While researching something else, I discovered that the 2013 Kansas Legislative Handbook was up on the Kansas Department of Revenue website. It makes sense the legislative session is over for 2013 and the sooner they get the info to the tax pros, the better we can plan and prepare.
Besides the dropping of gambling losses as an itemized deduction, there were a few other changes that caught my eye. Beginning on 2013 returns, Kansas will be cutting the federal itemized deductions or in tax speak giving them a haircut. The 2013 haircut will be 30% of the non-charitable contributions deductions. The percentage will increase annually until 2018 when only 50% of the federal deductions will be allowed. So, if your 2013 federal itemized deductions are $10,000 of which $2,500 are charitable deductions, Kansas will only allow you to use $7,750 ((10,000- 2500) - (30%) = 5250 + 2500). I assume that the state and local income taxes will continue to be subtracted from Kansas itemized deductions. We’ll see.
Last year the standard deductions for the Married Filing Joint and Head of Household filing statuses were both increased to $9,000. But it looks like those have been cut back to $7,500 and $5,500 respectively. No change to the single deduction of $3,000.
We were told that the Food Sales Tax Refund was gone beginning in 2013. It’s back but not really. The credit which was to offset the effect of the sales tax on food for lower income taxpayers is back but fairly worthless because it is no longer refundable. Most of my clients were filing a Kansas return simply to get that credit refunded to them. The legislature looks good, sort of, because they brought the credit back but then they still get to keep most of the money they saved when it was cut.
I’ll cover these and other changes in more depth as the KDOR gives up more guidance and starts releasing draft forms. Remember, these are just the changes that were made this year. There are all the changes to the taxability of business income that were passed last year and are starting this year. Congress might not do a lot this year with taxes, but Kansas will keep us hopping with their changes.