Question 1:  In the past, I was able to get a full refund of my Ohio taxes by submitting my Ohio return and the "Domicile Affidavit". What has changed?

Answer:   As in past years, you can still get a refund if you are a nonresident of Ohio. The only change is the form of the affidavit and the requirement that you change your state of residence using military form DD Form 2058. There is an affidavit form for military (for 2007), an affidavit form for military (for 2006 and prior years) and an affidavit form for non-military (for 2007) and also an affidavit form for non-military (for 2006 and prior years).

Question 2:  Why is there a separate affidavit for military?

Answer:  The Servicemembers Civil Relief Act of 2003, which was enacted by Congress and signed by the President in December, 2003, provides that a state cannot consider a servicemember to be a nonresident simply because he/she is absent from the state. We are using the military affidavit to clarify the states of residence of servicemembers. The relevant portion of the Servicemembers Civil Relief Act of 2003 follows:

Section 511 - (a) RESIDENCE OR DOMICILE- A servicemember shall neither lose nor acquire a residence or domicile for purposes of taxation with respect to the person, personal property, or income of the servicemember by reason of being absent or present in any tax jurisdiction of the United States solely in compliance with military orders.

Question 3: Can I be an Ohio resident and still not be domiciled in Ohio?

Answer:   Under Ohio Revised Code 5747.01(H)(1), "Resident" means "an individual who is domiciled in this state". Domicile is a broader term that includes intent. Consider a person who travels around the world for 20 years without setting up a residence anywhere else. Their domicile would be the place where they intend to return to after their travels are over. So, for purposes of Ohio income tax, if you are an Ohio resident then you are domiciled in Ohio.

Question 4: What does the Ohio "Bright Line" statute say about residency and domicile?

Answer:  The "Bright Line" statute, Ohio Revised Code 5747.24, says that "an individual who …has no more than 120 contact periods [days] within this state…and who during the entire taxable year has at least one abode outside this state, is presumed not to be domiciled in this state during the taxable year." It is only a presumption. Some people who spend no time in Ohio during a particular taxable year are still Ohio residents for that year. For example, an Ohio resident who works on extended assignments in other states or countries but intends to return to Ohio afterward is still an Ohio resident even though that person did not spend any time in Ohio during the taxable year. The ability of a person and/or that person’s family members to obtain in-state tuition at an Ohio university, vote in Ohio, and/or obtain or keep an Ohio driver’s license may be impacted by a person’s claiming that he/she is not an Ohio resident.

Question 5:  What does it mean to have "at least one abode outside this state"?

Answer: An abode is a place where you live. It could be an apartment, barracks, privately-owned home, or other living quarters. However, having an abode outside of Ohio does not necessarily mean that a servicemember has to change residency (see Q&A-6, below).

Question 6:  I am a servicemember whose military records say that my "Home of Record" and "State of Legal Residence" are Ohio. Yet, I spent no time in Ohio during the taxable year. Am I an Ohio resident for income tax purposes?

Answer:  Maybe. The federal Servicemembers Civil Relief Act of 2003 says that a servicemember will not lose his/her Ohio residency by reason of being stationed outside Ohio, unless the servicemember has filed DD Form 2058 with the military to officially change his/her state of legal residence. That is why we are using the military domicile affidavit to clarify the states of residency of servicemembers. If you claimed Ohio in error, you may fix that mistake by filling out DD Form 2058 to change your residency from Ohio to the correct State along with completing this Department’s Military Domicile affidavit.

Question 7: I am a military servicemember. Because I enlisted while I was an Ohio resident and my DD Form 2058 showed my state of legal residence as Ohio, I have always had Ohio income tax withholdings taken from my pay. However, I have actually been a resident of California since January, 2001. What should I do?

Answer: Because your home of record in your military payroll documents is still Ohio, you must first update your DD Form 2058 with your military payroll authorities. You may then submit the Ohio Domicile (Residency) Affidavit for Military, available on the Department of Taxation’s website, and indicate your place of residence for the years in question. On the affidavit, you must indicate when you corrected the state of residence shown on your DD Form 2058 on file with your military payroll authorities. You should (1) file state income tax returns as a resident for your actual state of residence for the years in question and (2) file Ohio income tax returns or amended returns as a nonresident for the years in question.

For years prior to 2003, you can take the Schedule D nonresident credit when completing Form IT-1040. For taxable years 2003 and 2004, you will receive the benefit of the federal Servicemembers Civil Relief Act of 2003 by deducting your military pay on line 34 of the Ohio income tax return, form IT-1040, or the Ohio I-File application. For taxable years 2005 and later, you will receive the benefit of the federal Servicemembers Civil Relief Act of 2003 by deducting your military pay on line 36 of the Ohio income tax return, form IT-1040, or the Ohio I-File application. Please note that non-military income of a servicemember earned in Ohio and all income of a servicemember’s civilian spouse who resided in Ohio is taxable to Ohio and is therefore not subject to the Schedule D credit or the appropriate line item deduction.

Question 8: I am an Ohio resident and a military servicemember stationed outside Ohio. Immediately before enlisting, I resided in an Ohio school district having a school district income tax. Am I required to file and pay Ohio school district income tax now that I am no longer living in that school district?

Answer: Yes, for taxable years 2006 and prior (for taxable years 2007 and forward, Ohio resident servicemembers can deduct military earned while stationed outside the state). “Resident” for purposes of the Ohio school district income tax is generally determined in the same way as it is for purposes of the Ohio income tax. Under Ohio's tax laws even though you are currently stationed outside Ohio, you are still domiciled in Ohio and in that school district; so, you owe Ohio income tax and school district income tax. Residency for servicemembers is clarified in Questions and Answers 1-7, above. Ohio resident servicemembers who move from one school district to another during the year are encouraged to notify the Ohio Department of Taxation by e-mail.

Question 9: I am an Ohio National Guard member deployed for Operation Iraqi Freedom. Are special provisions available to me?

Answer: If (i) your are deployed for Operation Iraqi Freedom, and (ii) you are either in the national guard or a member of a reserve component of the armed forces of the United States, and (iii) you are eligible for a federal extension of time to file your federal income tax return, you automatically receive both an automatic extension of time to file your Ohio income tax return and an extension of time to pay the Ohio income tax due. These Ohio extensions are for the same length of time as the federal extension. Please visit the IRS web site to find out more about the federal extensions.

During the extension period, you do NOT have to pay any interest or penalty on any tax due.

In addition, under a provision of Ohio Revised Code section 5747.026 enacted in 2005, if you are a member of the national guard or a reserve component of the armed forces of the United States who is called to active duty for any reason, you may apply for an extension of time to file your Ohio income tax or school district income tax, without any penalty or interest. Under this provision you can establish payment arrangements with the tax commissioner for unpaid taxes due which arose during your time of active duty, any time on or before the sixtieth day after your duty terminates.

Question 10: I am retired from the Air Force and reside in Ohio. What tax obligations do I have for my military retirement pay, and if I should become deceased before my spouse, how is income from the military Survivor Benefit Plan treated under Ohio law?

Answer: For taxable year 2007 and prior years, Ohio residents must pay Ohio income tax on their military retirement income. However, these taxpayers are eligible for a retirement income credit of up to $200, based on the amount of retirement income received during the taxable year (claim the credit on line 48 of Ohio Tax Department form IT-1040). Income which a spouse receives from a military survivor benefit plan is also treated as retirement income and is also eligible for the credit of up to $200.

Military retirement income and survivor benefit plan income is also  subject to school district income tax if the taxpayer resides in a school district that levies the “traditional method” income tax. Military retirement  income and survivor benefit plan income is not subject to school district income tax if the taxpayer resides is a school district levying the “alternative method” income tax, which is based on earned income only (click here for a listing of school districts imposing the traditional method income tax and a listing of school districts imposing the “alternative method” income  tax). 

The retirement income credit does not apply to the school district income tax.

Effective for taxable years beginning after Dec. 31, 2007, military retired pay of taxpayers who retired from service in the active or reserve components of the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard, or from the National Guard, and SBP benefits, are exempt from state income tax and school district income tax. This pay can be deducted from federal adjusted gross income. Eligible taxpayers can request that their Ohio withholding be adjusted by contacting the Defense Finance and Accounting Service at www.dfas.mil or (877) 363-3677. Federal civil service retirees who received federal service credit for military service are allowed to deduct only that portion of their pension attributable to military service.