Schedule KW-2 (Form 740)

This article explains the process for completing Schedule KW-2, a form used to report Kentucky income tax withheld.

Schedule KW-2 is an official form provided by the Commonwealth of Kentucky for taxpayers who need to report the Kentucky income tax withheld from their income. It is designed to be attached to the Kentucky income tax return forms, such as Form 740, 740-NP, or 740-NP-R. This schedule serves the purpose of documenting all the Kentucky income tax withheld throughout the year, ensuring that taxpayers receive proper credit for these withholdings when filing their taxes. It is essential that the form is filled out correctly and completely to ensure all withheld taxes are credited properly. Multiple copies of Schedule KW-2 may need to be filed if there are multiple sources of withholding. The instructions provided below will guide you step-by-step through completing this form, ensuring that you follow all necessary procedures.

How to File Schedule KW-2

To file Schedule KW-2, you must first complete it fully by including all the necessary information about the Kentucky income tax withheld from your income. This form is submitted alongside your main Kentucky tax return form (either Form 740, 740-NP, or 740-NP-R). Make sure not to include any W-2, 1099, or W-2G forms with your submission; instead, keep them for your records. You will need to enter the tax details from each of your W-2s, 1099s, and W-2Gs if applicable. The total withholding information will then be transferred to your main tax return, ensuring that the Kentucky Department of Revenue properly credits you for the taxes that have already been paid through withholding. The following sections provide detailed line-by-line instructions for completing this form.

How to Complete Schedule KW-2 (Form 740)

How to Complete Schedule KW-2

Part I – Form W-2

  1. Name(s) as Shown on the Tax Return
    Enter the names of the taxpayer and spouse (if applicable) exactly as they appear on your Kentucky income tax return.
  2. Spouse’s Social Security Number
    If filing jointly, enter your spouse’s Social Security number.
  3. Your Social Security Number
    Enter your own Social Security number in this field.

For each W-2 with Kentucky tax withheld, complete the following columns:

  • Column A: Employee’s Social Security Number
    Enter the employee’s Social Security number from each Form W-2.
  • Column B: Employer’s Identification Number (EIN)
    Enter the Employer Identification Number from each Form W-2.
  • Column C: State
    Enter the state that issued the W-2 (which should be Kentucky for this form).
  • Column D: Employer’s State I.D. Number
    Enter the employer’s state identification number from Box 15 of the W-2.
  • Column E: KY State Wages (Box 16 of Form W-2)
    Enter the Kentucky taxable wages from Box 16 of each W-2.
  • Column F: KY Income Tax Withheld (Box 17 of Form W-2)
    Enter the amount of Kentucky income tax withheld, as shown in Box 17 of each W-2.

Repeat this for each W-2 you are reporting.

  1. Line 10: Total from All W-2s
    Add up the total amounts from Column F (Kentucky Income Tax Withheld) and report this total on Line 10. This is the total Kentucky income tax withheld from all your W-2 forms.

Part II – Form 1099 and W-2G

  1. Recipient’s Social Security Number
    Enter the recipient’s Social Security number for each Form 1099 or W-2G.
  • Column B: Payer’s Identification Number (EIN)
    Enter the payer’s Employer Identification Number from each Form 1099 or W-2G.
  • Column C: State
    Enter the state where the income was earned (this should be Kentucky).
  • Column D: Payer’s State I.D. Number
    Enter the payer’s state identification number.
  • Column E: KY Income Amount
    Enter the Kentucky income amount shown on the Form 1099 or W-2G.
  • Column F: KY Income Tax Withheld
    Enter the amount of Kentucky income tax withheld, as shown on the Form 1099 or W-2G.
  1. Line 17: Total from All 1099s and W-2Gs
    Add up the totals from Column F for all 1099s and W-2Gs you are reporting, and enter the combined total on Line 17. This is the total Kentucky income tax withheld from all your 1099s and W-2Gs.

Part III – Totals

  1. Line 18: Total Kentucky Income Tax Withheld
    Add the totals from Line 10 (W-2s) and Line 17 (1099s and W-2Gs) to get your total Kentucky income tax withheld. Enter this combined total on Line 18.
  2. Final Step
    Transfer the total from Line 18 (Total Kentucky Income Tax Withheld) to your Kentucky income tax return, either Form 740 (Line 31(a)), Form 740-NP (Line 31(a)), or Form 740-NP-R (Line 1), where you report your total withheld taxes.
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