Ohio Part-Year Worksheet for TSO

This is the online version of the allocation worksheet for Ohio part-year returns from the Tax-Aide Ohio QTR, page 19.

Data Entry: Do simple math in each cell using [+] [-] [*] [/]; finish with [Enter] or [=]. [Tab] key moves to next cell.

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ISSUE: Tax returns for a part-year residents of Ohio are infrequently encountered at our sites but are in scope and can be complex. TSO's ability to allocate income, adjustments and deductions for part- year situations is limited. The “Resident Credit” is used for Ohio full-year residents who earned and were taxed on income outside of Ohio and not for part-year resident situations.

OHIO RULE: Ohio taxes part-year residents based on the same effective tax rate they would pay had they lived in Ohio all year. Ohio calculates tax on total income and then calculates a part-year resident credit which is subtracted from the tax calculated on taxable income. The credit is calculated by allocating income and deductions as Ohio vs. non-Ohio as entered on Ohio Schedule of Credits line 37. It is incorrect to calculate part-year resident Ohio tax based on an Ohio return which considers only Ohio sourced income.

TAX SLAYER INSTRUCTIONS:

1. Complete the Federal return.
2. Delete the existing Ohio return and add a new Ohio return so you can select the Part-Year resident option.
3. Enter basic Information
   1. County, school district and address verification
   2. Residency Status – Part-year for both taxpayer and spouse if applicable
   3. Beginning and ending dates of residency for the tax year
   4. Resident state (before/after Ohio)
4. The tax return for the non-Ohio state in which the taxpayer was also a part-year resident is OOS. The preparation of the non-Ohio return can be referred to the STAP program depending on your district guidelines.
5. Complete the Ohio return as though the taxpayer had lived in Ohio all year.
6. Interview the taxpayer to identify what income and adjustments were received in which state of residency. The worksheet below can be used to collect the necessary data prior to entering in TSO. The worksheet is tailored to typical Tax-Aide clients. Any reasonable allocation method is accetable. Ohio requires that income and adjustments are allocated to Ohio if they were accrued or paid while a resident of Ohio. Often, an allocation protated based on residency time is acceptable. TSO will generate form IT NRC which will show the allocations and calculate the credit. See Ohio instructions page 35 for more detailed allocation information.
7. To enter data in TSO, select Nonresident Credit Calculation from the Credits menu on the main Ohio screen. Enter the applicable amounts from worksheet lines 1–14 to the corresponding llines in parts A amd B of the TSO input screen. Some entries require just the Ohio amount, and some ask for both the federal amount (from federal 1040) and the Ohio amount.
8. In the boxes labeled List of Additions and List of Deductions in Part A, enter text describing the entries made on lines 7 and 8 of the worksheet. It is not possible to make numerical entries at this time.
9. Confirm that the credit percentage calculated on line 19 of the IT NRC generated by TSO looks reasonable based on your understanding of the taxpayer's residency status. For example, if the taxpayer lived in Ohio for 9 months, the non-resident credit on line 19 should be about 25% if their income was evenly distributed through the year.
10. If the taxpayer lives in a taxing SD, a part-year SD return is also required. In the SD 100 School District Information, select “Part-Year” and enter the residency information on the Residency Status screen. A separate SD entry is needed using district code 9999 for the dates of residency outside of Ohio. See QTR section F for more information on creating SD returns and making part-year income adjustments.

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