Schedule J: Kentucky Farm Income Averaging (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule J lets you elect to calculate your 2024 Kentucky income tax by averaging all or part of your taxable farming or fishing income over the previous three years. It uses Kentucky income and tax figures and is enclosed with Form 740.
Who files this form
Kentucky Schedule J is an election to figure your 2024 Kentucky income tax by averaging all or part of your 2024 Kentucky taxable income from a farming or fishing business over the previous three years.
This election may lower your tax if your 2024 farming or fishing income is high and your taxable income for one or more of the three prior years was low.
You must file a federal Schedule J to complete a Kentucky Schedule J.
What you'll need
- Your 2024 Kentucky Form 740. Schedule J uses the taxable income from line 11.
- Your federal Schedule J. Your elected farm income on Kentucky Schedule J, line 2, cannot exceed federal Schedule J, line 2(a).
- Copies of your original or amended income tax returns for 2021, 2022 and 2023, as needed to figure the tax.
- Prior Kentucky Schedules J, if you used them to figure your tax for 2021, 2022 or 2023. The form identifies which amounts to carry forward.
- Federal Schedule J instructions for definitions of farming business, fishing business and elected farm income, and for the situations where Kentucky Schedule J directs you to them.
How to file
Enclose Kentucky Schedule J with Form 740. Enter your name or names as shown on your tax return and your Social Security number.
On line 22, subtract line 21 from line 17. If the result is less than the tax on the taxable income shown on line 1, enter the resulting tax on Form 740, line 12, and check the box.
Common mistakes
- Completing Kentucky Schedule J without filing federal Schedule J. Filing the federal schedule is required.
- Using figures other than Kentucky figures to complete the Kentucky schedule.
- Including another state's income in elected farm income without also computing the tax excluding that income. This additional calculation is required to determine the state tax limitation for the credit for taxes paid to other states.
- Using the wrong tax rate. The reminders specify 5% for 2021 and 2022, 4.5% for 2023, and 4% for 2024.
- Not keeping a copy of your 2024 income tax return. The form reminds you to keep it for income averaging in 2025, 2026 or 2027.
Questions people ask
Does Schedule J cover fishing income too?
Yes. It can be used for all or part of your 2024 Kentucky taxable income from a farming or fishing business.
How much elected farm income can I enter on line 2?
Do not enter more than the amount on federal Schedule J, line 2(a). The form refers you to the federal instructions for elected farm income.
Which years are used to average my 2024 income?
The schedule uses 2021, 2022 and 2023. The amounts you enter depend on whether you used Schedule J to figure your tax in those years.
What if the amount entered on line 5, 9 or 13 is zero or less?
The instructions direct you to the federal instructions for that situation.