knc1
Level 1

Credit for taxes paid to Kansas on my Missouri tax return, is less than half of the taxes paid to Kansas

We live in Missouri. My husband and I work in Kansas, plus I receive retirement benefits from Kansas. We started to complete the long Missouri tax form MO-1040 which separates our income. After additions/subtractions from each person's income is calculated, our resulting income is combined.  We stopped in order to complete Form MO-A Individual Income Tax Adjustments and were limited to the amount of exemption we could claim. We entered that amount on our tax form MO-1040. All exemptions and deductions were subtracted from our combined Missouri income. Then divided by our income percentages, to once again separate our income. Then our Missouri tax is calculated. At this point, we completed Form MO-CR Credit for Income Taxes Paid To Other States. . .  This form treats our income separately again.  Since Kansas retirement is taxed when it is contributed each year, my distribution is not taxed on my Kansas return. However, my husband's tax credit for Missouri is approximately $1,000 less than the tax paid to Kansas. We have already filed our Federal and Kansas taxes, married filing jointly. Why can't we use part of that $1000 to pay the tax that Missouri claims I owe, since we are filing a combined return?

DanielV01
Expert Alumni

State tax filing

That's not how the credit works.  The credit is for income that both states are taxing.  Since your retirement income is not taxed by Kansas, the Missouri credit for taxes paid to another state will not be applied to that income.  And the Missouri credit is limited to the lower of what Kansas taxes the income also taxed by Missouri or what Missouri taxes the income also taxed by Kansas.

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