Kentucky Tax Extension: Potential for Higher Taxes – Essential Information You Need to Know

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Residents of Kentucky contemplating delaying their tax submissions until the extension deadline are urged to think twice. This cautious approach stems from the aftermath of devastating storms that struck the region earlier this year, causing massive destruction. The severe weather led to over 1,000 rescue operations and resulted in a tragic loss of at least 21 lives. In addition, thousands experienced prolonged power outages and there are still numerous road closures affecting residents.

Though the situation is challenging, those impacted by the storms may find some redemption in the IRS’s announcement to extend tax deadlines. Generally, the IRS waives interest and penalties for taxpayers in declared disaster areas, potentially offering some financial relief.

Kentucky Tax Extensions Explained

The IRS’s relief package was announced on February 24, shortly after the devastating storms began, extending the tax filing deadline for Kentucky residents from April 15 to November 3, 2025. This extension includes several important federal tax deadlines such as:

• Individual income tax returns and payments usually due on April 15, 2025.
• Contributions to IRAs and health savings accounts for eligible taxpayers for the tax year 2024.
• Quarterly estimated income tax payments for 2025 due on April 15, June 16, and September 15, 2025.
• Various returns for payroll, partnerships, S corporations, and tax-exempt organizations.

Additional details regarding this federal tax extension can be found in the IRS announcement.

State Income Tax Considerations

In contrast to the federal relief options, state-level income taxes may present a different scenario. According to the Kentucky Department of Revenue (DOR), delaying tax payments for a fall extension may actually increase state tax liabilities.

The extended deadline for state tax returns is also set for November 3, 2025, affecting both individuals and businesses originally due by April 15, 2025. Kentucky’s announcement indicated that state tax deadlines will align with those of the IRS concerning this disaster. However, it’s imperative to note that the state lacks provisions to waive interest that accrues on unpaid taxes, according to the state’s DOR.

This means that taxpayers delaying their filings may face additional costs associated with accrued interest.

Potential Interest Costs

For example, the Kentucky DOR illustrates what taxpayers might owe if they choose to adhere to the extension. If a taxpayer’s state taxable income is $50,000, their tax liability might be $2,000 if paid by the original April 15 deadline. However, by pushing the payment to the November extension, they could incur an interest charge of approximately $111.23. Consequently, the total owed by November 3 would amount to $2,111.23 if payments are delayed.

Note: This scenario provided by the DOR does not account for possible deductions, withholdings, or pre-paid estimated taxes throughout the year.

Given the potential for increased tax liability due to interest accumulation, the Kentucky DOR advises residents to file their state taxes by the April deadline or promptly thereafter.

Disaster Relief Guidelines