The Kansas Credit for Taxes Paid to Another State or Country is a non-refundable tax credit designed to prevent Kansas residents from being taxed twice on the same income. The credit is available to eligible Kansas residents who pay income tax to another state, the District of Columbia, a territory or possession of the United States, or a foreign country on income that is also subject to Kansas income tax.
The credit is claimed on the Kansas Individual Income Tax Return (Form K-40) or the applicable fiduciary return (Form K-41).
Definition of "State"
For purposes of the Kansas credit, the term "state" includes:
- Any state of the United States.
- The District of Columbia.
- Puerto Rico.
- Any territory or possession of the United States.
- Any foreign country or political subdivision of a foreign country.
Eligibility Requirements
To qualify for the Kansas Credit for Taxes Paid to Another State or Country:
Resident Requirement: The credit is available to Kansas residents who pay income tax to another state, the District of Columbia, a U.S. territory or possession, or a foreign country on income that is also subject to Kansas income tax. A qualifying part-year resident may claim the credit only for income that is taxed by both Kansas and another jurisdiction.
Double-Taxed Income: The same income must be included in Kansas taxable income and must also be subject to an income tax imposed by another qualifying jurisdiction.
Income Source: The tax paid to another jurisdiction must be legally imposed on income that is also taxed by Kansas.
Important Rules
- No Income Tax States: A credit is not available for income earned in a jurisdiction that does not impose an income tax.
- Foreign Country Taxes: Taxes paid to a foreign country may qualify for the Kansas credit. However, the allowable Kansas credit must be adjusted for any federal foreign tax credit claimed for the same foreign taxes.
- Federal Deduction Treatment: If foreign taxes were claimed as a federal itemized deduction instead of a federal foreign tax credit, taxpayers must follow Kansas instructions to determine whether the taxes qualify for the Kansas credit.
Credit Limitation Formula
The Kansas Credit for Taxes Paid to Another State or Country is limited to the lesser of:
- The income tax paid to the other qualifying jurisdiction, or
- The amount of Kansas income tax attributable to the income that was also taxed by the other jurisdiction.
The allowable credit is based on the portion of Kansas income tax attributable to the income taxed by the other jurisdiction.
The credit is non-refundable. It may reduce Kansas income tax liability to zero but cannot create a refund, and any unused credit cannot be carried forward.
Required Documentation
Taxpayers should maintain documentation supporting the credit claimed, including:
For Taxes Paid to Another U.S. State
- A copy of the tax return filed with the other state, if required.
- Documentation showing the amount of income taxed and the tax paid to the other jurisdiction.
For Taxes Paid to a Foreign Country
- Documentation showing the foreign income tax paid.
- A copy of federal Form 1116 (Foreign Tax Credit) or other supporting information, if applicable.
Taxpayers should retain all supporting records and provide them to the Kansas Department of Revenue if requested.
Source:
2025 Individual Income Tax Instructions (Form K-40)
Disclaimer: Always verify with the official Kansas Department of Revenue forms and instructions, as well as the IRS, for the most accurate and up-to-date tax guidance. For complex situations, consult a tax professional or attorney.