Kansas Schedule S Instructions: How to Complete and File Correctly

Filing taxes in Kansas requires understanding various forms and schedules, including Schedule S, which adjusts federal adjusted gross income to determine Kansas taxable income. Errors on this schedule can lead to misreported income and potential tax liabilities.

To complete Schedule S correctly, taxpayers must identify required additions, allowable subtractions, and income allocations for part-year residents or nonresidents. Proper documentation and adherence to filing procedures help prevent delays or audits.

Identifying Applicable Additions

Certain income types must be added to federal adjusted gross income for Kansas tax purposes. These primarily include income sources not taxed federally but subject to Kansas taxation.

Non-Exempt Bond Interest

Interest from certain bonds must be included in Kansas taxable income if excluded from federal taxation. This applies to interest earned on municipal bonds from other states and certain federally tax-exempt obligations. For example, interest from Missouri municipal bonds must be added to Kansas income, while interest from Kansas-issued municipal bonds remains exempt.

Taxpayers should review investment income and use Form 1099-INT or brokerage statements to identify federally excluded amounts. Failing to report taxable bond interest can lead to assessments or penalties.

Out-of-State Income

Income earned outside Kansas must be added back if exempted at the federal level. This includes wages, business earnings, or rental income from other states. For example, if a Kansas resident owns rental property in Nebraska and reports $10,000 in income that was adjusted federally, this amount must be included in their Kansas return.

Kansas taxes full-year residents on all income, regardless of where it was earned. Reviewing W-2s, K-1s, and other documents ensures compliance.

Other Required Additions

Additional adjustments may be required, including depreciation differences due to Kansas not conforming to federal bonus depreciation rules, state and local income taxes deducted federally, and certain business-related expense adjustments. For instance, state income taxes deducted on a federal return must be added back on the Kansas return.

Kansas also does not permit net operating loss (NOL) carrybacks, unlike federal rules. If an NOL deduction was used federally but is not allowed in Kansas, the disallowed amount must be added back. Understanding these adjustments helps prevent discrepancies between federal and state filings.

Determining Allowable Subtractions

Kansas Schedule S allows specific subtractions that reduce taxable income, exempting certain income types from state taxation.

Qualifying Retirement Exclusions

Kansas exempts certain retirement income. Social Security benefits are fully excluded if federal adjusted gross income (AGI) is $75,000 or less, regardless of filing status.

Retirement benefits from Kansas public pension plans, including KPERS, police, and firefighter pensions, are also exempt. However, private pensions and out-of-state public pensions remain taxable. Taxpayers should review Form 1099-R to determine eligibility.

Active Military Pay

Active-duty military members can subtract military pay from Kansas taxable income, including base pay and certain special pay categories like hazardous duty or combat zone pay.

Reservists and National Guard members qualify only if called to active duty under federal orders. Service members should reference their Leave and Earnings Statement (LES) to ensure only eligible income is deducted.

Other Exempt Income

Several additional income sources qualify for subtraction, including interest earned on U.S. government obligations like Treasury bonds, notes, and bills. Taxpayers should check Form 1099-INT or brokerage statements for qualifying interest income.

Certain farm income, such as payments from Kansas Department of Agriculture cost-share programs, may also be excluded. Additionally, income from Native American tribal sources may be exempt if earned on tribal land by an enrolled member.

Reviewing income sources and supporting documentation ensures all eligible subtractions are claimed, reducing taxable income.

Part-Year or Nonresident Allocations

Kansas tax law distinguishes between full-year residents, part-year residents, and nonresidents, each with different income reporting requirements.

Part-year residents must allocate income between the time spent in Kansas and the period of residency in another state. Wages, business income, and investment earnings received while living in Kansas are fully taxable, while income earned before or after that period is generally excluded. For example, if a taxpayer moved to Kansas on July 1 and earned $80,000 for the year, only income from July through December is reported on the Kansas return.

Nonresidents must report only income derived from Kansas sources, such as wages earned in Kansas, rental income from Kansas properties, and business profits generated within the state. Investment income, like dividends or capital gains, is typically sourced to the taxpayer’s state of residence unless tied to a Kansas-based business.

Part-year residents and nonresidents must complete Schedule S and the Kansas Nonresident and Part-Year Resident (K-40NR) form to calculate taxable income. Misallocating income can lead to underpayment or overpayment of taxes, making careful review essential.

Documentation Measures

Accurate recordkeeping is essential. Discrepancies between reported income and supporting documentation can result in audits, penalties, or delayed processing.

Taxpayers with complex income structures, such as pass-through business income, partnership earnings, or trust distributions, must retain K-1 forms to verify income allocation and deductions. Those with depreciation adjustments should keep detailed fixed asset schedules and prior-year tax returns to reconcile differences between federal and Kansas depreciation rules.

Self-employed individuals must maintain thorough records of expenses, including receipts, invoices, and mileage logs. The Kansas Department of Revenue may request substantiation for deductions such as business use of a home, vehicle expenses, or professional fees. Electronic bookkeeping software can help track these expenses.

Filing Procedures

Once Schedule S is completed, ensuring proper filing procedures helps avoid processing delays, penalties, or rejected returns. Taxpayers must verify that all required forms, including the Kansas Individual Income Tax Return (K-40), are submitted accurately and on time. The state’s filing deadline typically aligns with the federal due date of April 15. An extension to file does not extend the deadline for tax payments, meaning any balance due must still be paid by April 15 to avoid interest and penalties.

Kansas offers multiple filing methods, including electronic submission through the Kansas Department of Revenue’s online portal or third-party tax software, as well as paper filing. E-filing is recommended, as it reduces processing time and minimizes errors. Taxpayers expecting a refund can receive funds more quickly through direct deposit. For those mailing paper returns, sending documents via certified mail helps confirm receipt. Keeping copies of all submitted forms and supporting documentation ensures records are available for future inquiries or audits.