How did Kansas change the definition of income for homestead property tax refund claims for 2013?

Plain-English summary

Kansas Notice 14-11 (July 1, 2014) changes how income is measured for homestead and related property tax refund claims, retroactive to 2013.

Background. The 2012 income-tax changes (effective tax year 2013) altered Kansas adjusted gross income by adding a subtraction exempting certain business income and new addition modifications for certain business losses and deductions (K.S.A. 79-32,117, subsections (b)(xx)-(xxiii) and (c)(xx); see Notice 12-11). Because homestead "income" begins from Kansas adjusted gross income, those business modifications had flowed into homestead refund claims.

The change. 2014 Senate Bill 265 (Section 2) amended K.S.A. 79-4502(a) so that homestead "income" now means Kansas adjusted gross income without regard to the modifications under K.S.A. 79-32,117(b)(xx) through (xxiii) and (c)(xx), in addition to the other items the statute already counts (maintenance, cash public assistance, pensions/annuities, most Social Security, dividends and interest, workers compensation, etc.).

SAFESR too. The revised definition also applies to the Selective Assistance for Effective Senior Relief (SAFESR) program; K.S.A. 79-32,263 was amended so "household income" uses the K.S.A. 79-4502(a) definition (including Social Security payments).

Effective date / action. The amendment is effective for tax year 2013. Anyone who filed a 2013 homestead or property tax relief refund claim should review whether they still meet the income qualifications; anyone who no longer qualifies must repay the amount received and should contact the Department for instructions on filing an amended claim.

What this means for you

Homestead and SAFESR claimants

• The 2012 business income exemption and loss add-backs no longer change your homestead "income." If they affected your 2013 claim, recheck your eligibility -- you may need to repay a refund you no longer qualify for.

Tax preparers

• Recompute 2013 homestead/SAFESR income without the (b)(xx)-(xxiii) and (c)(xx) modifications and advise clients on amended claims where eligibility changed.

Common questions

What changed in the income definition? Homestead income now ignores the 2012 business income subtraction and business loss/deduction add-backs.

Does it affect SAFESR? Yes -- SAFESR household income uses the same amended K.S.A. 79-4502(a) definition.

What year does it apply to? Tax year 2013 (retroactive).

What if I no longer qualify for a 2013 refund? You must repay the amount received; contact the Department to file an amended claim.

Citations and references

• K.S.A. 79-4502(a) -- definition of "income" for homestead property tax relief, amended by Section 2 of 2014 Senate Bill 265.
• K.S.A. 79-32,117(b)(xx)-(xxiii) and (c)(xx) -- the 2012 business modifications now disregarded.
• K.S.A. 79-32,263 -- the SAFESR program, using the amended income definition.
• 2014 Senate Bill 265, Section 2 -- the amending legislation.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 14-11

Original ruling text

Policy & Research Phone: 785-296-3081
915 SW Harrison St FAX: 785-296-7928
Topeka KS 66612-1588 www.ksrevenue.org
Nick Jordan, Secretary Department of Revenue Sam Brownback, Governor
Richard Cram, Director

                                     Notice 14-11

                        Amended Definition of Income for
             Homestead Property Or Property Tax Relief Refund Claims
                               Retroactive to 2013

                                    (July 1, 2014)

  During the 2014 Legislative Session Senate Bill 265 was passed and signed into law.

Section 2 of the Bill amends K.S.A. 79-4502, which defines terms used for homestead property
tax relief claims, to change the definition of "income".

 In 2012 the Kansas Legislature enacted major changes to the Kansas income tax act which

were effective for tax year 2013. The calculation of Kansas adjusted gross income was changed
by the enactment of a new subtraction modification which exempted certain business income
from Kansas income tax, and new addition modifications which made certain business losses and
deductions subject to the tax. [See Notice 12-11] The new addition modifications were included
in K.S.A. 79-32,117, as subsection (b)(xx) through (xxiii) and the new subtraction modification
was included as subsection (c)(xx).

  The amount of adjusted gross income determined under the Kansas income tax act is used

as the starting point in the calculation of income for homestead property tax refund claims.
Section 2 of Senate Bill 265 changes the manner in which income is computed for homestead
property tax refund purposes by disregarding some of those modifications which were enacted in
2012. The amended language, found in subsection (a) of K.S.A. 79-4502, now provides:

       (a) "Income" means the sum of adjusted gross income under the Kansas income
 tax act effective for tax year 2013 and thereafter without regard to any modifications
 pursuant to K.S.A. 79-32,117(b)(xx) through (xxiii) and (c)(xx), and amendments
 thereto, maintenance, support money, cash public assistance and relief, not including
 any refund granted under this act, the gross amount of any pension or annuity,
 including all monetary retirement benefits from whatever source derived, including
 but not limited to, all payments received under the railroad retirement act, except
 disability payments, payments received under the federal social security act, except
 that for determination of what constitutes income such amount shall not exceed 50%
 of any such social security payments and shall not include any social security
 payments to a claimant who prior to attaining full retirement age had been receiving
 disability payments under the federal social security act in an amount not to exceed
 the amount of such disability payments or 50% of any such social security payments,
 whichever is greater, all dividends and interest from whatever source derived not
 included in adjusted gross income, workers compensation and the gross amount of
 "loss of time" insurance. Income does not include gifts from nongovernmental

 sources or surplus food or other relief in kind supplied by a governmental agency, nor
 shall net operating losses and net capital losses be considered in the determination of
 income. Income does not include veterans disability pensions. Income does not
 include disability payments received under the federal social security act.

   The revised definition of income for homestead property tax refund claims is also used for

property tax relief refund claims made under the selective assistance for effective senior relief
(SAFESR) program. The controlling statute, K.S.A. 79-32,263 has been amended to provide, in
part, that:

 For purposes of this section, "household income" means all income as defined in
 K.S.A. 79-4502(a), and amendments thereto, including any payments received under
 the federal social security act, received by persons of a household in a calendar year
 while members of such household. The provisions of this act shall be part of and
 supplemental to the homestead property tax refund act.

   Although enacted during the 2014 Legislative Session, the amendments to K.S.A. 79-

4502(a) are effective for tax year 2013. As a result, anyone who filed a homestead property or
property tax relief refund claim for tax year 2013 should review their claim to see whether they
still meet the income qualifications. Anyone who does not qualify will be required to repay the
amount they received. In that event, please contact the Department of Revenue for instructions
on how to file an amended claim and repay the amount received.

                                 Taxpayer Assistance

Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions about this Notice, please contact:

                             Taxpayer Assistance Center
                            Kansas Department of Revenue
                            915 SW Harrison St., 1st Floor
                              Topeka, KS 66612-1588
                                Phone: 785-368-8222
                                 Fax: 785-291-3614