WITHHOLDING KENTUCKY INCOME TAX

WITHHOLDING

KENTUCKY INCOME TAX

INSTRUCTIONS FOR EMPLOYERS

Revised February 2019

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

Frankfort

42A003 (2-19)

KENTUCKY TAXPAYER SERVICE CENTER LOCATIONS

revenue.ky.gov/Get-Help/Pages/Service-Centers.aspx

Ashland

1539 Greenup Avenue, 41101-7695

(606) 920-2037

Fax: (606) 920-2039

Bowling Green

201 West Professional Park Court, 42104-3278

(270) 746-7470

Fax: (270) 746-7847

Corbin

15100 North US25E, Suite 2, 40701-6188

(606) 528-3322

Fax: (606) 523-1972

Frankfort

501 High Street, Station 38, 40601

(502) 564-5930

Fax: (502) 564-8946

Hopkinsville

181 Hammond Drive, 42240-7926

(270) 889-6521

Fax: (270) 889-6563

Forms

FORMS

501 High Street, Station 23B

Frankfort, KY 40601

(502) 564-3658

Information

Withholding Tax Inquiries (502) 564-7287

Forms and Information on the Internet revenue.ky.gov

Louisville

600 West Cedar Street, 2nd Floor West, 40202-2310

(502) 595-4512

Fax: (502) 595-4205

Northern Kentucky

Turfway Ridge Ofﬁce Park

7310 Turfway Rd., Suite 190

Florence, 41042-4871

(859) 371-9049

Fax: (859) 371-9154

Owensboro

401 Frederica Street, Bldg. C, Suite 201, 42301-6295

(270) 687-7301

Fax: (270) 687-7244

Paducah

Clark Business Complex, Suite G

2928 Park Avenue, 42001-4024

(270) 575-7148

Fax: (270) 575-7027

Pikeville

Uniplex Center

126 Trivette Drive, Suite 203, 41501-1275

(606) 433-7675

Fax: (606) 433-7679

Kentucky Department of Revenue

Mission Statement

As part of the Finance and Administration Cabinet, the mission of the

Kentucky Department of Revenue is to administer tax laws, collect revenue,

and provide services in a fair, courteous, and efﬁcient manner for the beneﬁt

of the Commonwealth and its citizens.

The Kentucky Department of Revenue does not discriminate on the basis of

race, color, national origin, sex, age, religion, disability, sexual orientation,

gender identity, veteran status, genetic information or ancestry in employment

or the provision of services.

YOUR RIGHTS

AS A KENTUCKY TAXPAYER

As part of the Finance and Administration Cabinet, the

mission of the Kentucky Department of Revenue (DOR) is to

administer tax laws, collect revenue, and provide services in

a fair, courteous, and efﬁcient manner for the beneﬁt of the

Commonwealth and its citizens.

As a Kentucky taxpayer, you have the right to expect the DOR

to honor its mission and uphold your rights every time you

contact or are contacted by the DOR.

Some Kentucky taxpayer rights are very speciﬁc, such as

when and how to protest a Notice of Tax Due or the denial of

a refund. Others are more general.

The following is a summary of your rights and the DOR’s

responsibilities to you as a Kentucky taxpayer.

RIGHTS OF TAXPAYER

Privacy

You have the right to privacy with regard to information you

provide pertaining to returns, reports, or the affairs of your

business.

Assistance

You have the right to advice and assistance from the DOR in

complying with state tax laws.

Explanation

You have the right to a clear and concise explanation of:

9 basis of assessment of additional taxes, interest and

penalties, or the denial or reduction of any refund or credit

claim;

9 procedure for protest and appeal of a Notice of Tax Due,

a reduction or denial of a refund, or a denial of a request

for additional time to ﬁle a supporting statement; and

9 tax laws and changes in tax laws so that you can comply

with the law.

Protest and Appeal

You have the right to ﬁle a protest with the DOR if you disagree

with a Notice of Tax Due, a reduction or denial of a refund, or

a denial of a request for additional time to ﬁle a supporting

statement. If you ﬁle a timely protest, you have a right to a

conference to discuss the matter. If you are not satisﬁed with

the Department’s ﬁnal ruling following your protest, you may

appeal the ﬁnal ruling to the Kentucky Claims Commission, Tax

Appeals pursuant to KRS 131.110(5) and KRS 49.220 et. seq.

(See reverse for procedure to ﬁle a protest.)

Representation

You have the right to representation by your authorized agent

(attorney, accountant, or other person) in any hearing or

conference with the DOR. You have the right to be informed

of this right prior to the conference or hearing. If you intend

for your representative to attend the conference or hearing in

your place, you will be required to give your representative

a power of attorney before the DOR can discuss tax matters

with your authorized agent. See Form 20A100.

Recordings

You have the right to make an audio recording of any meeting,

conference, or hearing with the DOR. The DOR has the right

to make an audio recording, if you are notiﬁed in writing in

advance or if you make a recording. You have the right to

receive a copy of the recording.

Consideration

You have the right to consideration of:

9 waiver of penalties or collection fees if “reasonable cause”

for reduction or waiver is given (“reasonable cause” is

deﬁned in KRS 131.010(9) as: “an event, happening, or

circumstance entirely beyond the knowledge or control of

a taxpayer who has exercised due care and prudence in

the ﬁling of a return or report or the payment of monies

due the department pursuant to law or administrative

regulation”);

9 installment payments of delinquent taxes, interest, and

penalties;

9 waiver of interest and penalties, but not taxes, resulting

from incorrect written advice from the DOR if all facts

were given and the law did not change or the courts did

not issue a ruling to the contrary;

9 extension of time for ﬁling reports or returns; and

9 payment of charges incurred resulting from an erroneous

ﬁling of a lien or levy by the DOR.

Guarantee

You have the right to a guarantee that DOR employees are

not paid, evaluated, or promoted based on taxes assessed

or collected, or a tax assessment or collection quota or goal

imposed or suggested.

Damages

You have the right to ﬁle a claim for actual and direct monetary

damages with the Kentucky Claims Commission if a DOR

employee willfully, recklessly, and intentionally disregards

your rights as a Kentucky taxpayer.

Interest

You may have the right to receive interest on an overpayment

of tax.

DEPARTMENT OF REVENUE RESPONSIBILITIES

The DOR has the responsibility to:

9 perform audits and conduct conferences and hearings

with you at reasonable times and places;

9 authorize, require, or conduct an investigation or

surveillance of you only if it relates to a tax matter;

9 make a written request for payment of delinquent taxes

which are due and payable at least 30 days prior to seizure

and sale of your assets;

9 conduct educational and informational programs to help

you understand and comply with the laws;

9 publish clear and simple statements to explain tax

procedures, remedies, your rights and obligations, and

the rights and obligations of the DOR;

9 notify you in writing when an erroneous lien or levy is

released and, if requested, notify major credit reporting

companies in counties where lien was ﬁled;

JULY 2018

9 advise you of procedures, remedies, and your rights and

obligations with an original notice of audit or when an

original Notice of Tax Due is issued, a refund or credit

is denied or reduced, or whenever a license or permit is

denied, revoked, or canceled;

9 notify you in writing prior to termination or modiﬁcation

of a payment agreement;

9 furnish copies of the agent’s audit workpapers and a written

narrative explaining the reason(s) for the assessment;

9 resolve tax controversies on a fair and equitable basis at

the administrative level whenever possible;

9 notify you in writing at your last known address at least 60

days prior to publishing your name on a list of delinquent

taxpayers for which a tax or judgment lien has been ﬁled;

and

9 notify you by certiﬁed mail 20 days prior to submitting

your name to the relevant agency for the revocation or

denial of professional license, driver’s license, or motor

vehicle registration.

PROTEST AND APPEAL PROCEDURE

Protest

If you receive a Notice of Tax Due, or if the DOR notiﬁes you

that a tax refund has been reduced or denied, or the DOR

denies your request for additional time to ﬁle a supporting

statement, you have the right to protest. To do so:

9 submit a written protest within 60 days from the original

notice date (or 45 days if the original notice date is prior

to 07/01/2018); notice of refund reduction or denial, or

denial of a request for additional time to ﬁle a supporting

statement;

9 identify the type of tax involved and give the account

number, Social Security number, or other identiﬁcation

number and attach a copy of the DOR Notice of Tax Due

or refund denial to support that your protest is timely;

9 explain why you disagree;

9 attach any proof or documentation available to support

your protest or request additional time to support your

protest;

9 sign your statement, include your daytime telephone

number and mailing address; and

9 mail to the Kentucky Department of Revenue,

Frankfort, Kentucky 40620.

Conference

You have the right to request a conference to discuss the issue.

Final Ruling

If you do not want to have a conference or if the conference

did not resolve your protest, you have the right to request a

ﬁnal ruling of the DOR so that you can appeal your case further.

Appeal

If you do not agree with the DOR’s ﬁnal ruling, you can ﬁle

a written appeal with the Kentucky Claims Commission. If

you do not agree with the decision of the Kentucky Claims

Commission, you have the right to appeal their ruling to the

Kentucky courts (ﬁrst to the circuit court in your home county

or in Franklin County, then to the Kentucky Court of Appeals,

and ﬁnally to the Kentucky Supreme Court).

NOTE: The above protest and appeal procedures do not apply

for real property which is valued by the local property valuation

administrator (PVA). Contact the local PVA for information

about how to appeal the valuation of real property.

TAXPAYER OMBUDSMAN

The DOR has a Taxpayer Ombudsman whose job is to serve as

an advocate for taxpayers’ rights. One of the main functions

of the Ombudsman is to ensure that your rights as a Kentucky

taxpayer are protected.

Also, an important function of the Taxpayer Ombudsman is

to confer with DOR employees when you have a problem

or conﬂict that you have been unable to resolve. However,

it is not the role of the Ombudsman to intercede in an audit,

handle a protest, waive taxes, penalty or interest, or answer

technical tax questions. To ﬁle a protest, see PROTEST AND

APPEAL PROCEDURE. Please do not mail your protest to the

Ombudsman.

The Taxpayer Ombudsman is your advocate and is there to

make sure your rights are protected. If you think you are not

being treated fairly or if you have a problem or complaint,

please contact the Ombudsman for assistance.

The Taxpayer Ombudsman may be contacted by telephone at

502–564–7822 (between 8:00 a.m. and 5:00 p.m. weekdays).

The mailing address is: Department of Revenue, Taxpayer

Ombudsman, P. O. Box 930, Frankfort, Kentucky 40602-0930.

WHERE TO GET ASSISTANCE

The DOR has ofﬁces in Frankfort and taxpayer service centers

in nine cities and towns throughout Kentucky. DOR employees

in the service centers answer tax questions and provide

assistance. You may obtain assistance by contacting any of

the following:

Ashland Taxpayer Service Center

1539 Greenup Avenue, 41101–7695

606–920–2037

Bowling Green Taxpayer Service Center

201 West Professional Park Court, 42104–3278

270–746–7470

Corbin Taxpayer Service Center

15100 North US25E, Suite 2, 40701–6188

606–528–3322

Frankfort Taxpayer Service Center

501 High Street, 40601–2103

502–564–4581 (Taxpayer Assistance)

Hopkinsville Taxpayer Service Center

181 Hammond Drive, 42240–7926

270–889–6521

Louisville Taxpayer Service Center

600 West Cedar Street, 2nd Floor West, 40202–2310

502–595–4512

Northern Kentucky Taxpayer Service Center

Turfway Ridge Ofﬁce Park

7310 Turfway Road, Suite 190

Florence 41042–4871

859–371–9049

Owensboro Taxpayer Service Center

401 Frederica Street, Building C, Suite 201, 42301–6295

270–687–7301

Paducah Taxpayer Service Center

Clark Business Complex, Suite G

2928 Park Avenue, 42001–4024

270–575–7148

Pikeville Taxpayer Service Center

Uniplex Center, 126 Trivette Drive, Suite 203, 41501–1275

606–433–7675

* * * * * * * * * *

The DOR has an online taxpayer service center where you can

download forms, publications, and obtain general information

about the department. The address is www.revenue.ky.gov.

The information in this brochure merely summarizes your

rights as a Kentucky taxpayer and the responsibilities of the

Department of Revenue. The Kentucky Taxpayers’ Bill of Rights

may be found in the Kentucky Revised Statutes (KRS) at

Chapter 131.041-131.083. Additional rights and responsibilities

are provided for in KRS 131.020, 131.110, 131.170, 131.1817,

131.183, 131.190, 131.500, 131.654, 133.120, 133.130, 134.580,

and 134.590.

Printing costs paid from state funds.

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

10F100 (7-18)

The Kentucky Department of Revenue does not discriminate

on the basis of race, color, national origin, sex, age, religion,

disability, sexual orientation, gender identity, veteran status,

genetic information or ancestry in employment or the provision

of services.

TABLE OF CONTENTS

SECTION PAGE

Kentucky Taxpayer Service Center Locations .................................................................................................... inside front cover

Kentucky Department of Revenue Web Page ..................................................................................................... inside front cover

Your Rights as a Kentucky Taxpayer

I. Wages Subject to Withholding.......................................................................................................................................................1

II. Withholding Tax Forms ............................................................................................................................................................... 1

Online Filing of Withholding Tax Returns .............................................................................................................................. 1-2

III. Kentucky's Withholding Certiﬁcate ............................................................................................................................................. 2

IV. Employer Filing Requirements

Annual Filing ............................................................................................................................................................................... 2

Quarterly Filing ....................................................................................................................................................................... 2-3

Monthly Filing ............................................................................................................................................................................. 3

Twice-Monthly Filing .............................................................................................................................................................. 3-4

One-Day Deposit ......................................................................................................................................................................... 4

V. Termination of Business .............................................................................................................................................................. 4

VI. Withholding Statements

Withholding Statement Reporting to Employees ........................................................................................................................ 4

Withholding Statement Reporting to DOR.................................................................................................................................. 4

Web Filing and CD Electronic Filing of W-2 Information .......................................................................................................... 5

CD Electronic Filing of W-2G and 1099 Information ................................................................................................................. 5

Form K-5 ..................................................................................................................................................................................... 5

VII. Electronic Fund Transfer ............................................................................................................................................................. 6

VIII. Summary of Employer Requirements ......................................................................................................................................... 6

IX. Gambling Winnings ..................................................................................................................................................................... 7

X. Interest, Penalties, Bond Requirement and Corporate

Ofﬁcer Liability ........................................................................................................................................................................... 7

XI. Computer Formula (Optional Withholding Method) ................................................................................................................... 7

XII. Taxable/Exempt Chart ................................................................................................................................................................. 8

XIII. Commonly Asked Questions and Answers .............................................................................................................................. 8-9

XIV. Forms Available Online ............................................................................................................................................................... 9

Notice—Information Concerning Worker's Compensation Insurance ...................................................................................... 10

Appendix—Sample copies of Forms K-1, K-3, and the Kentucky New Hire Reporting Form

WITHHOLDING ON SALARIES AND WAGES

UNDER THE KENTUCKY INCOME TAX LAW

INSTRUCTIONS FOR EMPLOYERS

I. WAGES SUBJECT TO WITHHOLDING

For withholding tax purposes, the terms wages, employee and

employer mean the same as deﬁned in Section 3401 of the Internal

Revenue Code currently in effect for Kentucky. Therefore, wages

or other payments made for services performed in Kentucky,

which are subject to withholding of federal income tax, are

subject to Kentucky withholding. Wages paid to the following are

speciﬁcally exempt from withholding but voluntary withholding

by mutual agreement is permitted:

1. household employees;

2. election workers;

3. employees of foreign governments and international

organizations;

4. ministers of a church or members of a religious order;

5. newspersons under age 18;

6. employees as noncash tips and total cash tips of less than $20

per month;

7. employees in a form other than in cash for services not in the

course of the employer’s business;

The above payments are the most common types that are not

subject to withholding. However, this list is not all-inclusive.

The Internal Revenue Code and related rulings and regulations

should be consulted for other payments that may be excluded

from withholding.

Regulation 103 KAR 18:010 provides that “Every employer

incorporated in Kentucky, qualiﬁed to do business in Kentucky,

doing business in Kentucky, or subject to the jurisdiction of

Kentucky in any manner, and making payment of wages subject

to withholding shall deduct, withhold, and pay to the department

the tax required to be withheld.”

Wages paid to a Kentucky resident as a regular employee in the

conduct of business of an employer required to withhold taxes,

are subject to withholding on services performed both in and

outside Kentucky.

Wages paid to a nonresident of Kentucky to the extent paid for

services rendered in Kentucky are subject to withholding, except

for wages paid to employees of those states that have entered

into reciprocal agreements with Kentucky. (See Section III.) A

completed Form 42A804, Kentucky's Withholding Certiﬁcate,

must be on ﬁle for each employee.

Agricultural workers are subject to withholding for Kentucky

purposes unless remuneration is paid in any medium other than

cash, the cash amount received by an employee is less than $150

during the calendar year and employer’s calendar year labor

expense is less than $2,500.

II. WITHHOLDING TAX FORMS

Following are the withholding forms which may be used by

the employer. Reference will be made to them throughout this

booklet.

10A100 Kentucky Tax Registration Application

K-1* Employer’s Return of Income Tax Withheld

K-3* Employer’s Return of Income Tax Withheld

(Annual Reconciliation)

K-1E** Employer’s Return of Income Tax Withheld

(Electronic Funds Transfer)

K-3E** Employer's Return of Income Tax Withheld

(Annual Reconciliation)

(Electronic Funds Transfer)

42A801(D) Amended K-1

42A803(D) Amended K-3

42A804 Form K-4, Kentucky's Withholding Certiﬁcate

42A805 Form K-5, Kentucky Employer's Report of

Withholding Tax Statements

42A806 Transmitter Report for CD Submission

42A808 Authorization to Submit Annual Employee

Wage and Tax Statements via Kentucky

Department of Revenue Web site.

*Employers not ﬁling electronically, will be mailed forms K-1 or

K-3 at the end of each reporting period. These preprinted forms

contain important processing information and cannot be furnished

in blank form. When a form is misplaced or not received, an

employer should request another form be issued. When requesting

any of these forms, please furnish the employer’s correct name,

address, Kentucky withholding account number and the period

for which the form is requested.

**K-1E and K-3E forms are now available on our website as

ﬁll-in forms. The Department will no longer mail these forms

to taxpayers.

Online Filing of Withholding Tax Returns—The Kentucky

Department of Revenue has implemented online ﬁling of

Withholding Tax returns and payments. WRAPS, Withholding

Return and Payment System, provides the ability to ﬁle

Withholding Tax returns online.

Taxpayers may ﬁle returns, view and/or amend returns previously

ﬁled online, request refunds and credit forwards, as well as pay

their Withholding Tax using the Enterprise Electronic Payment

System.

Please visit www.revenue.ky.gov to review the WRAPS user guide

and register for WRAPS.

***Bulk Filing of Withholding Tax Returns—The Kentucky

Department of Revenue has implemented a Bulk Filing system

for payroll companies who choose to ﬁle a large number of

Withholding Tax Returns in a single ﬁle. For details regarding

how to become a Bulk Filer; please refer to the Department

of Revenue Gateway Registration Overview on our website at

www.revenue.ky.gov.

III. KENTUCKY'S WITHHOLDING CERTIFICATE

Form K-4—Kentucky’s Withholding Certiﬁcate;

All Kentucky wage earners are taxed at a ﬂat 5% tax rate with a

standard deduction allowance annually adjusted by the Department

of Revenue in accordance with KRS 141.081(2)(a).

There are no personal exemptions. However, an employee may

be exempt from withholding if they meet the criteria deﬁned on

the form K-4.

• An Employee may be exempt from withholding for the current

tax year if both of the following apply:

¡ For the prior tax year; the employee had a right to a refund

of all Kentucky income tax withheld because they had

no Kentucky income tax liability; and

¡ For the current tax year; the employee expects a refund

of all Kentucky income tax withheld.

• Under the provisions of Public Law 105-261, pay and

compensation earned at the Fort Campbell, Kentucky, military

base is exempt from Kentucky income tax if you are not a

resident of Kentucky. KRS 141.010 (24) deﬁnes “resident” as

an individual domiciled within this state or an individual who

is not domiciled in this state, but maintains a place of abode in

this state and spends in the aggregate more than one hundred

eighty-three (183) days of the taxable year in this state;

• An employee may be exempt from withholding, if they meet

the conditions set forth under the Servicemember Civil Relief

Act as amended by the Military Spouses Residence Relief Act.

• An employee may be exempt from withholding if they work in

Kentucky but reside in one of the following reciprocal states:

Illinois, Indiana, Michigan, West Virginia, Wisconsin, Virginia

and commutes daily or Ohio and are not a shareholder-

employee who is a "twenty (20) percent or greater" direct or

indirect equity investor in a S corporation.

If any of the four criteria are met; the employee is exempt from

Kentucky Withholding. The employee must complete form K-4 and

ﬁle it with the employer before withholding will be discontinued.

IV. EMPLOYER FILING REQUIREMENTS

Employers report and pay Kentucky withholding tax annually,

quarterly, monthly or twice monthly. Employers who accumulate

$100,000 or more tax during any reporting period must remit

payment within one banking day. Regardless of the reporting and

payment frequency, returns issued to employers must be ﬁled

even though no Kentucky income tax was withheld during that

period. Delinquent returns interrupt normal processing and often

result in assessments which easily could have been prevented. The

ﬁling methods are described below.

A. Annual Filing

Employers withholding less than $400 Kentucky income tax a

year will be required to ﬁle a return and remit the tax annually.

The employer will be notiﬁed by DOR when the account is

placed on an annual ﬁling basis. The annual return (Form

K-3) is ﬁled with DOR by January 31, following the close of

the calendar year. The tax due is to be paid in full at the time

the return is ﬁled. Tax paid should reconcile with the total

amount of Kentucky tax withheld as shown on the Wage and

Tax Statements (Form W-2). The K-3 return must be ﬁled

even if no tax was withheld during the period. See Section

VI for the withholding statement requirements.

Employers assigned to an annual frequency who wish to ﬁle

quarterly may be changed if a request is made in writing.

Employers requesting this change should submit the request

to the Withholding Tax Branch, Department of Revenue, P.O.

Box 181, Station 57, Frankfort, Kentucky 40602-0181 or by

e-mail at DOR.WebResponseWithholdingTax@ky.gov.

B. Quarterly Filing

Employers withholding $400-$1,999 Kentucky income tax a

year must ﬁle and pay on a quarterly basis.

1. Form K-1

The quarterly return (Form K-1) must be submitted for

the ﬁrst three quarters of the calendar year. The return

must be ﬁled with the Department of Revenue, Frankfort,

Kentucky 40620, on or before the last day of the month

following the end of the quarter.

Payment of the tax withheld for the quarter must be

submitted with the return. The return must be ﬁled even

if no income tax was withheld for the period.

2. Form K-3

Employers on a quarterly ﬁling basis must ﬁle a quarterly

return and annual reconciliation (Form K-3) for the fourth

quarter. In addition to submitting the tax withheld for the

fourth quarter, an annual reconciliation area is provided for

balancing the employer’s account.

Tax paid for the ﬁrst three quarters plus the tax due for

the fourth quarter should reconcile with the total amount

of Kentucky tax withheld as shown on the Wage and Tax

Statements (Form W-2).

If the account is underpaid, the amount of additional tax

should be entered on Line 4, Form K-3 and paid with the

fourth quarter return. If the account is overpaid, credit

may be taken on Line 4 against any tax due for the fourth

quarter. All overpayments and underpayments will be

veriﬁed by DOR.

The K-3 return must be ﬁled even if no income tax

was withheld for the period. See Section VI for the

withholding statement requirements.

QUARTERLY FILING

Period Form Due Date

January–March K-1 April 30

April–June K-1 July 31

July–September K-1 October 31

October–December K-3 January 31

C. Monthly Filing

Employers withholding $2,000-$49,999 Kentucky income tax a

year must ﬁle and pay on a monthly basis. Employers meeting

the monthly ﬁling requirement must notify DOR and be placed

on a monthly ﬁling basis. Employers required to ﬁle a return

and remit tax withheld monthly must continue monthly ﬁling

unless permission is granted by DOR to ﬁle quarterly. When

an account has been placed on monthly ﬁling and the employer

fails to ﬁle monthly, applicable interest and penalties will be

assessed as described in Section X.

1. Form K-1

The monthly return (Form K-1) must be ﬁled for the ﬁrst

11 months of the year. The return must be ﬁled with the

Department of Revenue, Frankfort, Kentucky 40620, on

or before the 15th day of the following month. Payment

of tax withheld for the month must be submitted with the

return. The return must be ﬁled even if no income tax

was withheld for the period.

2. Form K-3

Employers on a monthly ﬁling basis must ﬁle a Form K-3 for

the last month of the calendar year. In addition to submitting

the tax withheld for December, an annual reconciliation

area is provided for balancing the employer's account.

Tax paid for the ﬁrst 11 months plus the tax due for

December should reconcile with the total amount of

Kentucky tax withheld as shown on the Wage and Tax

Statements (Form W-2).

If the account is underpaid, the amount of additional tax

should be entered on Line 4, Form K-3 and paid with the

fourth quarter return. If the account is overpaid, credit

may be taken on Line 4 against any tax due for December.

All overpayments and underpayments will be veriﬁed by

DOR.

The K-3 return must be ﬁled even if no income tax

was withheld for the period. See Section VI for the

withholding statement requirements.

MONTHLY FILING

Period Form Due Date

January K-1 February 15

February K-1 March 15

March K-1 April 15

April K-1 May 15

May K-1 June 15

June K-1 July 15

July K-1 August 15

August K-1 September 15

September K-1 October 15

October K-1 November 15

November K-1 December 15

December K-3 January 31

D. Twice-Monthly Filing

Employers withholding $50,000 or more Kentucky income tax

a year must ﬁle and pay on a twice-monthly basis. Employers

meeting the twice-monthly ﬁling requirement must notify DOR

and be placed on a twice-monthly basis. Employers required

to ﬁle a return and remit tax withheld twice-monthly must

continue twice-monthly ﬁling unless permission is granted

by DOR to change ﬁling frequency. When an account has

been placed on twice-monthly ﬁling and the employer fails

to ﬁle twice-monthly, applicable interest and penalties will be

assessed as described in Section X.

1. Form K-1

The twice-monthly return (Form K-1) must be ﬁled for the

ﬁrst through the 15th of the month and is due on or before

the 25th of the month; the 16th through the end of the

month is due on or before the 10th of the following month.

Payment of tax withheld for the reporting period must be

submitted with the return. The return must be ﬁled even

if no income tax was withheld for the period.

2. Form K-3

Employers on a twice-monthly ﬁling basis must ﬁle a Form

K-3 for the last reporting period of the calendar year. In

addition to submitting the tax withheld for the last reporting

period of the year, an annual reconciliation area is provided

for balancing the employer’s account.

Tax paid for the ﬁrst 11 months plus the tax due for

December should reconcile with the total amount of

Kentucky tax withheld as shown on the Wage and Tax

Statements (Form W-2).

If the account is underpaid, the amount of additional tax

should be entered on Line 4, Form K-3 and paid with the

return. If the account is overpaid, credit may be taken on

Line 4 against any tax due for the last reporting period. All

overpayments and underpayments will be veriﬁed by DOR.

The K-3 return must be ﬁled even if no income tax

was withheld for the period. See Section VI for the

withholding statement requirements.

TWICE-MONTHLY FILING

Return and Payment

Reporting Period Due Date

January 1-January 31* February 10

February 1-February 15 February 25

February 16-February 28 March 10

March 1-March 15 March 25

March 16-March 31 April 10

April 1-April 15 April 25

April 16-April 30 May 10

May 1-May 15 May 25

May 16-May 31 June 10

June 1-June 15 June 25

June 16-June 30 July 10

July 1-July 15 July 25

July 16-July 31 August 10

August 1-August 15 August 25

August 16-August 31 September 10

September 1-September 15 September 25

September 16-September 30 October 10

October 1-October 15 October 25

October 16-October 31 November 10

November 1-November 15 November 25

November 16-November 30 December 10

December 1-December 15 December 26

December 16-December 31** January 31

* First reporting period of year will be for the entire month of January

and due on February 10.

** Payment and return will be on Form K-3, Annual Reconciliation,

due January 31.

E. One-Day Deposit

Employers who accumulate $100,000 or more Kentucky income

tax withheld during any reporting period must remit payment

within one banking day. Employers who meet this requirement

for the ﬁrst time should contact the EFT area at (502) 564-6020

for instructions.

V. TERMINATION OF BUSINESS

If an employer discontinues business during the year, the following

actions must be taken to close the withholding account:

1. Fill out Form 10A104, Update or Cancellation of Kentucky

Tax Account(s) and return to Department of Revenue. This

step must be taken. Failure to do so will generate computer

notices which could result in assessments for delinquent

returns.

2. Provide a Form W-2 for each employee; and report the

withholding statement to DOR on Form K-5.

3. Prepare and ﬁle a Form K-3.

VI. WITHHOLDING STATEMENTS

Withholding Statement Reporting to Employees

Employers must furnish the designated copies of the Wage and

Tax Statement (Form W-2) to their employees by January 31. This

is required by Regulation 103 KAR 18:050.

If an employee is discharged or terminates his or her employment

during the year and requests a withholding statement, the employer

must provide the employee with the designated copies of Form

W-2 within 30 days of the last payment of wages or within 30

days of the request.

Employers may use an approved commercially printed six-part

Form W-2. It is important that the Kentucky withholding account

number be listed on the Wage and Tax Statements (Form W-2).

Many employers list only the Federal Identiﬁcation Number,

which causes processing problems of the employee’s individual

income tax returns.

Commercially printed forms must include:

1. a legible copy for the employee stating that it is to be attached

to his or her Kentucky income tax return;

2. a copy for the employee’s personal records;

3. an acceptable format with spaces designated as follows:

a. taxable wages;

b. Kentucky taxable wages;

c. Kentucky tax withheld and federal tax withheld;

d. employer’s Kentucky withholding account number and

federal identiﬁcation number;

e. employee’s Social Security number;

f. employee’s name and address;

g. employer’s name and address; and

h. name of state.

Withholding Statement Reporting to DOR

Withholding statements include Forms W-2, W-2G, and 1099

Series. Do not mail paper copies of the withholding statements to

the DOR. Paper copies of Forms W-2, W-2G, and 1099 Series

received by the DOR will not be processed and will not be

considered ﬁled. Retain the paper forms for your records and

only provide copies upon request.

The withholding statement information must be either submitted

electronically or reported using Form K-5. Withhholding statement

information must be submitted to DOR by January 31. Failure to

furnish the required withholding statement information may result

in penalties in accordance with KRS 131.180(4).

Only report 1099 data to the DOR when Kentucky tax has been

withheld.

Electronic Filing Threshold

Regulation 103 KAR 18:050(5) requires any employer or payer

issuing 26 or more withholding statements (Forms W-2, W-2G,

and 1099 Series) annually to ﬁle electronically. Employers and

payers issuing fewer than 26 withholding statements that are not

ﬁled electronically must ﬁle Form K-5.

Withholding Statement Format and Filing Methods

• The EFW2 format for W-2 electronic ﬁles must be submitted

via Web Filing or on CD.

• The Publication 1220 format for W-2G and 1099 electronic

ﬁles must be submitted on CD.

• Form K-5 is required for withholding statements not reported

in an electronic ﬁle format.

o Form K-5 is completed online and either ﬁled

electronically by clicking the submit button or printed

with a barcode and mailed to DOR. The K-5 print and

mail option is only available for those reporting fewer

than 26 withholding statements.

Web Filing and CD Electronic Filing of W-2 Information

DOR follows the federal speciﬁcation format for ﬁling W-2 data

electronically. This does not mean a duplicate copy of your

federal electronic ﬁle is acceptable. There are differences in the

data record requirements and some differences in procedural

requirements between the federal and state formats.

Kentucky follows the SSA’s EFW2 speciﬁcations with DOR

deﬁned RS Records for ﬁling W-2 information. Speciﬁcations

are available at https://revenue.ky.gov/Business/Pages/Employer-

Payroll-Withholding.aspx

Web Filing is the preferred method of reporting annual Wage and

Tax Statement (W-2) information. DOR has designed a secure

website to provide this functionality. Web Filing streamlines the

processing of the wage and tax information and offers an easy,

secure way to meet the ﬁling requirements. For information

regarding participation in the Web Filing method to electronically

ﬁle wage and tax information, contact the Withholding

Tax Compliance Section at (502) 564-1900 or by e-mail at

DOR.WebResponseWithholdingTax@ky.gov.

CD submission is another ﬁling option to report annual Wage

and Tax Statement (W-2) information. Employers and third-party

processors who do not register for web ﬁling may utilize this ﬁling

method to submit EFW2 ﬁles to the DOR. All CD submissions

must accompany a Transmitter Report, Form 42A806.

CD Electronic Filing of W-2G and 1099 Information

DOR follows the federal Publication 1220 speciﬁcation format

for ﬁling W-2G and 1099 data electroncially. DOR deﬁned B

Records are required when reporting Kentucky statements.

Speciﬁcations are available at https://revenue.ky.gov/Business/

Pages/Employer-Payroll-Withholding.aspx

CD submission is the only method of ﬁling W-2G and 1099 data in

the Publication 1220 electronic format. All CD submissions must

accompany a Transmitter Report, Form 42A806.

Only report 1099 data to the DOR when Kentucky tax has been

withheld.

Form K-5 Filing of W-2, W-2G, and 1099 Information

Form K-5 must be used to report W-2, W-2G, and 1099 information

that is not ﬁled in an electronic ﬁle format. The K-5 is completed

online and may be ﬁled electronically by clicking the submit

button or it may be printed and mailed to the DOR at the address

on the form.

The online electronic ﬁling method may be used to report any

number of withholding statements. However, the print and mail

ﬁling method is only an option available for those reporting

fewer than 26 withholding statements. Form K-5 is available at

https://revenue.ky.gov/Business/Pages/Employer-Payroll-

Withholding.aspx

K-5 Filing Tips

• Only report Kentucky W-2’s, W-2G’s, and 1099’s.

• Only report 1099’s that have Kentucky tax withheld.

• Incomplete forms cannot be submitted or saved.

• 26 or more withholding statements requires electronic ﬁling.

• A separate K-5 must be ﬁled for each type Form W-2, W-2G,

or 1099.

• W-2C’s cannot be reported on Fom K-5.

• Be sure to retain a copy of the completed Form K-5 for your

records.

• Tax years prior to 2018 may be reported on Form K-5 –

requires electronic ﬁling.

• Do not mail paper copies of W-2’s, W-2G’s, or 1099’s to the

DOR. Paper copies of Forms W-2, W-2G, and 1099 received

by the DOR will not be processed and will not be considered

ﬁled. Retain the paper forms for your records and only provide

copies upon request.

Form W-2C – Corrected Wage and Tax Statement

W-2 corrections can only be made via paper and must be reported

by ﬁling Form W-2C, not Form K-5.

VII. ELECTRONIC FUND TRANSFER

Employers whose average monthly income tax withholding

exceeds the amount referred to in Regulation 103 KAR 1:060

will be required to submit tax payments via electronic fund

transfer (EFT). DOR will notify employers when they reach this

threshold.

DOR offers business entities the opportunity to voluntarily pay

their withholding tax via EFT. KRS 131.155—Electronic Fund

Transfer was amended by the 2000 General Assembly to require

that all electronic fund transfer payers remit payment to DOR by

the debit method or other means as prescribed by DOR. DOR may

also require reporting agents whose aggregate payment on behalf

of multiple taxpayers is in excess of the threshold or anyone who

reports and pays for more than 100 individual accounts to remit

all payments via electronic fund transfer. The current threshold

for mandatory electronic fund transfer established by Regulation

103 KAR 1:060 is $25,000 for withholding taxes. Many business

entities ﬁnd this a convenient and efﬁcient way to remit their tax

payments.

To be eligible for EFT, the business must be registered with DOR

for withholding tax ﬁling purposes. The business must then register

with DOR's EFT group. Applications for EFT may be obtained by

contacting the EFT Group at (502) 564-6020, or by visiting one of

DOR's taxpayer service centers. Once the completed application

is received and processed the business will be notiﬁed that they

may begin remitting payments via EFT and will receive speciﬁc

instructions for the payment method selected.

KRS 131.155(5)

Taxpayers and any other persons who are required to collect and

remit taxes administered by the department by electronic fund

transfer shall be entitled to receive refunds for any overpayment

of taxes or fees by electronic fund transfer. Form 42A815,

Withholding Tax Refund Application, must be submitted to request

an electronic refund.

VIII. SUMMARY OF EMPLOYER REQUIREMENTS

1. DOR uses a combined application for registration of

withholding, corporation, coal and sales and use taxes.

Employers required to withhold Kentucky income tax must

complete Sections A, B, C and D of this form. A withholding

account number is required when an employer has one or more

employees as deﬁned in Section 3401 of the Internal Revenue

Code currently in effect for Kentucky.

2. The employer must withhold tax according to the tables or

computer formula.

3. The employer must send payment of all income tax withheld for

the applicable period to the Department of Revenue, Frankfort,

Kentucky 40620. This payment must be accompanied by Form

K-1 or K-3, Employer’s Return of Income Tax Withheld, which

will be furnished by DOR.

4. On or before January 31 of each year, or at the termination of

employment, the employer must give each employee a wage

and tax statement in duplicate using Form W-2 (Copies No.

2, B and C) or a previously approved commercially printed

wage and tax statement showing:

a. taxable wages;

b. Kentucky taxable wages;

c. Kentucky tax withheld and federal tax withheld;

d. employer’s Kentucky withholding account number and

federal identiﬁcation number;

e. employee’s Social Security number;

f. employee’s name and address;

g. employer’s name and address; and

h. name of state.

5. The employer must ﬁle Form K-3, Employer’s Return of

Income Tax Withheld, on or before January 31 of each year.

Form K-3 is a combination return reporting income tax

withheld for the period ending December 31, and reconciling

withholding for the year. The employer must report Wage

and Tax Statement information to DOR by January 31.

6. Income exempt from Kentucky withholding is generally

the same as under federal law. The chief classes exempt are

domestic workers, fees paid to public ofﬁcials and ministers.

7. Employers required to withhold Kentucky income tax are

generally the same as under federal law. It is necessary to

report W-2 information for each employee even if there

may be no Kentucky income tax withheld.

8. Employers not ﬁling electronically, will be mailed forms K-1

or K-3 at the end of each reporting period. These preprinted

forms contain important processing information and cannot

be furnished in blank form. When a form not received contact

DOR to request a replacement. When requesting any of these

forms, please furnish the employer’s correct name, address,

Kentucky withholding account number and the period for

which the form is requested.

9. Other Employer Requirements

You may need to register for a Kentucky Unemployment

Insurance account. Please visit https://kewes.ky.gov for

additional information.

KRS 405.435 requires all employers in Kentucky to report

all new or re-hires to the Cabinet for Health and Family

Services. The Kentucky New Hire Reporting Form must be

ﬁled within twenty (20) days of the hiring or return to work

of the employee. Please visit https://ky-newhire.com/default

for additional information.

Kentucky businesses are required to comply with the Kentucky

Revised Uniform Unclaimed Property Act, codiﬁed as KRS

Chapter 393A. If you have uncashed vendor checks, payroll

checks, unclaimed customer deposits or refunds, or other types

of property belonging to third-parties, you may be required to

turn the property over to the Kentucky State Treasury. Please

review KRS Chapter 393A, or visit https://treasury.ky.gov for

more information.

IX. GAMBLING WINNINGS

Regulation 103 KAR 18:070 establishes the withholding rate

on gambling winnings at the maximum income tax rate in KRS

141.020. Every person making a payment of gambling winnings

that is subject to federal tax withholding must deduct and withhold

from the payment Kentucky income tax. The withholding tax

rate for gambling winnings is 5 percent of the proceeds paid (the

amount of winnings minus the amount of the bet). The Kentucky

tax withheld from gambling winnings should be reported and paid

on the payee's withholding account. The winnings and tax withheld

should be reported and paid on the K-1 or K-3 return.

Gambling winnings of more than $5,000 from the following

sources are subject to income tax withholding.

• Any sweepstakes, wagering pool, or lottery.

• Any other wager, if the proceeds are at least 300 times the

amount of the bet.

Gambling winnings from bingo, keno, and slot machines are

generally not subject to income tax withholding.

The deﬁnition of wages in KRS 141.010(22) includes gambling

winnings subject to withholding as provided in Section 3402(q) of

the Internal Revenue Code. Additional information is available in

Internal Revenue Service Publication 505, Tax Withholding and

Estimated Tax.

X. INTEREST, PENALTIES, BOND REQUIREMENT

AND CORPORATE OFFICER LIABILITY

A. Interest (KRS 141.985)—If the tax, whether assessed by DOR

or the taxpayer, or any installment or portion of the tax is not

paid on or before the due date prescribed for its payment, there

shall be collected, as a part of the tax, interest upon the unpaid

amount computed from the due date until paid.

B. Civil Penalties (KRS 131.180)—Any employer who fails to

withhold and remit taxes as required by KRS Chapter 141 may

be subject to the following penalties.

1. Late ﬁling of return—2 percent of the total tax due for each

30 days or a fraction thereof the return or report is late, not

to exceed 20 percent (minimum $10).

2. Late payment or failure to withhold tax—2 percent of the

tax not timely paid or withheld for each 30 days or fraction

thereof the payment is late, not to exceed 20 percent

(minimum $10).

3. Failure to timely obtain identiﬁcation number, permit,

license or other document of authority—10 percent of any

cost or fee required for issuance (minimum $50).

4. Failure to ﬁle return or furnish information—Any employer

required to furnish a wage and tax statement who fails to

furnish a statement, may for such failure be subject to civil

penalty of $25 for each return (minimum $100).

C. Criminal Penalty (KRS 141.990(5))—Any employer who

willfully fails to make a return, or willfully makes a false return,

or who willfully fails to pay the tax owing or collected, with

the intent to evade payment of the tax or amount collected, or

any part thereof, shall be guilty of a Class D felony.

D. Criminal Penalty (KRS 514.040)—A person is guilty of

theft by deception when he issues a check or similar sight

order in payment of all or any part of any tax payable to the

Commonwealth knowing that it will not be honored by the

drawee. Theft by deception is a Class A misdemeanor unless

the amount of the check or sight order is $500 or more but less

than $10,000, in which case it is a Class D felony; or $10,000

or more, in which case it is a Class C felony.

E. Bond Requirement (KRS 141.310(13))—Any employer may

be required to post a bond with DOR. Action to restrain or

enjoin the operation of an employer’s business may be taken

until the bond is posted and/or the tax is paid. The amount of

the bond shall not exceed $50,000.

F. Corporate Ofﬁcer Liability (KRS 141.340(2))—Certain

corporate ofﬁcers shall be held liable for any tax required to

be withheld from wages paid to employees of the corporation.

XI. COMPUTER FORMULA (OPTIONAL

WITHHOLDING METHOD)

The current year Computer Formula example and tax tables can

be found at www.revenue.ky.gov.

XII. TAXABLE/EXEMPT CHART

Withholding tax law is based on the federal withholding tax

law currently in effect for Kentucky. DOR generally follows the

administrative regulations and rulings of the Internal Revenue

Service in those areas where no speciﬁc Kentucky law exists.

The Kentucky Legislature has provided for the prospective

adoption of amendments to the Internal Revenue Code currently

in effect for Kentucky, which would extend provisions that would

otherwise terminate, providing any subsequent federal legislation

is limited only to the extension of the statute.

The chart below has been prepared as a quick reference guide to the

withholding tax treatment of many types of payments or payees.

Kentucky

Situation Withholding

Treatment

Agricultural Workers—Wages Required*

Aliens Required

Bonuses Required

Cafeteria Plans Not Required

Clergy Not Required

Company Cars Required

Contractors Not Required

Dependent Care Assistance Programs Not Required

Directors and Ofﬁcers Required

Dismissal or Severance Pay Required

Domestic Workers Not Required

Election Campaign Workers Not Required

Family Employment Required

Federal Thrift Savings Fund Not Required*

Flexible Beneﬁt Plans Not Required

Fringe Beneﬁts Not Required*

Golden Parachute Payments Required

Group-Term Life Not Required*

Health Care Plans Not Required

IRA Not Required

Loans Not Required

Meals and Lodging Not Required*

Moving Expenses Required

Nonproﬁt Organizations Required

Pensions Not Required

Retirement and Pension Plans (401K Plan) Not Required*

Scholarships and Grants Not Required

SEP Plan Not Required*

Sick Pay Required*

Third-Party Sick Pay Not Required

Tips Required (over $20)

Travel Expenses Not Required*

Vacation Pay Required

*Refer to Internal Revenue Code currently in effect for Kentucky.

XIII. COMMONLY ASKED QUESTIONS AND

ANSWERS

1. Who is considered an employee?

An employee is someone who receives wages for services

performed for his or her employer. The term wages includes

all remuneration (other than fees paid to a public ofﬁcial)

for services performed. Therefore, wages earned for services

performed in Kentucky are subject to Kentucky withholding.

Corporate ofﬁcers are also considered employees.

2. How do I obtain a Withholding Tax Account Number?

• The employer may register online at https://onestop.ky.gov/

Pages/default.aspx.

• The employer may ﬁll out the Kentucky Tax Registration

Application, Revenue Form 10A100. Once received, the

application will be reviewed and an account number and

ﬁling frequency will be assigned. Applications may be

obtained online at https://revenue.ky.gov/Pages/index.aspx,

by contacting the nearest Kentucky Taxpayer Service Center

or the following address:

Department of Revenue

ATTN: FORMS

Station 23B

Frankfort, Kentucky 40620

(502) 564-3658

3. Is an out-of-state employer required to withhold?

Regulation 103 KAR 18:010(2) provides that wages paid

to nonresidents are subject to withholding to the extent that

they earned wages while working in Kentucky unless the

nonresident employee is a resident of a reciprocal state. An

out-of-state employer may voluntarily withhold Kentucky tax

on a Kentucky resident who is working outside of Kentucky.

4. Does an employer have to withhold tax on a spouse or

relative?

Yes. Tax must be withheld on a spouse employed by a spouse,

son or daughter employed by parent, a parent employed by a

son, daughter, or any other employee-relative.

5. What is a K-5?

A K-5 is used to report withholding statement information from

W-2's, W-2G's, and 1099's that has not been submitted in an

electronic ﬁle (EFW2 or Publication 1220 format). The K-5

is completed online and can be ﬁled by clicking the submit

button or it may be printed and mailed to the address on the

form. The print and mail option is only available for those

reporting fewer than 26 withholding statements.

6. What happens if an employer does not submit copies of

W-2s to his or her employees or DOR?

Penalties will be assessed per KRS 131.180.

7. Is Form 1099 required to be ﬁled with Kentucky?

Form 1099 is only reported to Kentucky when Kentucky tax

has been withheld. 1099 information may be reported in an

electronic ﬁle on CD in the Publication 1220 format or it may

be reported on Form K-5.

8. Is tax required to be withheld on agricultural labor?

Kentucky income tax law is based on the Internal Revenue

Code currently in effect for Kentucky. Section 3121(a) of the

Internal Revenue Code includes agricultural wages as being

taxable unless remuneration is paid in any medium other than

cash, the cash amount received by an employee is less than

$150 and the employer’s labor expense is less than $2,500.

Therefore, any agricultural wages taxable for federal purposes

would also be considered taxable for Kentucky.

9. Is Kentucky tax required to be withheld on pensions?

No. Kentucky tax may be withheld voluntarily, but is not

required.

10. What should I do if I do not receive a return?

If you are not an online or EFT ﬁler and a return is not received

10 days before the due date, contact DOR immediately, at

(502) 564-7287, so a new return can be issued. Each return is

preprinted and contains coded data for processing purposes.

11. How do I amend information on a previously ﬁled

return?

Online ﬁlers may amend previously ﬁled periods online by

locating the period to be amended and selecting "Click here to

edit the return" displayed under the "Return Status" heading.

For additional assistance amending a return online, please go

to the WRAPS Home Page, Important Links and select the

Public User Guide.

Paper ﬁlers may obtain a K-1 Amended Return, Form

42A801(D), or a K-3 Amended Return, Form 42A803(D), on

the Employer Payroll Withholding website page at:

https://revenue.ky.gov/Business/Pages/Employer-Payroll-

Withholding.aspx or by contacting one of the Taxpayer Service

Centers listed on the inside front cover of this instruction book.

However, in many cases a phone call to DOR at (502) 564-7287

may eliminate the need to ﬁle an amended return.

XIV. FORMS AVAILABLE ONLINE AT

www.revenue.ky.gov

Withholding Tax Forms

42A801(D) Amended K-1

42A803(D) Amended K-3

42A801-E Form K-1E—Kentucky Employer's Income

Tax Withheld Worksheet for EFT accounts

only (ﬁll-in form)

42A803-E Form K-3E —Kentucky Employer's

Income Tax Withheld Worksheet—Annual

Reconciliation for EFT accounts only (ﬁll-in

form)

42A804 Form K-4—Kentucky's Withholding

Certiﬁcate

42A805 Form K-5—Kentucky Employer's Report of

Withholding Tax Statements

42A806 Transmitter Report for CD Submission of

Electronic Files—EFW2 or Publication 1220

Format

42A808 Authorization to Submit Employees Annual

Wage and Tax Statements Via Kentucky

Department of Revenue Web Site

42A815 Withholding Tax Refund Application

42A003 Withholding Tax Book—Instructions for

Employers

42A003(T) Withholding Tax Tables

Sample copies of Forms K-1 and K-3 are provided in the back

of this book.

IMPORTANT INFORMATION FOR KENTUCKY EMPLOYERS

CONCERNING WORKERS COMPENSATION INSURANCE

Every Kentucky employer with one or more employees is required to maintain workers compensation insurance. (KRS 342.630)

There are no special exceptions for family member or part-time employees. Out of state employers performing any work in this

state are required to have Kentucky workers compensation insurance. Keep in mind that workers often referred to as “day laborers

(contract labor)” are considered employees under the Workers Compensation Act and must be covered.

Exempted by statute are farm laborers, domestic servants working in a private home of an employer who has less than two employees,

workers employed by a homeowner for residential maintenance, remodeling and repair lasting no more than 20 consecutive work

days, and employees protected by federal laws, including railroad and maritime workers. (KRS 342.650)

Compliance with the Act

The Enforcement Branch of the Ofﬁce of Workers Claims seeks compliance of all employers in the state. This is accomplished

by regular inspections of employers to verify compliance. The Ofﬁce of Workers Claims can issue a citation resulting in a ﬁne

of $100 to $1,000 for each offense. The ﬁne can be substantial since each employee and each day of violation shall constitute a

separate offense [KRS 342.990(7)(c)]. An injunction prohibiting the employer from doing business until it comes into compliance

can be obtained. The statute also prohibits the employer from deducting premium from wages or salary of any employee entitled

to beneﬁts.

Kentucky does not sponsor a state-run insurance program. Therefore, it is the employer’s responsibility to secure the insurance from

a private carrier. Workers compensation insurance may be obtained by purchasing a policy from an insurance agent that represents

approved insurance companies.

This information form provides a brief explanation of the Workers Compensation Act. Additional information can be obtained by

contacting the Kentucky Department of Labor, Ofﬁce of Workers Claims Enforcement Branch at 1-502-564-5550 or 1-800-731-

5241. Our Internet Web site is www.labor.ky.gov/workersclaims.

APPENDIX

SAMPLE COPY

DO NOT REPRODUCE

SAMPLE COPY

DO NOT REPRODUCE

Rev.05/13

Kentucky New Hire Reporting Form

Mail completed form to: Kentucky New Hire Reporting Center

P.O. Box 3818

Dublin, OH 43016

Or fax completed form to: 1-800-817-0099

We also offer fast and easy-to-use online reporting options. For more information please

visit our website at www.ky-newhire.com or call us toll-free at 1-800-817-2262.

EMPLOYER INFORMATION

Federal Employer Identification Number (FEIN): __________-______________________

(Please make certain you use the same 9-digit FEIN you use to report your quarterly wage information)

Kentucky Employer Identification Number (KEIN): __________-____________________

Employer Name: ___________________________________________________________

Address: _____________________________________________________________________________________

(Please indicate the address where the Income Withholding Order should be sent)

City: _________________________________ State: __________ Zip Code: _________________ +4: __________

Contact Name: _______________________________ E-mail Address: _____________________________

Phone Number: _________-_________-____________ Fax Number: _________-_________-____________

COMPLETE ONE ENTRY FOR EACH NEW OR REHIRED EMPLOYEE

EMPLOYEE INFORMATION

Social Security Number: __________-________-_______________

First Name: _______________________ Middle Name: _______________________ Last Name:__________________________

Employee Address: _____________________________________________________________________________

City: _____________________________________ State: __________ Zip Code: ____________ +4: ___________

Date of Hire: _______________________ *Date of Birth: _______________________

Is medical insurance available to this employee? Yes ____ No ____

* OPTIONAL

EMPLOYEE INFORMATION

Social Security Number: __________-________-_______________

First Name: _______________________ Middle Name: _______________________ Last Name:__________________________

Employee Address: _____________________________________________________________________________

City: _____________________________________ State: __________ Zip Code: ____________ +4: ___________

Date of Hire: _______________________ *Date of Birth: _______________________

Is medical insurance available to this employee? Yes ____ No ____

* OPTIONAL

Reports will not be processed without all of the above mandatory information

Please note: Forms K-1 and K-3 cannot be reproduced.

CHECKLIST

FORM K-1

1. Are the number of employees and the amount of Kentucky wages paid listed?

2. If an amount is claimed on Line 4, is an explanation included on back of return?

3. If you had no employees for a ﬁling period, are you ﬁling a return indicating zero employees as

required?

4. Is Form K-1 signed and dated?

FORM K-3

1. Are the number of employees and the amount of Kentucky wages paid listed?

2. If an amount is claimed on Line 4, is an explanation included on back of return?

3. Is the Annual Reconciliation (on back of return) completed?

4. Is Form K-3 signed and dated?

WAGE AND TAX STATEMENTS (FORMS W-2)

1. Are the required items listed in Section VI included on the forms?

2. Are the Wage and Tax Statements (Forms W-2) legible?

3. Does the total of Kentucky tax withheld on the Wage and Tax Statements (Forms W-2) reconcile

to total payments listed on Form K-3?

4. Is the Kentucky Withholding Account Number listed?