| February 2007 |
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TaxAdvisor
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Taxpayer Favorable Changes to Ohio's Residency Rules
Recent Ohio legislation revised the income tax domicile test. Ohio House Bill
73 applies to taxable years beginning January 1, 2007.
Under the new law, an individual who has no more than 182 contact periods in
Ohio and who has at least one abode (home) outside of this state is presumed to
not be a resident of Ohio. The bill also repeals a provision that allowed you to
exclude 30 contact periods in Ohio for medical, funeral, or charitable purposes.
A contact period is any two consecutive days in Ohio while the taxpayer stays
overnight away from the taxpayer's non-Ohio abode. For example, you are a
resident of Kentucky and spend one day in Ohio, spend the night in Pennsylvania,
then return to Ohio the next morning. This would be one contact period in Ohio,
even though you did not spend the night in Ohio.
A statement, verifying that the individual was not a resident of Ohio for the
taxable year and indicating the location of the abode outside of Ohio, is due on
or before the following April 15th. This statement must be on the form
prescribed by the commissioner. This does not apply to an individual changing
domicile from or to Ohio during the taxable year.
If the form is timely filed, the State cannot rebut the presumption unless
the taxpayer makes a false statement. Although the new rules seem to favor the
taxpayer, it is possible that the State could argue that a false statement has
been made if a person considers Ohio their "home." Thus, besides maintaining
good records of where you spend your time, it is important to support your
statement that Ohio is not your state of residence by doing the following in the
state of your abode outside of Ohio:
- Filing a declaration of domicile
- Register to vote
- Obtain a drivers license
- Title vehicles used outside of Ohio
- File your income tax returns using your non-Ohio abode address
If the form is not timely filed or a false statement is made, the taxpayer is
presumed to be an Ohio resident. In those cases, the taxpayer must rebut the
presumption of Ohio residency.
Finally, the act does not change the taxation of income earned from Ohio
sources, therefore, a nonresident Ohio return will be needed if you have income
from a business or rental located in Ohio.
If you have any questions or would like additional information regarding this
Tax Advisor, please contact one of our tax practice leaders: Jim Bowen at
330.255.2461 or Paula DiVencenzo at 330.255.2479.
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