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02-17-2017 10:01 AM
I have income from a 1099-MISC. I have entered the amount in both box 7 (nonemployee income) and box 18 (state income - even though it's not listed in box 18 on the 1099) in my Premium software. But, on my Kansas return on Schedule S, it subtracts my business income as a modification only subject to federal taxes. I'm not sure why it's taking my business income OFF of my federal AGI? Even the KS tax help line tells me that this income isn't taxable at the state level, but it makes me nervous. ?? Is that tax somehow already figured in with my federal? It changes from me owing about $100 to getting back nearly $700 and would also mean that I'd need to amend 2015...
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02-17-2017 11:20 AM - last edited on 02-17-2017 11:20 AM by HaroldG
Welcome to the H&R Block community.
The information you've received about Kansas is correct. Only wage income is taxable in Kansas. Your state passed a law in 2012 (the law went into effect in 2013) that eliminated the state income tax on the income of pass-through entities which include sole proprietorship's, s-corporations, partnerships, and limited liability companies. This exemption from tax also includes independent contractors who are issued a Form 1099-MISC.
However, your net income on Schedule C is taxable on the federal return and should not be removed at the federal level. Your net income is the figure shown on the 1099-MISC less any expenses you incurred for this job that you were not reimbursed for.
Hopefully this helps you out.
Senior Tax Advisor (Tampa, FL)