We have been following Ohio’s legislative priorities and wanted to share a few issues that may have an impact on you should these be enacted into law.
Bright Light Residency Test
With regard to Ohio’s bright line residency test this might be a good time to review with us the facts and circumstances of your Ohio and non-Ohio residences to ensure you are taking full advantage of state tax minimization.
Deduction for Wages Earned
For some of our clients we have taken well-grounded Ohio tax positions with respect to Ohio’s small business deduction for wages earned by a small business owner whose company employs personnel by way of an employee leasing company (often known as a PEO). The State seeks to codify this tax treatment.
Pass Thru Entities
With respect to Ohio pass thru entities having non-resident owners this legislation would represent a much sought after simplification to avoid the unnecessary situation of companies overpaying tax on behalf of non-Ohio owners and the need for such non-residents to file refund claims to ensure the State is only receiving the tax it is lawfully entitled to. There is a well-grounded interpretation under current Ohio law we utilize in practice but it’s always welcome when the State seeks to codify such an interpretation.
The conformity of federal filing status for married couples for Ohio filing purposes has often resulted in a win-lose scenario for the couple. A joint federal tax return is often advantageous but that then subjects the Ohio taxpayer to a joint Ohio return even if separate Ohio returns would produce a tax savings. This situation leads to the need to “optimize” filing status when we prepare tax returns for married couples. If enacted into law married taxpayers would have more options available to them when it comes to Ohio income taxes.
Please direct any questions you may have to your MMB Advisor! Contact us now!