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Unemployment benefits fully taxable on Kentucky returns

April 1, 2021 - 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.​
Q: Does Kentucky follow "same as federal" income tax position which allows up to $10,200 of unemployment compensation received in 2020 to be excluded from gross income?
 
A: No. 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 General Assembly would have to adopt this amendment to the Internal Revenue Code by amending KRS Chapter 141 to enact the particular provision at issue before Kentucky taxpayers could take the same exclusion on their Kentucky income tax returns for 2020 and 2021, and for fiscal taxable years ending on or after March 27, 2020, but before taxable years beginning January 1, 2022.
 

Click here to view at the Kentucky Department of Revenue's website.

IRS on-demand

Available via on-demand: Click here to register

  • IRS Notice 2021-20: Changes to PPP Loan Forgiveness & the Employee Retention Tax Credit (2 CPE hours)
  • The American Rescue Plan Act of 2021 and IRS Notice 2021-20 (2 CPE hours) 

Update on HB 278: Paycheck Protection Program expense deductibility

March 16, 2021
HB 278 was signed by the Governor!
https://apps.legislature.ky.gov/record/21rs/hb278.html

Paycheck Protection Program

Click here to view and register for PPP webinars.

Update: January 13, 2021
SBA re-opening PPP to small lenders on Friday, January 15 and all lenders on Tuesday, January 19! Click here for details.

The new guidance released includes:

At this time, the Kentucky Department of Revenue has stated that the PPP expenses are not deductible at the state level. KyCPA is currently working on resolving this issue legislatively. We will keep you updated on our progress.

Paycheck Protection Program (PPP) resources

Treasury and the U.S. Small Business Administration (SBA) FAQs on the Paycheck Protection Program (PPP) 

Click here for additional resources

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To assist our members in easily finding the latest on COVID-19, KyCPA will update this dedicated webpage with links to quality resources, information and developments.

 

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