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1. I am from Ohio and am currently serving on active duty in the Army. Am I subject to Ohio individual income tax and school district income tax, and would the answer be any different if I were serving in the National Guard or the reserves?
Yes, Ohio individual income tax applies to all military servicemembers of the active and National Guard or reserve components who are residents of Ohio and are stationed inside the state (see Law Change for Taxable Years 2007 and Forward, below, if you are stationed outside the state). School district income tax also applies if the service member’s domicile is within a school district that imposes the tax, even if the service member did not reside in the school district at any time during the taxable year.
You are an Ohio resident if Ohio is indicated as your state of legal residence on DD Form 2058, “State of Legal Residence Certificate,” or equivalent (e.g., home of record) in your military personnel record, whether or not you spent any time in Ohio during the taxable year. For purposes of Ohio income taxes, if you are a member of the military and if Ohio is indicated in your military personnel record as your state of legal residence, then you are domiciled in Ohio.
Filing information is available in:
Ohio 2009 Income Tax Instructions
Ohio 2009 School District Income Tax Instructions
Visit The Finder to locate a school district number by address.
You can calculate a resident tax credit if any of your income was taxed by another state. For information about the resident tax credit, see the instructions for Schedule C in the Ohio 2008 Income Tax Instructions.
Law Change for Taxable Years 2007 and Forward: You and all other service members, however, are affected by a change in law for taxable years beginning on and after Jan. 1, 2007. This law allows for the deduction of your military pay you receive for active duty service while you are stationed outside the state (see below) if the military pay is included in your federal adjusted gross income. See division (A)(24) of Ohio Revised Code 5747.01. You must still file an Ohio individual, and if applicable, school district income tax return in order to qualify for the deduction.
The term “stationed” refers to an Ohio resident servicemember’s permanent duty station. For purposes of this exemption, "permanent duty station" has the same meaning as specified in Ohio Revised Code 5103.20, Article II, Subparagraph (U), that is, it means the military installation where an active duty servicemember – or, concerning this exemption, an Ohio resident servicemember in the National Guard or military Reserve forces – is currently assigned and is physically located under competent orders that do not specify the duty as temporary. Periods of training in which a servicemember, either individually or as part of a unit, departs from his/her permanent place of duty and then returns following the completion of the training, is not included in the definition of “stationed.” However, periods of active duty outside Ohio for purposes other than training, or periods of training greater than 30 days outside Ohio, as described below, qualify a servicemember for this exemption.
Examples of military pay and allowances that do qualify for this deduction include the following amounts, but only if the taxpayer receives the amounts while he/she is stationed outside Ohio:
Examples of military pay and allowances that do not qualify for this deduction include the following:
Please note that the November 2009 amendment to the Servicemembers Civil Relief Act, which exempts spouses of military who reside with their spouse outside their state of domicile from taxes within the local jurisdiction where they currently reside, does not apply to Ohio-domiciled spouses of servicemembers who reside with their spouses outside Ohio. These spouses are presumed to retain their Ohio domicile, and remain subject to Ohio state income tax and school district income tax, if their domicile is within a taxing school district.
Additional information for taxable year 2009: Military personnel stationed outside Ohio and who are claiming to have a home-of-record outside Ohio for taxable year 2009 must file by June 1, 2010 Ohio form ITDA-M, Affidavit of Non-Ohio Domicile for Taxable Year 2009 - Military, which will be available in the Forms area of our Web site. If Ohio tax was mistakenly withheld, you should submit U.S. Department of Defense form DD 2058 or its equivalent to the applicable military authorities to change your military state of residence. See the Ohio 2009 Income Tax Instructions booklet, specifically, the line 36 instructions on page 19, for more information.
For taxable years 2006 and prior: The deduction for military pay received while stationed outside the state is not available for taxable year 2006 and prior years. Military servicemembers are subject to Ohio individual income tax and, if applicable, Ohio school district income tax for those taxable years.
For more information:
Visit a section of our Web site dedicated to military tax questions at Military Tax Provisions.
2. I'm in the Air Force stationed at Wright-Patterson AFB and claim that I'm domiciled in another state (e.g. New York is the state of legal residence on my military records). Am I liable for Ohio income tax and school district income tax on my military pay?
No. None of your military income is taxable. If your state of legal residence (e.g. home of record) in your military personnel record is not Ohio, you are a military nonresident and are not subject to state income and school district income tax except in circumstances specified below.
In regards to your spouse, please see Amendment to Servicemembers Civil Relief Act affecting nonresident spouses, further below is this section.
As a military nonresident stationed in Ohio, you do not have to file an Ohio income tax return if all of the following apply to you: (i) you are a military nonresident, (ii) your filing status on your IRS income tax return is single, married filing separately, qualifying widow(er), or head of household, and (iii) you have no Ohio income other than your military compensation. If the filing status on your IRS income tax return is married filing jointly and if you and your spouse have no Ohio income other than military compensation, you do not need to file an Ohio income tax return.
However, you will have to file an Ohio income tax return if any of the following applies to you:
If you are required to file an Ohio income tax return, you can deduct your military income on line 2 on Ohio income tax form IT 1040. By so deducting, your income will not be subject to any Ohio school district income tax.
Amendment to Servicemembers Civil Relief Act affecting nonresident spouses: The Servicemembers Civil Relief Act of 2003, as amended in 2009, is a federal law which provides that a state cannot consider a servicemember or his/her spouse to be a resident or a nonresident simply because he/she is present in the state - or absent from the state - due to military orders of the servicemember. Additionally, the 2009 amendment to the Act provides that the wage and salary income of the nonresident spouse of a servicemember is exempt from the income tax of the state in which the servicemember and spouse are stationed and living. This provision does not apply to taxable years prior to 2009.
Military payroll authorities will generally withhold income tax for the state of legal residence shown on the servicemember's Form DD 2058. A servicemember who had State income tax withheld in error should have the military payroll authorities correct the State of legal residence shown on his/her Form DD 2058. A servicemember's nonresident spouse who had Ohio income tax withheld and who claims exemption under the 2009 amendment to the Servicemembers Civil Relief Act should file an Ohio income tax return claiming a refund and include proof of his/her eligibility for the exemption. Nonresident servicemembers and their spouses living in Ohio should complete and submit Ohio Form ITDA-M, Affidavit of Non-Ohio Domicile for Taxable Year 2009 - Military, which will be available in the Forms area of our Web site.
To avoid a possible Ohio income tax assessment based on filing address, the Ohio Dep[artment of Taxation encourages all military nonresidents to complete and file timely an IT 10 form annually, if applicable.
3. I'm retired from the Air Force and reside in Ohio. What tax obligations do I have for my military retirement pay, and if I die before my spouse dies, how does Ohio tax income from the military survivor benefit plan?
Law Change for Taxable Years 2008 and Forward: Effective for taxable years beginning after Dec. 31, 2007, military retirement 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 Ohio income tax and from Ohio school district income tax. Eligible taxpayers can use Schedule A of Ohio tax form IT 1040 to deduct such retirement pay included in 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.
This deduction also applies to such amounts received by the surviving spouse or the former spouse of each military retiree who is receiving payments under the survivor benefit plan. Please note that child support receipts, regardless of the source, are not included in federal adjusted gross income; so these amounts are not deductible.
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. A formula for this deduction is contained on page 24 of the Ohio 2008 Income Tax Instructions, specifically in the instructions for line 45g of form IT 1040. The formula is illustrated in the example below.
Example: The taxpayer has included in federal adjusted gross income (line 1 of the Ohio income tax return, form IT 1040) $60,000 which the taxpayer received as a federal civil service pension. The taxpayer has 15 years of military service and 45 years of combined military service and civilian employment with the U.S. government. The fraction is 15/45 = 1/3. The taxpayer can deduct $20,000 on line 45g on the year 2008 form IT 1040: 1/3 X $60,000.
Note: Because military retirement income is deducted from federal adjusted gross income and thus is not included in Ohio adjusted gross income for post-2007 years, military retirement income does not qualify for the Ohio retirement income credit.
For Taxable Year 2007 and Prior Years: Ohio residents must pay Ohio income tax on their military retirement income for taxable year 2007 and prior. 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 49 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, which is the same base as the state 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, “earned income only method” income tax, which is based on earned income only.
To determine if the school district in which you are domiciled has an income tax during the taxable year, contact your local school district..
The retirement income credit does not apply to the school district income tax.
4. My son is domiciled in Ohio but is currently a midshipman at Annapolis. Is the pay that he receives while stationed there eligible for the pay deduction for military active duty while stationed outside Ohio for taxable years 2007 and after?
Yes. Cadets at the U.S. service academies, specifically the Military Academy, the Air Force Academy, the Coast Guard Academy, and midshipmen at the Naval Academy, are considered to be serving on active duty under the provisions of 38 United States Code section 101 (21). All of the academies are located outside Ohio, and cadets and midshipmen are eligible for the deduction from federal adjusted gross income for pay received while stationed at these facilities. (Note: this provision does not extend to service in the Reserve Officer Training Corps.) See division (A)(24) of Ohio Revised Code 5747.01.
5. My former spouse is currently serving in the Air Force in California. She is sending me monthly child support payments from her military pay. Are these payments eligible for the deduction for military active duty while stationed outside Ohio for taxable years 2007 and after?
No. Child support receipts are not taxable income, regardless of source. Since these amounts are not taxable, they are not eligible for the deduction.
6. I am divorced, and my ex-husband is retired from the Army. In the divorce settlement, I was awarded a portion of his monthly retired pay. Does this payment meet the eligibility requirement for the exemption of military retired pay for taxable years 2008 and after?
Yes. Any portion of military retirement pay which an ex-spouse directly receives from a retirement fund and which is part of a divorce settlement for spousal support is eligible for the deduction for military retired pay to the extent this pay (i) is included in the recipient’s federal adjusted gross income and (ii) would qualify for the deduction allowable by division (A)(26) of Ohio Revised Code 5747.01 if the retired military person had received the income. Please note that the Ohio Department of Taxation may require a copy of the divorce agreement and the 1099-R as verification for the deduction.
