Tax Alert

Should You Prepay Kansas State Income Tax Before Year-End?

Should you prepay Kansas income tax image

This year, because of significant changes in the Kansas tax laws, taxpayers should take a hard look at whether to pre-pay 2017 state income taxes before Dec. 31. The Kansas Legislature’s rollback of 2012 state income tax cuts reinstates state income tax on non-wage business income for sole proprietorships, farming and rental activities, and pass-through entities, such as partnerships, LLCs and S corporations – so taxpayers with these types of income may once again owe Kansas income tax.

The State of Kansas does not require adjustments to estimated quarterly income tax, as long as the tax liability is paid by April 15, 2018. However, proposed federal tax reforms complicate the pre-payment decision.

  • The current federal tax reform proposal would eliminate the state income tax deduction for individuals in 2018. If this passes, it may make sense to pre-pay Kansas income tax in 2017.
  • BUT, if a taxpayer is subject to the alternative minimum tax (AMT) in 2017, it may limit the amount that should be pre-paid.

Bottom line – this is a critical year for Kansas taxpayers to review their situation with a tax professional well before year-end, to evaluate how best to manage and mitigate tax liability in the current environment. Keep an eye on federal tax reform and set up an appointment with a tax advisor as soon as possible.

Summary

For more information about pre-payment of Kansas income tax and the effects of tax reform, contact your AGH tax professional or Shawn Sullivan, AGH’s senior vice president of tax services using the information below.

Shawn Sullivan

Senior Vice President
Tax Services

Shawn serves as one of two primary leaders in the firm’s large tax group. He has extensive public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, wholesale/retail distribution, real estate development and management, construction, and contractor industries. In addition to enhancing business performance to minimize tax consequences, he has experience in mergers and acquisitions and international tax and business structuring.

A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.

NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.