RESOLVED as of 3/2/18
We have opened Issue #1420 to review an issue where dependent(s) are not being included when calculating the Personal Tax Credit (Form 740, Line 17) and Family Size Tax Credit (Form 740, Line 21) on KY returns.
Example Scenario for Personal Tax Credit:
Head of Household Federal return (Single for KY purposes) with 1 qualifying dependent.
- Per KY instructions, this return is allowed a Personal Tax Credit of $10 per qualifying individual on the return. This KY return should receive $20 Personal Tax Credit on Line 17 but is only receiving $10 on Line 17 because the qualifying dependent is not being included.
Example Scenario for Family Size Tax Credit: DOES NOT impact any KY return with a KY AGI $32,718 or higher based on KY qualifications for the Family Size Tax Credit
Same return as above – Head of Household Federal return (Single for KY purposes) with 1 qualifying dependent with a KY AGI of $16,800.
- Per KY instructions, this return would be considered a Family Size of 2 for determining the Family Size Tax Credit. With a KY AGI of $16,800 and Family Size of 2, the Family Size Tax Credit should be 90% of the value listed on Line 19 (Total Tax Liability) of Form 740. The Family Size Tax Credit is used to lower the KY tax liability, possibly increasing a KY refund or lowering an amount owed.
- However, because the qualifying dependent is not being considered when determining the Family Size Tax Credit, this KY return is showing as a Family Size of 1 instead of a Family Size of 2. Per KY instructions, for a Family Size of 1 with a KY AGI of $16,800 is over the highest threshold to qualify for the Family Size Tax Credit ($16,040 and under for Family Size of 1) and does not receive any Family Size Tax Credit on Line 21. This is then incorrectly lowering a possible KY refund or incorrectly increasing an amount owed to KY.
Q: What do you do if you have an impacted KY return that has not been filed?
A: We recommend holding these KY returns until this blog post as been marked as RESOLVED. At that time, any impacted KY returns can be transmitted for processing.
Q: What do you do if you have an impacted KY return that has been filed and accepted and did not receive the correct Personal Tax Credit or Family Size Tax Credit?
A: TaxSlayer VITA/TCE Support is in the process of contacting each site that may have impacted KY returns with further instruction. Attempts to call each site will take place on Thursday (3/8), Friday (3/9), and Saturday (3/10). If we are unable to speak with the site admin, we will follow up with an e-mail. Note: If your site does not receive a call or e-mail from TaxSlayer VITA/TCE Support regarding potentially impacted KY returns, your site DOES NOT have any impacted KY returns.