Does Kentucky Accept a Federal Tax Extension?

When tax season arrives, many individuals and businesses need more time to prepare their returns. A tax extension provides this additional time to file, helping taxpayers avoid late-filing penalties. However, an extension to file is not an extension to pay any taxes owed. Taxpayers must estimate their tax liability and remit payments by the original due date to avoid penalties and interest. Understanding Kentucky’s specific income tax rules is important for managing tax obligations.

Kentucky’s Income Tax Extension Policy

Kentucky’s Department of Revenue aligns its individual income tax extension policy with the federal system. If a taxpayer has a valid federal income tax extension, granted by filing IRS Form 4868, Kentucky automatically grants the same extension for filing the state return. This means a separate Kentucky extension form is not required if a federal extension is in place. When filing the Kentucky income tax return, a copy of the federal extension (Form 4868) should be attached.

The standard extension period granted by Kentucky is six months. For calendar year filers, this moves the filing deadline from April 15 to October 15. For corporate and pass-through entity returns, extension periods vary. Corporations receive a seven-month extension, and pass-through entities receive a six-month extension. If a taxpayer anticipates owing Kentucky income tax and needs to submit a payment with their extension, a specific Kentucky form may be required.

Steps to Request a Kentucky Extension

If a taxpayer does not have a federal extension, or needs to make a payment for Kentucky income tax, they must request a state extension. The primary form for individual, general partnership, and fiduciary income tax extensions in Kentucky is Form 740EXT, also known as Revenue Form 40A102. This form must be submitted to the Kentucky Department of Revenue by the original tax return due date, April 15 for most individual filers. The form requires a reason for the extension request; however, inability to pay is not a valid reason for granting an extension.

Taxpayers can submit Form 740EXT by mail to the address provided on the form. Electronic filing options are available for Kentucky extensions, especially when a payment is made via direct debit. If paying electronically, taxpayers complete the form with their banking information. Even with an extension, the Kentucky tax return must still be filed by the extended deadline.

Key Details for Kentucky Extensions

All state tax payments are due by the original deadline of the return, April 15 for individual income tax. Any tax not paid by this original due date will be subject to interest and penalties, regardless of whether an extension to file has been granted. To avoid these additional charges, taxpayers should estimate their tax liability and remit any estimated payment by the April deadline.

Penalties for late payment in Kentucky are two percent of the total tax due for each 30-day period, or fraction thereof, that the payment is late, with a maximum penalty of 20 percent of the total tax due. A penalty for late filing applies if the return is not submitted by the extended due date. This penalty is also two percent of the total tax due for each 30 days the return is late, up to a maximum of 20 percent of the total tax due, with a minimum penalty of $10. Underpayment of estimated tax also incurs a penalty, calculated based on the underpayment amount multiplied by the tax due interest rate.