Effective for tax years beginning in 2015, Ohio law increases from 6 to 7 the number of months which individuals may be able to spend in Ohio without being Ohio income tax residents.  So it is now possible to spend an extra month in Ohio with your grandchildren without being subject to Ohio income tax.

Why Does It Matter?

  • Let’s assume a Florida resident spends some time in Ohio.  (The rules apply to any non-Ohio resident, not only Florida residents.)
  • Ohio income tax residents pay Ohio income tax on their worldwide income, with credits for tax paid to other jurisdictions.
  • Florida residents and other non-Ohio residents pay Ohio income tax only on income earned in Ohio.
  • For the 2014 tax year, Ohio’s highest marginal individual income tax rate is 5.39%. Thus, classification as a resident of a state like Florida, which has no state income tax, can result in significant income tax savings.

Highlights of the Changes:

  • Under Ohio law, income tax residency is determined on the basis of “domicile”.  An individual is presumed not to be domiciled in Ohio if they have fewer than the permitted number of “contact periods” in Ohio during the year and they file the required Affidavit (see below).  A “contact period” occurs when an individual spends an overnight away from their Florida (or other non-Ohio) residence, and portions of two consecutive days in Ohio.
  • The recent change in the law increases from 182 to 212 the number of “contact periods” that a person is permitted to have with Ohio and still be presumed not to be domiciled in Ohio for income tax purposes.

Requirements – Ohio Presumption of Non-Domicile:

  • The individual owned at least one non-Ohio home for the entire year.
  • The individual was not a resident of Ohio at any time during the year.
  • The individual had no more than 212 “contact periods” during the tax year.
  • Action required:  For an individual who does not intend to file an Ohio income tax return for the relevant tax year yet had a home in Ohio, or a contact period or other relevant connections with Ohio, they are required to file a simple one-page Affidavit of Non-Ohio Residence with the Ohio Department of Taxation no later than June 1 of the year following the year for which they are claiming to be a non-resident.  Failure to file will result in a presumption that the individual was domiciled in Ohio during the entire tax year in question.  This presumption can be rebutted, but only as to those portions of the tax year for which the individual provides very strong evidence of non-Ohio domicile.
  • If you are changing your residency from Ohio to Florida during the year, the Ohio income tax rules are more complicated.

Note:

  • Individuals seeking to establish their non-Ohio residency for income tax purposes can take various measures to establish domicile elsewhere.
  • Meeting the requirements for the statutory presumption of non-Ohio domicile (including a timely filed Affidavit of Non-Ohio Residency) does not preclude the Ohio Department of Taxation from challenging  a taxpayer’s claim of non-domicile. For instance, the Department may challenge the accuracy of the statements made in the Affidavit.