Notice

Notice Number:17-09
Tax Type:Individual Income Tax
Brief Description:Notice 17-09 Estimated Tax Payments for Nonwage business Income
Keywords:
Effective Date:07/01/2017
Approval Date:06/27/2017


Body:
Notice 17-09

Estimated Tax Payments For Nonwage business Income
(July 1, 2017)

The 2017 Kansas Legislature made substantial changes to income tax law including, specifically, K.S.A. 79-32,117. The effect of these changes (contained in Senate Bill 30) is to make nonwage business income subject to Kansas income tax. The new law does this by making changes to several addition and subtraction modifications. Please see Notice 17-03 for more specific information.

Kansas tax law changes made in 2012 stated that beginning after December 31, 2012, certain categories of nonwage business income were exempt from income tax. As a result, taxpayers receiving this nonwage business income were no longer required to make estimated tax payments, and have not made such payments for the last several years. The provisions of Senate Bill 30 change this, so taxpayers receiving nonwage business income should immediately begin making estimated tax payments.

Section 5 of Senate Bill 30 essentially reverses the 2012 changes. Generally, for tax years beginning after December 31, 2016, the following nonwage business income will be subject to Kansas income tax:

Like the federal tax system, the Kansas tax system is designed so that income tax is remitted as income is earned. While income earned as wages is generally subject to withholding, most income other than wages is not usually subject to withholding. As a result, an individual who receives non-wage income should make estimated tax payments. An estimated payment is a direct payment to the Department of the estimated amount of tax due on income that has been received.

Individuals receiving nonwage income that is now subject to tax because of the amendments made in Section 5 of Senate Bill 30 should begin making estimated tax payments immediately. And, because the effective date of the amendments is retroactive to January 1, 2017, consideration should be given to increasing the amount of the estimated payment(s) in order to “catch-up” with the amount of tax had payments been made for the first two quarters of the tax year. Failure to make these estimated payments could result in having to pay a significant amount of income tax being due in April of 2018 when filing the 2017 income tax return.

Usually, failure to make estimated tax payments in a timely fashion will result in a penalty being imposed. However, this legislation specifically provides that a penalty will not be imposed if all of the tax that was underpaid as a result of changes made by the legislation is paid by April 17, 2018, which is the due date of 2017 calendar year income tax returns. Section 4 of the Bill amends K.S.A. 79-32,117 by adding subsection (f) which states:

Despite the fact no penalty will be imposed for failing to make estimated tax payments, the Department strongly encourages all taxpayers receiving nonwage business income to make estimated tax payments for tax year 2017, and to review their personal tax situation with their tax preparer or tax professional. Making estimated payments now will help avoid a large, unpaid tax bill later.

To access the Kansas estimated tax form, K40-ES, please visit our website at: https://ksrevenue.org/pdf/k-40es17.pdf

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
Topeka, KS 66612-1588
Phone: 785-368-8222
Hearing Impaired TTY: 785-296-6461
Fax: 785-291-3614




Date Composed: 06/27/2017 Date Modified: 06/27/2017