Ohio Part-Year TSO worksheet

Note to OH3-D14: This is the online version of TRT OH5, OHIO PART YEAR RESIDENT. The line 17 instructions here are different than the paper version (the amount shown to enter in TSO has already been multiplied by -1).

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 and a manual calculation is usually needed. 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 on OH Schedule of Credits lines 31-33. It is incorrect to calculate part-year resident Ohio tax based on a Ohio return which considers only Ohio sourced income.

TAX SLAYER INSTRUCTIONS:

1. Complete the Federal return.
2. Delete the existing OH return and add an OH return again so you can select the Part-Year resident option.
3. Enter basic Information
4. County and school district
   1. Residency Status – Part-year for both taxpayer and spouse if applicable
   2. Beginning and ending dates of residency for the tax year
   3. Resident state (before/after Ohio)
5. The tax return for the non-Ohio state in which the taxpayer was also a part-year resident is OoS. Also, this TRT does not address self-employment if some of that income was earned outside Ohio.
6. Complete the OH return as though the taxpayer had lived in Ohio all year.
7. Interview the taxpayer to identify what income was received in which state of residency. Follow the instructions on this “Ohio Part-Year TSO Worksheet” which has been created for use with TSO to record and total the Ohio allocations for all forms of income, adjustments and deductions. This worksheet generally follows the OH IT NRC Worksheet, but has been modified to accommodate the way TSO handles part-year returns. The worksheet should be printed so it can be used for QR and added to the taxpayer’s envelope.
   Important: TSO assumes all income entered on the federal return is from the non-Ohio state except for W2, 1099-R and 1099-G. For all worksheet entries except these three, enter the total value (if there is a place for it) and the amount allocated to Ohio. The 'Method' column can assist in calculating the OH amount based on the federal amount. For the W2/1099-R/W2-G enter worksheet values as follows:
   1. If there is an Ohio income entry on the form, enter on the line number ending with 'OH'
   2. If there is no Ohio entry on the form, enter on the line number ending with 'OS' (Other State, or no state specified).
   The items highlighted in yellow are provided as an error check to verify the federal amounts entered equal the sum of the Ohio and Other State entries.
   If an Ohio amount exceeds the federal amount, the entry boxes of both will be highlighted as an additional error check.
8. Edit the Ohio return to calculate the part-year credit by following the instructions on line 17 of the worksheet. Enter the value shown in TSO at “Income Subject to Tax” > “Enter the adjustment to Ohio AGI.” (note that this value is the sum of lines 9 and 15, multiplied by -1, due to the way TSO handles the data)
9. Confirm that Schedule of Credits lines 31-33 look reasonable based on your understanding of the taxpayers residency status. For example, if the taxpayer lived in Ohio for 9 months, the non- resident credit on line 33a 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 edit menu, select “Part-Year” and enter the residency dates and other residency state. Select the district type. If “Traditional”, enter the non-resident AGI from OH Credits line 31 in the “Amount of Traditional Tax Base Earned While Not Resident” box. If “Earned Income”, TSO will use Ohio W2 state income data. If there is no Ohio W2 data, the wage income allocated to Ohio in step 6 will have to be manually entered in the Earned Income SD return. The portion of the self-employment income deduction (Ohio Schedule of Adjustments line 11) earned while living in the SD must be entered in TSO in the “Net Earnings from Self Employment” box in the Earned Income SD entry screen.

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