Kentucky allows married taxpayers more flexibility than the federal return when selecting a state filing status. If you filed a joint federal return, you may still have options on your Kentucky return that can affect how income, deductions, and credits are calculated.
Kentucky Filing Status Options
Kentucky recognizes the following filing statuses:
Filing Status 1 – Single
Use this status if you were unmarried on the last day of the tax year and do not qualify for another filing status.
Filing Status 2 – Married Filing Separately on This Combined Return
Use this status when you are married and want to file one Kentucky return, but separately report each spouse's income, deductions, and withholding on that return.
Under this method:
- Both spouses are reported on a single Kentucky return.
- Each spouse's income is calculated separately.
- Deductions and withholding are allocated to the spouse to whom they belong.
- Kentucky tax is computed separately for each spouse and then combined on one return.
This is often referred to as a combined return, not a joint return.
Filing Status 3 – Married Filing Joint
Use this status when you are married and want to file a traditional joint return.
Under this method:
- Both spouses' income is combined.
- Deductions are combined.
- Credits and withholding are combined.
- Kentucky tax is calculated on the couple's combined income.
This option most closely follows the Federal Married Filing Jointly return.
Filing Status 4 – Married Filing Separate Returns
Use this status when each spouse files their own separate Kentucky return. Each spouse reports only their own income, deductions, credits, and withholding.
What Is the Difference Between Filing Status 2 and Filing Status 4?
Although both filing statuses keep the spouses' income separate, they are filed differently.
Filing Status 2 – Married Filing Combined
Under Filing Status 2:
- Both spouses file one Kentucky return.
- Each spouse's income, deductions, credits, and withholding are allocated separately.
- Kentucky calculates each spouse's tax separately and combines the results onto one return.
- An Income Allocation for a Married Combined Return must be completed.
This option is often used when a married couple wants to file together on one Kentucky return but does not want to combine all income and deductions as a joint return.
Filing Status 4 – Married Filing Separate Returns
Under Filing Status 4:
- Each spouse files a separate Kentucky return.
- Each spouse reports only their own income, deductions, credits, and withholding.
- Each spouse receives their own refund or pays their own balance due.
- No combined return is filed.
This option is typically used when spouses want completely separate Kentucky tax returns.
Quick Comparison
Filing Status 2 (Married Filing Combined)
- One Kentucky return.
- Income kept separate.
- Tax calculated separately for each spouse.
- One combined filing.
Filing Status 4 (Married Filing Separate Returns)
- Two Kentucky returns.
- Income kept separate.
- Each spouse files independently.
- Separate refunds and balances due.
Example
Assume:
- Taxpayer earns $80,000.
- Spouse earns $20,000.
Filing Status 2
- One Kentucky return is filed.
- The $80,000 and $20,000 are allocated to the appropriate spouse.
- Kentucky calculates each spouse's tax separately, then combines the results onto one return.
Filing Status 4
- Two Kentucky returns are filed.
- One spouse files a return reporting $80,000.
- The other spouse files a separate return reporting $20,000.
- Each return stands on its own.
When Should I Choose Married Filing Separately on Combined Return?
You may want to consider Married Filing Separately on Combined Return when:
- One spouse has significantly different income levels than the other.
- Allocating income separately produces a lower Kentucky tax.
- You want Kentucky to calculate each spouse's tax separately while still filing one return.
If this option is selected, the program will open the Income Allocation for a Married Filing Separately on Combined Return section where income, deductions, credits, and dependents may be allocated between spouses.
When Should I Choose Married Filing Joint?
You may want to consider Married Filing Joint when:
- You filed a joint federal return and want Kentucky to follow the same approach.
- You want the simplest filing method.
- Combining income produces the more favorable Kentucky tax result.
What Is the "Select Filing Status of Married Filing Combined or Married Filing Joint" Question?
When a married taxpayer enters the Kentucky return, the program asks:
Select Filing Status of Married Filing Separately on Combined Return or Married Filing Joint
This selection determines whether Kentucky will:
- Calculate tax separately for each spouse (Married Filing Separately on Combined Return), or
- Calculate tax using the spouses' combined income (Married Filing Joint).
If Married Filing Combined is selected, additional allocation screens will appear, including:
Kentucky → Basic Information → Income Allocation for a Married Filing Separately on Combined Return
These screens are used to allocate:
- Income
- Adjustments
- Deductions
- Credits
- Dependents
between the taxpayer and spouse.
Kentucky MFS Change Filing Status for State Purposes Only
Kentucky also provides an option to change from a federal Married Filing Jointly (MFJ) return to Married Filing Separately (MFS) for Kentucky purposes only.
Program Entry
Kentucky → Basic Information → Change Filing Status from MFJ to MFS for State Purposes Only
This option is generally used when:
- The taxpayers filed a joint federal return.
- They wish to calculate Kentucky tax separately.
- Kentucky filing separately produces a more favorable tax result.
If this option is selected, additional allocation screens will appear allowing income, deductions, credits, and dependents to be assigned between spouses.
Because Kentucky calculations can vary significantly between filing methods, taxpayers may wish to compare the results of:
- Married Filing Combined
- Married Filing Joint
- Married Filing Separately
before choosing a final filing status.
Program Entry
To access this section, navigate to:
- State
- Edit Kentucky using the three dots
- Basic Information
Important Notes
- Filing Status 2 and Filing Status 3 both use a single Kentucky return.
- Filing Status 2 requires income allocation between spouses.
- Filing Status 3 combines both spouses' income and deductions.
- Kentucky may allow a different filing status than the filing status used on the federal return.
- The filing status producing the lowest Kentucky tax liability may vary depending on income, credits, deductions, and withholding.