Schedule M: Kentucky Federal Adjusted Gross Income Modifications (2024)
Kentucky · Kentucky DOR · Used for tax years 2024
Kentucky Schedule M reports additions to and subtractions from federal adjusted gross income for your 2024 Kentucky income tax return. It totals these adjustments for Form 740 and is enclosed with that return.
Who files this form
Use 2024 Kentucky Schedule M with Form 740 to report additions to or subtractions from federal adjusted gross income.
The schedule covers adjustments such as interest from other states’ bonds, Kentucky Schedule K-1 adjustments, retirement income exclusions, taxable Social Security benefits, active duty military pay, depreciation differences and net operating losses.
What you'll need
Have your federal Form 1040 or 1040-SR and Kentucky Form 740 available for the income amounts referenced on Schedule M.
Depending on your adjustments, you may also need:
- Kentucky Schedule K-1 for resident adjustments from partnerships, estates, trusts or S corporations.
- Schedule P when required to determine your pension exclusion. Schedule M says to enclose it if the exclusion exceeds $31,110 per taxpayer.
- Federal Form 4562, if filed with your federal return. A copy must be submitted with Form 740 even to verify that no depreciation adjustments are required.
- A Kentucky version of Form 4562 if you report Kentucky depreciation. Enclose it with Form 740.
- Detailed schedules supporting other additions on line 5 or other subtractions on line 14.
- Schedule KNOL if you claim a Kentucky net operating loss deduction. Complete and enclose it.
- Other adjustment-specific forms, such as Form 461-K for the excess business loss limitation, or Schedule P and Form 4972-K for the specified lump-sum distribution adjustment.
How to file
Enclose Schedule M with your 2024 Kentucky Form 740. Enter your name or names as shown on the tax return and your Social Security number.
- Add lines 1 through 5. Enter the total on Schedule M, line 6, and Form 740, page 1, line 6.
- Add lines 7 through 14 and enter the total on line 15.
- Add lines 15 and 16. Enter the total on Schedule M, line 17, and Form 740, page 1, line 8.
- Include the supporting forms and schedules required for your adjustments.
The supplied text does not provide a mailing address or e-filing directions.
Common mistakes
- Subtracting interest that is only federally guaranteed. Line 8 does not include taxable interest from securities such as Fannie Mae, Ginnie Mae or Freddie Mac that are merely guaranteed by the U.S. government.
- Combining spouses’ retirement income before figuring the exclusion. Each spouse must calculate their own exclusion. Joint filers then combine the separately calculated exclusions on line 9, column B.
- Using depreciation adjustment lines when they do not apply. The instructions say to use lines 3 and 12 only for the specified federal special depreciation allowance or increased Section 179 deduction elections.
- Overlooking at-risk adjustments. Before entering a difference on line 5, account for additions or subtractions affecting at-risk limitations.
- Omitting paperwork for a 2024 net operating loss. Complete Schedule KNOL, Part I, to determine the loss carryforward, keep a copy and enclose a copy with your return.
Questions people ask
What is the retirement income exclusion for 2024?
The stated exclusion is 100% of taxable retirement benefits or $31,110, whichever is less, calculated separately for each taxpayer. If the pension worksheet total exceeds $31,110 and you have the specified federal, Kentucky state or Kentucky local government retirement income, or supplemental U.S. Railroad Retirement Board benefits, complete Schedule P to determine your exclusion.
Can I subtract taxable Social Security benefits?
Enter Social Security and Social Security equivalent U.S. Railroad Retirement Board benefits included in Form 740, page 1, line 5, on Schedule M, line 10. These amounts appear on federal Form 1040 or 1040-SR, line 6(b).
Can I subtract active duty military pay?
Yes. Enter active duty military pay included in Form 740, page 1, line 5, on Schedule M, line 13. The instructions state that all military pay received by Armed Forces members while on active duty can be excluded.
Where do I report a taxable state income tax refund?
On line 7, enter the taxable state income tax refund or credit reported on your federal return and included as income on Form 740, page 1, line 5.