KS preparers-Kansas non-resident return. Is it really possible that my client doesn't owe?

[NECPA in NEBRASKA]

The KS return has changed this year and I may be going nuts at this late date. Client has farm rental and oil royalties in KS, they have paid estimates for years. When preparing Schedule S, it says to deduct rental real estate, etc from the Schedule E on line B10, Schedule S. Then on B20, it says to deduct the net modifications that are applicable to KS source income. I did and that gave me a 0% nonresident allocation % so they don't owe any KS tax. Is this even possible? I just feel like I must have missed a step or they are going to be very happy customers this year.

Thank you!

[jasdlm]

Yep. New law effective with 2013 tax year. They still have to file, however.

House Bill 2117

• A Kansas nonresident receiving income from Kansas sources must file a Kansas income tax return regardless of whether tax will be due. So a non-Kansas resident whose only source of Kansas income is from pass-through entity allocations exempt from Kansas income taxation still must file a Kansas nonresident individual income tax return

Here's a link to a decent article to give you some backup information.

http://www.bkd.com/articles/2012/kansas-legislation-means-significant-tax-changes.htm

[NECPA in NEBRASKA]

Thank you. That is a pretty amazing change. Nebraska just taxes and taxes until everybody leaves.