State Income Tax Benefits on Your Ohio Return

You generally have to file an Ohio state income tax return if you are a full-year or part-year resident of Ohio and your taxable income is more than the exemption amount in Ohio. You also must file an Ohio return if you were not a resident but you had income from sources in Ohio. If you had Ohio state income tax withheld from your pay you should file an Ohio return even if not required. You may be due a refund. If you are age 65 or older you do not have to file an Ohio state tax return if you are single, your federal adjusted gross income is less than or equal to $11,500 ($13,500 if you are married filing jointly) and you have no adjustments to make.

You can file your federal and Ohio returns at the same time electronically using the IRS e-file program. You can also use Ohio I-File to prepare a state or school district income tax return based on a series of questions the software asks you, or you can use eForms to complete Adobe Acrobat versions of the state and school district tax forms online. Another option is TeleFile, using your touchtone telephone to file your return. Or you can file a paper return using either Ohio Form IT 1040 or IT 1040EZ, if you qualify for the simpler return.

Your Ohio state income tax return starts with your federal adjusted gross income, so you will need to complete your federal return first. If you are using tax software you may be able to prepare both returns simultaneously. From your federal adjusted gross income you add and subtract certain adjustments and subtract your personal and dependent exemptions to determine your Ohio taxable income. Based on your taxable income you find your tax in the tax table.

From your tax you subtract the credits you qualify for, the Ohio state income tax that was withheld from your pay and any estimated payments you made during the year. You can add any voluntary contributions you want to make. The end result is your refund or the amount you owe.

Ohio Adjustments

Interest and dividends you earned on state and local government obligations other than Ohio that were excluded on your federal tax return must be added to income on your Ohio return. Interest you earn on U.S. government obligations such as savings bonds or Treasury bills that you included on your federal return can be subtracted on your Ohio return. Also, interest income on Ohio obligations that was included in your income on your federal tax return can be deducted on your Ohio return.

Ohio has reciprocity agreements with its neighboring states Indiana, Kentucky, West Virginia, Michigan and Pennsylvania. If you were a full-year resident of one of those states and your only income in Ohio was from wages or other employee compensation you do not have to file an Ohio tax return. But if you have other income in Ohio and have to file an Ohio tax return, you can subtract the employee compensation you earned in Ohio. You should also file an Ohio return to get a refund of Ohio state income tax that was withheld from your pay.

If you are an Ohio resident and a member of the Armed Forces stationed outside Ohio, you can deduct your military pay and allowances for active duty outside Ohio.

If you included an Ohio state or local income tax refund as income on your federal tax return because you claimed an itemized deduction for the tax the previous year, you can subtract the refund on your Ohio return.

If you received disability benefits due to a permanent physical or mental disability, you can deduct those benefits on your Ohio tax return. This includes survivorship benefits received upon the death of a covered employee. This deduction does not include retirement or pension benefits. Once you reach retirement age, your disability benefits become retirement or pension benefits and are no longer deductible as disability benefits.

If you had to include any social security or railroad retirement benefits as income on your federal tax return, you can deduct those benefits on your Ohio return. If you received retirement pay for active service in the U.S. Armed Forces or Reserves, you can deduct that retirement pay on your Ohio tax return.

If you contribute to the Ohio CollegeAdvantage 529 Savings Plan you can deduct up to $2,000 per beneficiary each year. If you cannot claim all your contributions for the year, you can carry forward the excess and deduct it in future years until the entire unused portion is deducted.

If you are a member of the Ohio National Guard and you received reimbursement for group life insurance premiums that you had to include as income on your federal tax return, you can deduct the reimbursements on your Ohio return. If you received a death benefit paid for a member of the Ohio National Guard who died while on active duty, you can deduct that death benefit on your Ohio tax return.

On your Ohio tax return you can claim a deduction for health care insurance premiums, long-term care insurance premiums and health care expenses not covered by insurance to the extent the total of your insurance premiums and expenses exceeds 7.5% of your federal adjusted gross income. You can claim this deduction without itemizing your deductions.

You can deduct the amount you contribute to a medical savings plan up to a maximum of $4,048 for the year. If you are married filing jointly, both you and your spouse can claim a deduction, for a potential maximum deduction of $8,096. If you had to include any income earned on your medical savings account as income on your federal tax return, you can deduct that income on your Ohio return.

Credits

If you are retired and receive pensions, annuities or distributions from a pension, retirement, or profit sharing plan, you can claim a credit on your Ohio return. The amount of the credit is based on the amount of income you receive, up to a maximum credit of $200 per return if you have total retirement income of more than $8,000. Social security, railroad retirement and military retirement benefits do not qualify for this credit since they are subtracted from your income for Ohio income tax purposes.

If you are 65 or older, you can claim a $50 senior citizen credit per return. If you file jointly and both you and your spouse are 65 or older, you can claim just one $50 credit. If you are 65 or older and receive a lump sum distribution from a pension, retirement or profit-sharing plan, you could qualify to claim a credit of $50 times the number of years of your expected remaining life. If you take this credit, you can no longer claim the senior citizen credit. There is a separate line on Ohio Form IT 1040 for a lump sum retirement credit if you retire before age 65. You can find a life expectancy table and worksheet to calculate the credit on Ohio Form LK WKS.

If you claimed the child and dependent care credit on your federal return, you can claim a percentage of the credit on your Ohio return. You can claim 100% of the credit if your Ohio adjusted gross income is less than $20,000 and 25% of the credit if your Ohio adjusted gross income is less than $40,000.

If you pay for qualified displaced worker training you can claim a credit for half your expenses, up to a maximum credit of $500.

You can claim a credit of up to $50 ($100 if married filing jointly) for political contributions to the campaign committee of certain Ohio offices.

If you adopted a child under age 18, you can claim a one-time adoption credit of $1,500 per child. If you cannot use the entire credit, you can carry forward the unused portion to the two following tax years.

If you paid personal income tax to another state on income that is included in your Ohio tax return you can claim a credit for that tax on your Ohio return. You calculate the credit on Schedule C of Ohio Form IT 1040 if you are a full-year resident and on Schedule D if you were a part-year resident or nonresident.

Sources:
Ohio Income Tax Booklet- Ohio Department of Taxation