Homestead Claims Forms K40-H & K-40PT Property Tax Refunds Before presenting this material you should read through KDOR’s “Homestead or Property Tax Refund For Homeowners” booklet. This is the instruction booklet for completing Forms K-40H and K-40PT. You will want to have the following handouts available: K-40H vs. K-40PT Homestead Interview Tips Social Security Income Homestead Questions and Answers You may want to handout the Homestead instruction booklet too. It’s time to change our mindset. There is a world of difference between filing an income tax return and a claim for a property tax refund. This is not a tax. It is a property tax rebate program available to Kansas residents who own and occupy a dwelling as their principal residence that is subject to general property tax. There are two programs. The Homestead claim (K-40H) and the Property Tax Relief claim (K-40PT). The terminology changes, and the entire goal changes. The next slide will take us through these changes. Time to change gears … Kansas STTC Training - TY2017 1

Income Tax Vs. Homestead Terms & Definitions K-40 – Income Tax K-40H/PT – Homestead Taxpayer Claimant TP, SP Dependents Household FAGI, AGI, Earned Household Income It’s time to change our mindset. There is a world of difference between filing an income tax return and a claim for a property tax refund. The terminology changes, and the entire goal changes. For example, when we are working on a tax return, the principal person is the taxpayer. The taxpayer has some income and is responsible for paying any tax owed. However, when we file a claim for property tax refund, we now refer to the claimant. The claimant is the one who qualifies to file the claim. The claimant may not be the same as the taxpayer. In fact, the claimant does not even need to have filed a tax return. When doing taxes, we include the taxpayer’s family as dependents. We may also include others as the dependents, such as parents, even if they don’t live with the taxpayer. On the property tax refund form, we are not concerned with dependents. Everyone who lives in the house, or lived in the house for some period of time during the year, is included as part of the household. They do not even need to be related to the claimant. When doing income tax, we talk about various types of income – gross income, adjusted gross income, and so forth. On the property tax refund forms, all income is rolled together into household income – the total income during the year from each member of the household prorated for the amount of time residing in the house. For income tax, we report all income that is taxable and most income that is exempt from taxation. Sometimes, however, we do not need to report income. An example is a distribution from a 529 plan account that includes both money contributed to the plan as well as money earned as interest or dividends in the account. When considering a property tax refund claim, we account for all the money coming into the household, but it is reported in one of two ways. It is either included in or excluded from the total household income. When we complete the K40 form, we have calculated how much money the taxpayer owes to the state. When we complete the K40H or K40PT form, we have calculated how much money the state owes to the claimant. Finally, and this subject eludes some of our experienced volunteers, property tax on the K40 is the amount of tax paid during the tax year for residence and personal property. When we talk about property tax on the claim forms, we refer to the general property tax assessment issued by the county of the residence. The tax is payable in two halves, one being due in Dec of the tax year and the second half being due in May of the current year (the year in which the tax return is being filed). For a Homestead refund, it makes no difference if the tax has been paid or not. The claim can still be filed. Now that we have defined our terms, we can move on to discuss property tax refunds. Taxable, Exempt Included, Excluded Income Tax Owed Property Tax Refund PT Paid in TY PT Assessed in CY Kansas STTC Training - TY2017 2

What Are These Claims? HOMESTEAD CLAIM Form K-40H Rebate of portion of general property tax assessed for Kansas residents PROPERTY TAX RELIEF CLAIM Form K-40PT Refund of property taxes paid for low income senior citizens The Homestead claim rebate will range from a low of $35 to a maximum of $700. The rebate is a percentage of the assessed general property tax for the tax year, based on the total includable Household Income. For example, if the Household income is between $15,001 and $16,000 the rebate percent would be sixty (60%). See the Refund Percentage Table on page 2 of Homestead Instructions. The Property Tax Relief claim gives a 75% refund of the assessed general property taxes for the tax year. To qualify for PT, the claimant must have “timely paid” their December, 2017 general property tax payment. Non-payment or late payment disqualifies the claimant from filing PT. You may still file a Homestead claim for this claimant. Kansas STTC Training - TY2017

General Qualifications Forms K-40H and K-40PT Kansas resident for the entire year Own and occupy a homestead (dwelling) Name on property deed (owner) Homestead valued at $350,000 or less Home ownership (name on deed) is a requirement, however there is nothing to say a person can not own and occupy more than one home. Normally this happens when a person moves from one house to another within the state of Kansas. You can’t own and occupy more than one homestead at a time. How does this reconcile with the statement; “only one Homestead claim can be filed on a property.” Kansas will match the claims to see that only 12 months of property tax is claimed on the property. This may slow a claim down and the claimant may receive a letter from the state asking for additional information. Kansas STTC Training - TY2017

K-40H Qualifications Homestead Household Income $34,450 or less, AND Age-55 or Older OR Blind or Disabled OR Dependent Child OR Surviving Spouse These are additional qualifications to those listed on slide 4. Household income is generally all taxable and nontaxable income received by all adult household members during the claim year. If a household member only lived in the homestead for part of the year, you would only count the income while he or she was a household member. There are some excluded incomes. First, 50% of regular Social Security and/or SSI payments are excluded from income on Form K-40H. Kansas WebFile and TaxSlyaer handles this automatically. Second, disability payments from the VA, Railroad, and Social Security are excluded. Third, income for minor child and/or incapacitated individuals may be excluded as long as they are not on the property deed. This is true for both Forms K-40H and K-40PT. However these payments must be reported on both forms in the “Excluded Income” section. If the claimant is not 55 or older for the entire year, he or she does not qualify unless one of the following is true: Disabled and/or Blind - To qualify as disabled, the claimant must qualify for Social Security disability, Railroad disability, Veterans’ disability (50% or greater rating), or have a completed Certificate of Disability (Schedule DIS). Claimants receiving Social Security disability payments prior to attaining full retirement age retain their disabled status when filing Homestead and PT. Proof of any of these disability types must be filed with KDOR with a first-time claim. Dependent Child - the qualifying child must have lived in the claimant's home the entire year and must have been under age-18 the entire year. Surviving Spouse - of a disabled veteran, who had a disability rating of 50% or greater, OR of an active duty service member who died in the line of duty and he or she has not remarried. Kansas STTC Training - TY2017 5

K-40PT Qualifications Property Tax Relief Household Income $19,500 or less, including 100% of Social Security AND Age-65 or Older Current Property Tax Payments These are additional qualifications to those listed on slide 4. The Household Income definition is covered in the notes on slide 5. The claimant must have been age-65 or older for the entire year to qualify. Current Property Tax Payments To qualify for PT, the claimant must have “timely paid” their December, 2017 general property tax payment. Non-payment or late payment disqualifies the claimant from filing PT. You may still file a Homestead claim for this claimant. Which property tax number do I use? For both Homestead and PT, enter the tax assessed for the tax year. This amount may be found on the taxpayer’s real estate tax statement. Many counties also have web sites that will provide this information. (This will be different than the amount the taxpayer paid during the tax year. The amount paid is what is entered as an itemized deduction.) The claimant’s homestead may be a trailer that the Taxpayer owns and has on a rented lot. In this case, the Personal property tax for the trailer may be claimed, but not the tax on the rented lot. If the land is owned as well, then you may claim both personal property tax on the trailer and the general property tax on the land. Remember that for a Taxpayer to qualify the Property Tax Relief Claim (K-40PT), they must not be delinquent in paying the general property taxes. Kansas STTC Training - TY2017 6

Kansas STTC Training - TY2017 D e f i n i t i o n s Homestead – A dwelling used as a residence Household Member – All residents of the Homestead Homestead – A dwelling used as a residence that is subject to general property tax. The claimant must own (name on deed) the dwelling. The claimant must occupy the dwelling. Identifying a Household Member can be problematic for some claimants. The Taxpayer may have a revolving door policy with grandchildren, children, or other people moving in and out as they please. We must depend on the client to tell us who was a household member. Our intake Form 13614-C asks the client to list “everyone who lived with you last year (other than your spouse)” and we should rely on this list, after confirming that everyone is indeed listed. If a client tells us that her Aunt Mary came to stay with her last summer but didn’t live with her, what do we say? Did Aunt Mary maintain a residence somewhere else? If so, she is probably visiting, not a household member. First explain why you’re asking. Talk about Homestead and the importance of identifying household members. If the client still does not want to include aunt Mary in her household, talk to your LC. On the other hand if Aunt Mary is included as a member of the household, you will need her Social Security number and income. Kansas STTC Training - TY2017 7

Kansas STTC Training - TY2017 D e f i n i t i o n s Household Income – ALL Household members Disability Income – Experience tells us that Household Income is an area that is loaded with opportunities for error. If an error is made here, there is no way the refund will be correct. Use great care in completing this section. Read your reference material. Use your Job Aids. Household income is generally all taxable and nontaxable income received by all adult household members during the claim year. If a household member only lived in the homestead for part of the year you would only count the income while he or she was a household member. There are some excluded incomes. First, 50% of regular Social Security and/or SSI payments are excluded from income on Form K-40H. Kansas WebFile and TaxSlayer handles this automatically. Second, disability payments from the VA, Railroad, and Social Security are excluded. Third, income for minor child and/or incapacitated individuals may be excluded as long as they are not on the property deed. This is true for both Forms K-40H and K-40PT. However these payments must be reported on both forms in the “Excluded Income” section. Disability income can be excluded from Household Income but the exclusion is limited to Social Security disability, Railroad disability, SSI disability, and/or Veterans disability. The Homestead program uses disability as both a qualifier to participate and a qualifier to exclude income. Make sure you have a clear understanding of the difference. Review the job aids: Social Security Income and SS vs. SSDI vs. SSI Kansas STTC Training - TY2017 8

Kansas STTC Training - TY2017 Other Things To Know Deceased Claimant – Refund Advancement Program – Debtor Set-Off – Refund Advancement Program – This program pays the claimant’s December payment during the tax year, in advance of their completing their actual Homestead or PT claim. Once the claim is filed, the appropriate county will be repaid for the amount advanced. If the claimant participates in this optional program, there is a box on Forms K-40H and K-40PT that must be checked. If this box is not checked, the claimant cannot participate in that year’s advancement program. This will cause the claimant to receive the full refund instead of having the first half of their taxes paid. If they don’t pay the county, assuming the State will send a check, their property tax will be delinquent. KDOR does not encourage participation in this program. Few people use it, but if they do they will normally want to continue it. Deceased Claimant Question: My spouse is deceased. He died August 22, 2017. We own our home and have filed a Homestead claim in past years. Can I still file for Homestead? Answer: Is the surviving spouse’s named on the property deed? If yes, and he/she otherwise qualifies as a claimant, a Homestead claim would be filed in his/her name. If you are filing state and federal income tax returns, make the surviving spouse is the taxpayer. If not, and there is no one else in the Homestead (dwelling) who could be a qualified claimant, file a Homestead claim in the deceased claimant’s name. The refund amount must be prorated. Kansas WebFile will do this automatically.  Kansas has a “Debtor Set-Off” program. Very simply stated if the claimant owes the State of Kansas money (such as child support) the State will keep the refund to help satisfy the debt. Kansas STTC Training - TY2017 9

Kansas STTC Training - TY2017 Now it’s YOUR turn… Questions? Comments? Concerns? Kansas STTC Training - TY2017