 form. This is true for both returns filed for tax year 2015 and future tax years, and for amended returns filed to claim a refund for a prior tax year within the applicable statute of limitations. An amended Kansas return, including the above documentation, will be required for each prior tax year for which the credit is sought.

Taxpayers claiming a credit for taxes paid to another state should complete and include the appropriate Worksheet for computing the credit contained in the Form K-40 instructions. When the taxpayer has paid both income or earnings taxes to the state government of another state as well as to any political subdivision within such state, the total amount of such payments shall be entered on Line 1 of the Worksheet used for computing the credit for taxes paid to that state. Such credit shall then be computed according to the Worksheet directions.

Taxpayer Assistance

Additional copies of this notice, forms or publications are available from our web site, www.ksrevenue.org. If you have questions about this Notice, please contact:
Taxpayer Assistance Center
Kansas Department of Revenue
915 SW Harrison St., 1st Floor
Topeka, KS 66612-1588
Phone: 785-368-8222
Hearing Impaired TTY: 785-296-6461
Fax: 785-291-3614




Date Composed: 08/10/2015 Date Modified: 08/10/2015