Where to report interest income

[Dan]

Question:  If you earn interest from a bank account in Kansas but you are a resident of Oklahoma, what State taxes that interest?  Kansas or Oklahoma?  I read in the Kansas Individual Income tax booklet on page 19 "Income received by a nonresident from Kansas sources does not include income from annuities, interest, dividends...(such as bank accounts, stocks or bonds) unless earned by a business, trade profession or occupation carried on in Kansas..."  

Can someone explain the words in bold above?  Thanks!

[Dan]

I read one place that Bank interest is only taxable to your State of residence, not State where the bank is located.  Is this correct?

[Yardley CPA]

Did you receive a 1099-INT from the bank, mailed to either your home address or your clients home address, reporting the interest?  While I'm not 100% certain, I am 99.9...you report that interest income on your resident return.  

[DANRVAN]

10 hours ago, Dan said:

Question:  If you earn interest from a bank account in Kansas but you are a resident of Oklahoma, what State taxes that interest?  Kansas or Oklahoma?  I read in the Kansas Individual Income tax booklet on page 19 "Income received by a nonresident from Kansas sources does not include income from annuities, interest, dividends...(such as bank accounts, stocks or bonds) unless earned by a business, trade profession or occupation carried on in Kansas..."  

Can someone explain the words in bold above?  Thanks!

They are saying a nonresident of Kansas does not have to claim the interest on a Kansas tax return.

That is also true in Oregon and other states  I have dealt with.

[Catherine]

3 minutes ago, DANRVAN said:

They are saying a non resident  of Kansas does not have to claim the interest on a Kansas tax return.

 

Correct.  The interest is taxed in the home-resident-domicile (pick your favorite term) state.  Should that OK person have a business in KS - and the business earned the interest - then KS would tax the interest.

Think of it this way:  OK taxes all income, yes?  Even if KS taxes KS-source income, they then have a standard deduction or exemption or tax threshold, before there is any actual tax.  Even THEY don't want a gazillion additional tax returns, showing $135 in KS-source interest (let's say it's a big-dollar account), $4,000 exemption, taxable income $0, tax $0.  

[Dan]

Thanks for your replies.  That is what I thought was the correct interpretation of the rules.