double taxation

[revhosey]

I live in oklahoma, work in Kansas. Filed taxes using turbo tax. In that case, both states used my federal adjusted income with additions to W-2 income to determine adjusted gross income. So, Kansas taxed me not just on the income I earned in Kansas but also on all of the investment income I earned. The program then only allowed a credit in Oklahoma for the taxes paid on income earned from employment in Kansas. As a result, I paid taxes to both states for all of my investment income. In the end, I had to pay more in state income taxes than I paid in Federal because I was double taxed on all of my investment income. I thought it was illegal for two states to tax someone on the same income, but phone calls to both state tax commissions received answers of you have to pay our state on all of that income.

[NCperson]

@revhosey how did you file the Kansas tax return? did you file a NON-RESIDENT form? (look near the top third of the first page of the tax return - there should be a check mark to the left of NON-RESIDENT)

And OK should have been as a RESIDENT. 

I suspect that is the issue...... please post your findings. 

[TomD8]

Kansas can tax non-residents only on Kansas-source income.  Work income is "sourced" where the work is actually (physically) performed.

Did any of your investment income derive from Kansas sources?  If so, it could be at least partially taxable by Kansas.  See paragraph (h) of this Kansas statute:

http://kslegislature.org/li_2012/b2011_12/statute/079_000_0000_chapter/079_032_0000_article/079_032_...

Conversely, if none of your investment income derived from Kansas, none of it would be taxable by Kansas.

Some other possible issues: when you did your state returns in TurboTax, did you complete the non-resident Kansas return before you did your home state OK return?   You must do the returns in the proper sequence in order for the program to calculate your taxes correctly.  In the Personal Info section, did you list OK as your State of Residence?  Did you answer NO to the question about living in another state?  Did you indicate that you had Other State Income from KS?

[revhosey]

I filed as a resident of Oklahoma and a non-resident of Kansas.  But the turbo tax program added into my Kansas adjusted gross income (line B22 of Kansas Sch S) the entire amount of my Federal 1040 2a interest such that I had to pay taxes to Kansas for it as well as pay taxes on it to Oklahoma.

[revhosey]

I do not remember the order in which I did the state taxes. I did Ok as my state of residence and answer no to living in another state; and yes to having made income from another state.

[NCperson]

@revhosey you will have to describe in more detail what is on that schedule.

what is on line B2 - for both the federal and the KS columns? 

what is on Line B23 - what is the percent? 

[revhosey]

B2 on the Kansas form is Interest and dividend income. 

It is A1 on the Kansas schedule S - State and Municipal income not specifically exempt from KS taxes that the program drew from my Fed 1040 line 2a that it should not have.  

Line B23 of the Kansas form is the percentage allocation - which when all that extra non-employment income was included in the Kansas adjusted income became 47.6366 percent when it should have been only 36.53 percent.  As best as I can see, it is when the program pulled in the Fed 1040 line 2a and put it into Kansas Sch S line A1 that caused the double taxation. Where I failed was to force the program to make an adjustment to the Net Modifications applicable to Kansas source income on the "Part Year and Nonresident Modifications" screen.  

[NCperson]

what you are stating makes sense.  Your municipal income was not part of your federal gross income (which is correct) and then it should have been reported to OK only as you received it as a resident of OK. 

You will have to amend the KS tax return.