Kansas Schedule S Instructions
PART A - MODIFICATIONS TO FEDERAL ADJUSTED GROSS INCOME
CAUTION: Line numbers that reference the federal Form 1040 are from the 2012 tax forms and subject to change for tax year 2013.
ADDITIONS TO FEDERAL ADJUSTED GROSS INCOME
If you have income that is not taxed or included on your federal return but is taxable to Kansas, complete lines A1 through A13.
LINE A1: Enter interest income received, credited or earned during the taxable year from any state or municipal obligations such as bonds and mutual funds. Reduce the income by any related expenses (management or trustee fees, etc.) directly incurred in purchasing the state or political subdivision obligations. Do not include interest income on obligations of the state of Kansas or any Kansas political subdivision issued after 12/31/87 or the following bonds exempt by Kansas law: Board of Regents Bonds for Kansas colleges & universities; Electrical Generation Revenue Bonds; Industrial Revenue Bonds; Kansas Highway Bonds; Kansas Turnpike Authority Bonds; and, Urban Renewal Bonds.
If you are a shareholder in a fund that invests in both Kansas and other states' bonds, only the Kansas bonds are exempt. Use the information provided by your fund administrator to determine the amount of taxable (non-Kansas) bond interest to enter here.
LINE A2: Individuals affected are state employees, teachers, school district employees and other regular and special members of KPERS; and regular and special members of the Kansas Police and Firemen's Retirement System as well as members of the Justice and Judges Retirement System. Current employees: Enter the amount you contributed from your salary to the Kansas Public Employees' Retirement System (KPERS) as shown on your W-2 form, typically box 14. Retired employees: If you are receiving RETIREMENT checks from KPERS , the amount of your retirement income is subtracted on line A18 - Retirement benefits specifically exempt from Kansas income tax. Make no entry on this line unless you also made contributions to KPERS during 2013 (for example, you retired during 2013). Lump Sum Distributions: If you received a lump sum KPERS distribution during 2013, include on line A2 your 2013 KPERS contributions and follow the instructions for line A26, Other subtractions from federal adjusted gross income.
LINE A3: Enter any federal net operating loss carry forward claimed on your 2013 federal return.
LINE A4: Enter any business loss as determined by the federal Internal Revenue Code (IRC) and reported on both federal Schedule C and line 12 of your Form 1040.
LINE A5: If you have a Kansas expensing recapture amount from Schedule K-120EX, enter the amount on line A5 and enclose a copy of your completed K-120EX and federal Form 4562.
LINE A6: Enter any loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, residual interest in real estate mortgage investment conduits and net farm rental as determined by the federal IRC and reported on both federal Schedule E and line 17 of your Form 1040.
LINE A7: Enter any farm loss as determined by the federal IRC and reported on federal Schedule F and line 18 of your Form 1040.
LINE A8: Enter the amount of self-employment deduction from line 27 of your federal Form 1040.
LINE A9: Enter deduction for self-employed SEP, SIMPLE, and qualified plans as reported on line 28 of your federal Form 1040.
LINE A10: Enter deduction for health insurance paid by self- employed individuals included on line 29 of your federal Form 1040.
LINE A11: Enter domestic production activities as reported on line 35 of your federal Form 1040.
LINE A12: Enter amounts for the following additions on line A12:
- Federal Income Tax Refund. Generally, there will be no entry for this unless you amended your federal return for a prior year due to carry back of an investment credit or a net operating loss which resulted in you receiving a federal income tax refund in 2013 for that prior year.
- Partnership, S Corporation or Fiduciary Adjustments. If you received income from a partnership, S corporation, joint venture, syndicate, estate or trust, enter your proportionate share of any required addition adjustments. The partnership, S Corporation, or trustee will provide you with the necessary information to determine these amounts.
- Community Service Contribution Credit. Charitable contributions claimed on your federal return used to compute the community service contribution credit on Schedule K-60.
- Learning Quest Education Savings Program (LQESP). Any "nonqualified withdrawal" from the LQESP.
- Amortization - Energy Credits. Any amortization deduction claimed on the federal income tax return to the extent the same is claimed for deduction with regard to credit schedule K-73, K-77, K-79, K-82 or K-83 and any amount claimed in determining federal adjusted gross income on carbon dioxide recapture, sequestration or utilization machinery and equipment, or waste heat utilization system property.
- Ad Valorem or Property Taxes. Ad Valorem or property taxes paid by a nonresident of Kansas to a state other than Kansas or to a local government located outside Kansas, when the law of such state does not allow a Kansas resident to claim a deduction of ad valorem or property taxes paid to a Kansas political subdivision in determining taxable income to the extent they are claimed as an itemized deduction for federal income tax purposes.
LINE A13: Add lines A1 through A12 and enter result on line A13.
SUBTRACTIONS FROM FEDERAL ADJUSTED GROSS INCOME
If you have items of income that are taxable on your federal return but not to Kansas, then complete lines A14 through A27.
LINE A14: If the amount on Line 1 of Form K-40 is $75,000 or less, enter the amount received as benefits in 2013 under the Social Security Act (including SSI) to the extent these benefits are included in federal adjusted gross income. Do not make an entry if your social security benefit is not subject to federal income tax.
LINE A15: Enter amounts withdrawn from a qualified retirement account and include any earnings thereon to the extent that the amounts withdrawn were: 1) originally received as a KPERS lump sum payment at retirement and rolled over into a qualified retirement account, and 2) included in federal adjusted gross income (line 1 of Form K-40). Do not make an entry if the amount withdrawn consists of income that was originally received from retirement annuity contracts purchased for faculty and others employed by the State Board of Regents or by educational institutions under its management with either their direct contributions or through salary reduction plans or, a pension received from any Kansas first class city that is not covered by the Kansas Public Employee's Retirement Systems.
LINE A16: Enter any interest or dividend income received from obligations or securities of any authority, commission or instrumentality of the United States and its possessions that was included in your federal adjusted gross income. This includes U.S. Savings Bonds, U.S. Treasury Bills, and the Federal Land Bank.
You must reduce the interest amount by any related expenses (management or trustee fees, etc.) directly incurred in the purchase of these securities.
If you are a shareholder in a mutual fund investing in both exempt and taxable federal obligations, you may subtract only that portion of the distribution attributable to the exempt federal obligations.
Retain a schedule showing the name of each U.S. Government obligation interest deduction claimed, as it may be requested by KDOR at a later date.
Interest from the following are taxable to Kansas and may not be entered on this line: Federal National Mortgage Association (FNMA); Government National Mortgage Association (GNMA); Federal Home Loan Mortgage Corporation (FHLMC).
LINE A17: Enter any state or local income tax refund included as income on your federal return.
LINE A18: If you are receiving retirement benefits/pay, report on line A18 benefits exempt from Kansas income tax (do not include Social Security benefits). For example, KPERS retirement benefits are subject to federal income tax, but exempt from Kansas income tax. You must make a specific entry on Schedule S to report these exempt benefits. Enter total amount of benefits received from these plans that was included in your federal adjusted gross income. Do not enclose copies of the 1099R forms, instead keep copies for your records for verification by KDOR at a later date.
- Federal Retirement Benefits: Federal Civil Service Retirement or Disability Fund payments and any other amounts received as retirement benefits from employment by the federal government or for service in the United States Armed Forces.
- Kansas Pension Plans: Kansas Public Employees' Retirement (KPERS) annuities; Kansas Police and Firemen's Retirement System pensions; Kansas Teachers' Retirement annuities; Kansas Highway Patrol pensions; Justices and Judges Retirement System; Board of Public Utilities; income from retirement annuity contracts purchased for faculty and others employed by the State Board of Regents or by educational institutions under its management with either their direct contributions or through salary reduction plans; amounts received by retired employees of Washburn University as retirement and pension benefits under the university's retirement plan; and, certain pensions received from Kansas first class cities that are not covered by the KPERS System.
- Railroad Retirement Benefits: Retirement plans administered by the U.S. Railroad Retirement Board, including U.S. Railroad Retirement Benefits, tier I, tier II, dual vested benefits, and supplemental annuities.
LINE A19: Enter amount of military compensation earned in tax year 2013 only if you are a nonresident of Kansas. See MILITARY PERSONNEL on page 3. Also enter any Kansas income for services performed by a non-military spouse of a nonresident military service member when the spouse resides in Kansas solely because the service member is stationed in Kansas under military orders.
LINE A20: Enter contributions deposited in the Learning Quest Education Savings Program (LQESP) or qualified 529 tuition programs (as defined under IRC Section 529) established by another state, up to $3,000 per student (beneficiary); or $6,000 per student (beneficiary) if your filing status is married filing joint. You may have your direct deposit refund sent directly to your LQESP account. This is a great way to save money for higher education expenses. For details visit: learningquest.com
LINE A21: Enter amounts of a recruitment, sign up or retention bonus that you received as incentive to join, enlist or remain in the armed forces (including Kansas Army and Air National Guard), to the extent they are included in federal adjusted gross income. Also enter amounts you received for repayment of education or student loans incurred by you or for which you are obligated that you received as a result of your service in the armed forces of the United States, to the extent they are included in federal adjusted gross income.
LINE A22: This line to be used only by fiscal filers with tax year beginning 2012. Enter the amount of your Kansas expensing deduction from Schedule K-120EX and enclose a copy of your completed K-120EX and federal Form(s) 4562. Also enclose any schedule necessary to enable KDOR to reconcile the federal Form 4562 amounts to the expensing claimed on the K-120EX.
Important - The deduction must qualify under IRC Section 168: Modified accelerated cost recovery system (MACRS).
LINE A23: Enter business income as determined by the federal IRC and reported on federal Schedule C and line 12 of Form 1040.
LINE A24: Enter rental real estate, royalties, partnerships, S corporations, estates, trusts, residual interest in real estate mortgage investment conduits and net farm rental as determined by the federal IRC and reported on both federal Schedule E and line 17 of your Form 1040.
LINE A25: Enter farm income as determined by the federal IRC and reported on federal Schedule F and line 18 of your Form 1040.
LINE A26: Enter on line A26 a total of the following subtractions from your federal adjusted gross income. You may not subtract the amount of your income reported to another state.
- Jobs Tax Credit: Federal targeted jobs tax credit disallowance claimed on your federal income tax return.
- Kansas Venture Capital, Inc. Dividends: Dividend income received from Kansas Venture Capital, Inc.
- KPERS Lump Sum Distributions: Employees who terminated KPERS employment after 7/1/84, and elect to receive their contributions in a lump sum distribution will report their taxable contributions on their federal return. Subtract the amount of the withdrawn accumulated contributions or partial lump-sum payment(s) to the extent either is included in federal adjusted gross income. See NOTICE 07-05 for more information.
- Partnership, S Corporation or Fiduciary Adjustments: If you received income from a partnership, S Corporation, joint venture, syndicate, trust or estate, enter your proportionate share of any required subtraction adjustments. The partnership, S Corporation, or trustee will provide you with the necessary information to determine this amount.
- S Corporation Privilege Adjustment: If you are a shareholder in a bank, savings and loan, or other financial institution that is organized as an S Corporation, enter the portion of any income received that was not distributed as a dividend. This income has already been taxed on the privilege tax return filed by the S Corporation financial institution. Do not include any amount of modification from federal Schedule E and included on line A24 of the Schedule S.
- Sale of Kansas Turnpike Bonds: The gain from the sale of Kansas Turnpike Bonds that was included in your federal adjusted gross income.
- Electrical Generation Revenue Bonds: The gain from the sale of Electrical Generation Revenue Bonds that was included in your federal adjusted gross income.
- Native American Indian Reservation Income: Income earned on a reservation by a native American Indian residing on his or her tribal reservation, to the extent it is included in federal adjusted gross income.
- Amortization - Energy Credits: Allowable amortization deduction relating to credit schedule K-73, K-77, K-79, K-82 or K-83, and the allowable amortization deduction for carbon dioxide capture, sequestration or utilization machinery and equipment, or waste heat utilization system property.
Note: 55% of the amortization costs may be subtracted in the first year and 5% for each of the succeeding nine years.
LINE A27: Add lines A14 through A26 and enter result.
LINE A28: Subtract line A27 from line A13 and enter the result here and on line 2 of Form K-40. If line A27 is larger than lineA13 (or if line A13 is zero), enter the result on line 2 of Form K-40 and mark the box to the left to indicate it is a negative amount.
PART B - INCOME ALLOCATION FOR NORESIDENTS AND PART-YEAR RESIDENTS
If you are filing as a nonresident or part-year resident, complete this section to determine what percent of your total income from all sources and states is from Kansas sources.
LINES B1 through B11: In the left-hand column, enter the amounts from your 2013 federal return. In the right-hand column enter amounts from Kansas sources.
A part-year resident electing to file as a nonresident must include as income subject to Kansas income tax, unemployment compensation derived from sources in Kansas, any items of income, gain or loss, or deduction received while a Kansas resident (whether or not items were from Kansas sources), and any income derived from Kansas sources while a nonresident of Kansas.
Kansas source income includes all income earned while a Kansas resident; income from services performed in Kansas Kansas lottery, pari-mutuel, casino and gambling winnings; income from real or tangible personal property located in Kansas; income from a business, trade, profession or occupation operating in Kansas, including partnerships and S Corporations; income from a resident estate or trust, or from a nonresident estate or trust that received income from Kansas sources; and, unemployment compensation derived from sources in Kansas.
Income received by a nonresident from Kansas sources does NOT include income from annuities, interest, dividends, or gains from the sale or exchange of intangible property (such as bank accounts, stocks or bonds) unless earned by a business, trade, profession or occupation carried on in Kansas; amounts received by nonresident individuals as retirement benefits or pensions, even if the benefit or pension was "earned" while the individual was a resident of Kansas. This rule also applies to amounts received by nonresidents from 401k, 403b, 457s, IRAs, etc.; compensation paid by the United States for service in the armed forces of the U.S., performed during an induction period; and, qualified disaster relief payments under IRC Section 139.
LINE B12: Add lines B1 through B11 and enter result.
ADJUSTMENTS TO INCOME
In the Federal column enter adjustments to income shown on the front of your federal return. Federal adjustments are allowed to Kansas source income only as they apply to income related to Kansas. Enclose a separate sheet with calculations of amounts entered as Kansas source income on lines B13 through B17.
Note: The instructions for the following lines apply to the Amount From Kansas Sources column only.
LINE B13: Enter any IRA payments applicable to particular items of Kansas source income.
LINE B14: Enter only those penalties for early withdrawal assessed during Kansas residency.
LINE B15: Prorate the alimony paid amount claimed on your federal return by the ratio of the payer's Kansas source income divided by the payer's total income.
LINE B16: Enter only those moving expenses incurred in 2013 for a move into Kansas.
LINE B17: Enter total of all other allowed Federal Adjustments* including, but not limited to those in the following list.
- One-half of Self-Employment Tax Deduction - the portion of the federal deduction applicable to self-employment income earned in Kansas
- Self-Employed Health Insurance Deduction - payments for health insurance on yourself, your spouse, and dependents applicable to self-employment income earned in Kansas
- Student Loan Interest Deduction - interest payments made while a Kansas resident
- Self-employed SEP, SIMPLE and qualified plans - amount of the federal deduction applicable to income earned in Kansas
- Business expenses for Reservists, Artists and Fee-basis government officials - the portion of the federal deduction applicable to income earned in Kansas
- Domestic Production Activities Deduction - the portion of the federal deduction applicable to income earned in Kansas
- Health Savings Account Deduction - the portion of the federal deduction applicable to income earned in Kansas
- Tuition and Fees Deduction - the portion of the federal deduction applicable to income earned in Kansas
- Educator Expenses - the portion of the federal deduction applicable to income earned in Kansas
* This is the list of allowed federal adjustments as of publication of these instructions (in addition to those on lines B13 through B16). You may enter on line B17 any federal adjustment allowed by federal law for tax year 2013 (not already entered on lines B13 through B16).
LINE B18: Add lines B13 through B17 and enter result.
LINE B19: Subtract line B18 from B12 and enter result.
LINE B20: Enter the net modifications from Schedule S, Part A that are applicable to Kansas source income. If this is a negative amount, shade the minus (-) in the box to the left of line B20.
LINE B21: If line B20 is a positive amount, add lines B19 and B20. If line B20 is a negative amount, subtract line B20 from line B19. Enter the result on line B21.
LINE B22: Enter amount from line 3, Form K-40.
NONRESIDENT ALLOCATION PERCENTAGE
LINE B23: Divide line B21 by line B22. Round the result to the fourth decimal place; not to exceed 100.0000. Enter the result here and on line 9 of Form K-40.
PART C - KANSAS ITEMIZED DEDUCTIONS
CAUTION: Line numbers that reference the federal Form 1040 are from the 2012 tax forms and subject to change for tax year 2013.
ITEMIZED DEDUCTION COMPUTATION
If you itemized deductions on your federal return and wish to itemize on your Kansas return, you must complete Part C to compute the amount allowable for Kansas. Important - If your itemized deductions on federal Schedule A were limited based on your adjusted gross income, use the Kansas Itemized Deductions Worksheet on page 7 to assist you in completing Part C.
LINE C1: Enter your total federal itemized deductions from line 29 of your federal Schedule A.
LINE C2: Enter state and local income taxes (from line 5 of federal Schedule A or from line 3 of the Kansas Itemized Deductions Worksheet on page 7).
LINE C3: Enter the total amount of gifts to charity (from line 19 of federal Schedule A or from line 5 of the Kansas Itemized Deductions Worksheet on page 7).
LINE C4: Subtract line C2 and C3 from line C1 and enter result.
LINE C5: Multiply line C4 by 70% and enter the result.
LINE C6: Enter the amount reported on line C3.
LINE C7: Add lines C5 and C6. This is the amount of your Kansas itemized deductions to enter on line 4 of Form K-40.