Every employer maintaining an office or transacting business in Ohio, that pays compensation to an employee, is required to deduct and withhold Ohio income tax from the compensation paid to the employee.

Employers must register within 15 days from the date that withholding liability begins. Registration is free. There are three ways to register:

  - By Internet: Register electronically through the Ohio Business Gateway (OBG) Web site at obg.ohio.gov and follow the instructions for ODT Business Tax Registrations, or
  - By telephone: call 1-888-405-4089, listen for the message and then press 1 to connect with an agent,
  - By paper: complete and file Form IT 1, Application for Registration as an Ohio Withholding Agent and mail or fax the completed form to us. The completed form can be faxed to us at (614) 387-2165. Form IT 1 is available at our Web site at here.

Yes, you must withhold Ohio income tax.  As an employer you must withhold Ohio income tax from your employees’ wages. The IRS tax exemption does not apply to employment taxes.

Yes, you must withhold Ohio income tax. Your company is transacting business in Ohio since you have an employee working in Ohio.

No, you are not required to withhold Ohio income tax from your Ohio resident employees’ wages since you do not maintain an office or transact business in the state of Ohio. However, for the Ohio resident employees’ benefit, you may withhold Ohio income tax since they will owe tax to Ohio on their compensation.

No, withholding is not required on compensation paid for services provided in a domestic home. Withholding is voluntary, and should be withheld if the employee requests that Ohio tax be withheld.

No, a company is not required to withhold Ohio income tax from payments made to an independent contractor. Withholding is only required on employee compensation.

Ohio law conforms to the provisions of federal law regarding whether an employer-employee relationship exists between parties. Using the common law rules, every individual who performs services subject to either the control and/or will of an employer, both as to what shall be done and how it shall be done, is an employee. The employee may have discretion or freedom of action in performing their duties but the employer has legal right to direct or control either the method and/or the means by which the services are provided.

Please contact the IRS so that they can make a determination as to whether an employer-employee relationship exists. If the IRS verifies that an employer-employee relationship exists, then the employer must withhold Ohio income tax on compensation paid to the employee.

For Ohio state income tax purposes, we conform to the federal definition of compensation. This includes all wages, salaries, tips, bonuses, commissions, etc. paid to an employee for services provided.

Yes, amounts excluded from federal wages, tips and other compensation are also excluded for Ohio income tax purposes. However, premiums on life insurance amounts in excess of $50,000 that are included in Federal wages should also be included in state wages as reported in box 16 of an employee’s W-2 form. Please note that Ohio income tax withholding is not required on the cost of group-term life insurance that is included in the employee’s income.

Ohio income tax withholding is required on the amount of income included in wages, as required to be reported in box #1 on Form W-2, resulting from a disqualifying disposition of stock. 

However, withholding is not required when an employee, who acquired stock pursuant to her/his exercise of a stock option, holds the shares for the appropriate holding period and then sells the stock.  Reason:  the gain or loss from the sale is not W-2 wage income. 

Ohio income tax withholding is required on the amount of income included in wages, as required to be reported in box #1 on Form W-2, resulting from a disqualifying disposition of stock.

Form IT 4 is an Ohio Employee Withholding Exemption Certificate. The employer is required to have each employee that works in Ohio to complete this form, unless the employee lives in a state with which Ohio has signed a reciprocity agreement (see Form IT 4 NR below). The employee uses form IT 4 to determine the number of exemptions that the employee is entitled to claim, so that the employer can withhold the correct amount of Ohio income tax. The employee must also indicate their school district of residence, so that the employer can withhold school district income tax if the employee lives in a school district that has an income tax.

Form IT4 is required to be completed by all employees that work in the state of Ohio except those employees that reside in Indiana, Kentucky, Michigan, Pennsylvania and West Virginia. Employees that work in Ohio and live in one of these five states do not complete form IT 4, but instead complete Ohio form IT 4NR.

Form IT 4NR is an Employee’s Statement of Residency in a Reciprocity State. This form is to be completed only by residents of Indiana, Kentucky, Michigan, Pennsylvania and West Virginia that work in Ohio. Residents of these states, with whom Ohio has reciprocity agreements, may claim exemption from withholding of Ohio income tax by completing this form and filing it with their employer (see also FAQ 19).

Employees complete only the form that pertains to them. The employee provides the completed form to their employer and the employer retains all forms IT 4 and IT 4 NR. Upon request, the employer is to make these forms available to the Ohio Department of Taxation. The forms are available at the following links: IT 4 and IT 4NR.

An employee can only claim his/her natural dependents. This includes one exemption each for the employee, his/her spouse and each dependent. Dependents are the same as defined in the Internal Revenue Code and as claimed on the taxpayer’s properly completed federal income tax return for the taxable year, or which the taxpayer would have been permitted to claim had he/she filed such a return.

Yes. If an employee expects to owe more Ohio tax than will be covered through normal withholding, the employee can elect to have additional withholding deducted by claiming fewer exemptions on form IT 4 or by requesting a specific additional amount of tax be withheld each pay period by indicating the additional amount on form IT 4.

The form IT 4 is available here.

An employee must complete a new form IT 4 within 10 days if the number of exemptions previously claimed decreases, due to any one of the following:

  - Your spouse, for whom you have claimed an exemption, is divorced or legally separated, or is claiming their own exemption on a separate IT 4 form.
  - The support of a dependent, for whom you claimed an exemption, is taken over by someone else.
  - Your find that a dependent, for whom you have claimed an exemption, must be dropped for Federal purposes.
  - The death of a spouse or a dependent, for whom you have claimed an exemption. This does not affect your withholding until next year, but a new certificate should be filed by December 1st of the year in which the death occurs.

The form IT 4 is available here.

If an employee claims more than their natural dependents, the employer is to withhold tax using zero exemptions. However, an employee may choose to claim fewer exemptions so that more tax is withheld. For detailed information regarding this subject see our information release at the link below:

IT 2001-01 - Proper Completion of Form IT-4 - August 31, 2001

Your employee cannot claim to be exempt from Ohio withholding. Your employee must complete a new form IT 4 showing the proper number of exemptions. If the employee does not properly complete Ohio form IT 4, the employer is required to withhold Ohio income tax giving the employee zero exemptions, which results in the maximum amount of tax deducted. For detailed information regarding this subject, please see our information release at the link below:

IT 2001-01 - Proper Completion of Form IT-4 - August 31, 2001

Yes, you must withhold Ohio income tax from the compensation that the employee earned in Ohio, unless the employee is a legal resident of one of the five states with which Ohio has signed a reciprocity agreement (see FAQ 19).

No. Ohio has a reciprocal agreement with the five states that neighbor Ohio. These five states are Indiana, Kentucky, Michigan, Pennsylvania and West Virginia. The reciprocal agreements provide that Ohio will not impose state income tax on the salaries, wages, tips and commissions of residents of these five states. Employees of these states that work in Ohio should complete form IT 4NR, Employee’s Statement of Residency in a Reciprocity State, and file that form with their employer.

However, the reciprocity agreements do not apply to compensation paid to Ohio nonresident investors that hold a 20% or more interest in a pass-through entity, where the pass-through entity has nexus in Ohio; this compensation is reclassified as a distributive share of income and is not considered wages (please see the instructions for Ohio form IT 1040 line 37 for more information on this item).

A resident of Indiana, Kentucky, Michigan, Pennsylvania and West Virginia who had Ohio state income tax erroneously withheld from their wages during the preceding calendar year can file Ohio form IT 1040 to receive their refund.

The reciprocity wages earned in Ohio should be deducted on Schedule A of form IT 1040, and deducted on line 2 on the front of form IT 1040. Any remaining tax is deducted by calculating a non-resident credit on Schedule D of form IT 1040.

Please note that individuals claiming refunds due to Ohio tax withholding on reciprocity wages should not file Form IT AR, Application for Personal Income Tax Refund, but should file Form IT 1040 as indicated above.

*CAUTION: The reciprocal agreements apply only to employee compensation. Therefore, a resident of a neighboring state that has Ohio source income (for example, income from a trade or business derived from Ohio sources, rental income from property located in Ohio, etc.) cannot claim the reciprocity deduction nor nonresident credit with respect to that income, but must pay Ohio income tax on that income.

Use the Ohio withholding tables to determine the amount of tax to withhold from the employee’s pay. The Ohio employer’s withholding tax tables were last updated in October 2006. If you need these tables you can access them by going to tax.ohio.gov, clicking on the “Ohio Taxes” tab, and under the Business Taxes in the right hand column selecting "Employer Withholding". The tables are set up by payroll periods (daily, weekly, bi-weekly, semi-monthly, and monthly), which give you a specified amount to withhold. You can also use the percentage method to determine the amount to withhold.

No, you cannot use a flat rate for Ohio income tax withholding, except on supplemental compensation where the minimum rate is 3.5%.

The rate is at least 3.5% percent. Ohio Administrative Code 5703-7-10 provides that withholding agents must withhold at least 3.5% on supplemental compensation such as bonuses, commissions, and other nonrecurring types of payments other than salaries and wages.

Ohio Revised Code section 5747.062(A) requires the Ohio Lottery Commission to withhold Ohio income tax on every lottery prize payment that exceeds $5,000.00 or more regardless of the winner's state of residency. Ohio lottery winnings are taxed by Ohio regardless of the winner’s state of residency. The lottery prize recipient must file the applicable Ohio income tax return, form IT 1040 or form IT 1041, and calculate their tax due on the Ohio income and claim the tax withheld by the Lottery Commission against the amount of Ohio income tax due.

The forms you file are determined by your filing frequency. Your filing frequency is based on your combined Ohio withholding tax liability (state and school district withholding combined) for the 12-month period ending June 30th of the preceding calendar year. For example, the amount of the tax liability for the 12-month period from July 1, 2005 to June 30, 2006 determines your filing frequency and the forms you will file for the 2007 calendar year).

  - Partial weekly if your Ohio withholding tax liability for the 12-month period ending June 30th of the preceding year was $84,000 or more. Partial weekly filers are required to pay withheld taxes electronically by Electronic Funds Transfer (EFT) to the Ohio Treasurer of State’s office or through the Ohio Business Gateway (OBG) Web site. Payment is due within three (3) banking days from the end of each partial-weekly period unless the accumulated taxes are more than $100,000, in which case payment is due by the next banking day. Partial weekly filers are required to only file quarterly IT-942 forms, which are filed electronically through the OBG Web site. Partial-weekly filers do not file forms IT 501 or IT 941.

  - Monthly if your Ohio withholding tax liability for the 12-month period ending June 30th of the preceding calendar year was less than $84,000, but more than $2,000. Monthly filers are required to pay withheld taxes with Form IT 501, or by paying electronically through either the Ohio Treasurer of State, Ohio Business Gateway Web site or by credit card. Payment is generally due by the 15th day of the month following the month for which the taxes were withheld. Monthly filers are also required to submit an annual reconciliation form IT 941.

  - Quarterly if your Ohio withholding tax liability during the 12-month period ending June 30th of the preceding calendar year was $2,000 or less. Quarterly filers are required to pay withheld taxes with Form IT 501, or by paying electronically through either the Ohio Treasurer of State, Ohio Business Gateway Web site or by credit card. Payment is generally due by the last day of the month following the end of the calendar quarter for which the taxes were withheld. Quarterly filers are also required to submit an annual reconciliation form IT 941.

Also, if you registered as an Ohio withholding agent on or after July 1 of the preceding year, you are considered to be a new employer and your filing frequency is quarterly. Your frequency is quarterly since the business entity did not have any withholding liability for the prior twelve-month period ending June 30th. You need to file an IT 501 form for each calendar quarter and an Annual Reconciliation form IT 941 by January 31st of the following year.

There are two partial weekly filing periods for each week and your payment of the withheld tax is generally due within three banking days from the end of the partial weekly period during which you paid your employees. The exception to the three banking day rule is if the accumulated withheld tax (Ohio income tax and school district income tax combined) exceeds $100,000, then payment is due on the next banking day.

The first partial weekly period consists of the consecutive days Saturday, Sunday, Monday and Tuesday and the second period consists of the consecutive days Wednesday, Thursday and Friday.

Here is an example: Your pay date is on the 15th of the month, which is a Thursday. Since your pay date falls within the second partial weekly period, which ends on Friday, your payment is due within three banking days following that Friday. Since neither Saturday nor Sunday are considered banking days, your payment is due by the following Wednesday - unless Monday, Tuesday or Wednesday is a bank holiday. If one day of the three banking days - Monday, Tuesday or Wednesday - is a holiday, your due date is moved forward one additional day.

Click on the link below for the current partial-weekly due date schedule:

Ohio and School District Employer Withholding Tax Due Dates & Payment Schedule

You must remit your withheld taxes each time that you pay your employees and payment is due within three banking days from the end of the partial weekly period.

Example: if you pay your employees on Thursday, the partial weekly period ends Friday; therefore, your payment is due within three banking days from Friday. Since Saturday and Sunday are not considered banking days, your payment is due by Wednesday (unless Monday, Tuesday or Wednesday is a bank holiday, in which case your payment due date advances one day for the holiday to Thursday).

No, by law you must remit your payments on a partial weekly basis during the current year. Your filing frequency may change for the subsequent year based on your liability during the 12-month period ending June 30th of the current year.

You need to file form IT 941 at year-end. Form IT 941 can be filed electronically using the Ohio Business Gateway Web site or by paper. You do not need to file form IT 501 for any payment that is made electronically or by credit card.

If you remitted your payment by EFT (Electronic Funds Transfer), your transaction can generally be reversed if you notify the Ohio Treasurer of State’s office at l-877-EFT-OHIO (1-877-338-6446) within 24 hours of your transmission; if after 24 hours, you may contact the Ohio Department of Taxation at (614) 387-0224.

Payment by check: The department's policy is to submit a check for payment twice. If your check does not clear the second time, we will send to you a separate payment request.

Payment by EFT: If your payment was attempted by EFT, then you should call the Ohio Treasurer of State’s office at 1-800-EFT-OHIO (1-877-338-6446).

Ohio Business Gateway (OBG) is a Web site created to allow electronic filing and payment for several of Ohio’s business taxes. You can also register a new business through OBG. Please go to obg.ohio.gov (Ohio Business Gateway Home Page) for more information.

Yes. You can use your American Express, Discover/NOVUS, MasterCard, or Visa credit card to pay your withholding tax liability. Credit card payments may be made through the Ohio Business Gateway or over the Internet by visiting Official Payments Corp. and clicking on the “Payment Center” link or by telephone at 1-800-2PAY-TAX. There is a convenience fee charged by Official Payments Corporation for using this service. For more information regarding credit card payments please use the link below:

Business Tax - Credit Card Payments Now Accepted

No. You must remit your School District tax separately using form SD 101.

You can pay the additional tax due by making an electronic payment or by making a payment with form IT 501 for the same period. If you use another form IT 501 for the same period, only report the additional tax due - do not show the amount you previously paid for the period.

Also, you can include the additional tax due with your next payment, but only if your next payment is for a period within the same calendar year. For example, if you file and pay monthly and you underpaid the December 2006 withholding, you should not increase your January 2007 payment by the underpayment amount. Rather, you should include the additional tax due with your Annual Reconciliation, form IT 941 for 2006 (or if form IT 941 has already been filed, please use form IT 941X to report the additional tax due).

The forms named above are available at the following links: IT 501, IT 941 , and IT 941X .

You can reduce your next payment by the amount of the overpayment, but only if your next payment is for a period within the same calendar year. If your overpayment amount is more than what you owe on your next payment, the remaining overpayment can be used to reduce your subsequent payment(s) for period(s) within the same calendar year.

Monthly or quarterly filers (filing forms IT 501 and IT 941) – if the adjustment is for a period within the current calendar year, please amend your next IT 501 filing by reducing or increasing the net tax due. If the adjustment is for a prior calendar year, and you have already filed form IT 941, then amend the prior calendar year return, by filing form IT 941X.

Partial weekly filers (IT 942) – to amend a quarterly filing for a period, file an amended return using the Ohio Business Gateway Home Page. If you are making an adjustment for a prior calendar year, please amend your fourth quarter/annual form IT 942.

Monthly booklets are usually mailed in late December or early January.

Quarterly booklets are usually mailed late January. Your first quarterly payment is due by April 30th.

If you do not receive your forms prior to the payment due date, you may obtain a blank form IT-501 on this Web site at Tax Forms Search or we can fax or mail forms to you upon your request if you call 1-800-282-1782. Please be aware that it is your responsibility to make your payment before the payment is due.

Partial weekly filers do not receive preprinted forms since their payments must be made electronically by EFT through the Ohio Treasurer of State’s office or by filing and paying through the Ohio Business Gateway (OBG).

Click on the link below for the current partial-weekly due date schedule:

Ohio and School District Employer Withholding Tax Due Dates & Payment Schedule

Blank forms IT 501, IT 941, IT 3, IT 4 and IT 4NR are available on our Web site at Tax Forms Search. For partial weekly filers, form IT 942 is not available on our Web site since this quarterly and annual form must be filed electronically through the Ohio Business Gateway (please go to obg.ohio.gov for more information).

Yes. All employers are required to send a copy of their W-2 forms to the Ohio Department of Taxation. Your W-2 forms are accompanied by Ohio form IT 3, Transmittal of Wage and Tax Statements. W-2 forms for the preceding calendar year are due to us by the last day of February or within 60 days after discontinuation of business, whichever occurs first.

Generally, no. We only require 1099 forms that reflect Ohio income tax withholding, such as forms 1099R, to be sent to us. Other 1099 forms, such as forms 1099-MISC or 1099-INT, that do not report Ohio income tax withholding are not required to be sent to the Ohio Department of Taxation.

No. Online filing of W-2 forms is not yet available.

Please see our instructions on our Online Services page at the link below:

Magnetic Media Reporting for Tax Year 2007

If using the U.S. Post Office mail to:

Ohio Department of Taxation
P.O. Box 182667
Columbus, OH 43218-2667

If using a carrier other than the U.S. Post Office mail to the following:

Ohio Department of Taxation
4485 Northland Ridge Blvd.
Columbus, OH 43229

Please contact our Information Services Division at (614) 752-1972.

Follow federal guidelines when correcting an employee's W-2 form. Indicate clearly on the W-2 form, “Corrected” or “Reissued,” whichever applies. If you issue federal form(s) W-2C, or are correcting a W-2 form, send one copy of each corrected W-2 - and an amended IT-3 form that reflects your revised figures for the year - by mail to the following address:

Ohio Department of Taxation
Attn: Employer Withholding Tax
PO Box 182847
Columbus, OH 43218-2847

There are two penalties that can be charged for either late payment and/or non-payment. Ohio Revised Code section 5747.15(A)(3)(a) provides for a late payment penalty equal to 10% of the late payment plus twice the interest charged on the late payment. Ohio Revised Code section 5747.15(A)(4) provides for a penalty up to 50% of the tax withheld if payment is not made on or before the due date of the payment.

Yes. Ohio Revised Code section 5747.15(A)(1), provides a penalty equal to the greater of: i) $50 per month or fraction of a month, up to $500, or (ii) 5% per month or fraction of a month, up to 50%, of the sum of the taxes required to be shown on the report or return, for each month or fraction of a month that elapses between the due date, including extensions of the due date, and the date on which the return is filed.

Yes, Ohio Revised Code section 5747.07(G) provides that an employee of a business entity or trust having control of or charged with the responsibility of filing the withholding tax report and making payment shall be personally liable for failure to file the report or pay the tax due as required by this section. The personal liability includes any penalty and interest that accrue on the unpaid tax liability, as was affirmed by the Ohio Supreme Court in Soletesiz v. Tracy 663 N.E. 2d 1273, 75 Ohio St. 3d 477. For further guidance also see Ohio Administrative Code 5703-7-15.

The Ohio Attorney General’s office issues a Release of Satisfaction letter to you, when assessments are paid or satisfied. You will need to contact the AG's office regarding your request. Their address and telephone numbers are listed below:

Attorney General's Office
150 E. Gay St., 21st Floor
Columbus, OH 43215-3100
1-614-466-8360
1-614-752-7541

After you receive the lien release, you need to file the release with your County Recorder’s office. You may need to send to the Credit Bureau a copy of the lien release and a copy of the receipt from the County Recorder’s office to have your credit record updated.

We provide a location on our Web site for you to access municipal income tax forms and information for the cities, townships and villages in Ohio. Please use the link below:

Municipal Income Tax Forms and Information

State recertification of taxable wages is administered by the Ohio Department of Job & Family Services. Their telephone number is (614) 466-2319.

Ohio Revised Code section 5747.07(H) provides that if an employer sells their business or stock of merchandise or quits business, that all withheld taxes, including applicable interest and penalties, must be paid within 15 days after the date of selling or quitting business. The employer also must make a final return within the same 15 days.

Yes, Ohio Revised Code section 5747.07(H) requires that the employer’s successor withhold enough purchase money to cover the amount of the taxes, interest and penalties due and unpaid, until the former owner provides a receipt from the Tax Commissioner showing that the taxes, interest and penalties have been paid or a certificate that no such liability is due. If purchase money is not withheld, the buyer can be held personally liable for the Ohio withholding tax liabilities of the seller.

Please provide the following items to us on company letterhead, and we will provide you with a clearance letter:

1. Legal business name & trade name (if applicable).
2. The federal ID number (EIN).
3. Ohio employer withholding account number.
4. Business address.
5. Owner (or officer) name.
6. Last date of business.
7. Late date that the business had employees in Ohio.
8. Purchaser name (if known).

You may mail your request to the following address, or fax it to (614) 466-0002:

Ohio Department of Taxation
Attn: Ohio Employer Withholding Tax
P.O. Box 182867
Columbus, OH 43218-2867

To cancel, inactivate or merge your Ohio employer/school district withholding account, you should complete the change of employer status form found inside your Ohio employer/school district withholding coupon booklet and mail it to us. If you do not have this form, you may access the form using the link below:

2006 Change of Employer, Name, Address or Status

Please mail your completed form to the following address:

Ohio Department of Taxation
Taxpayer Services Division
P O Box 182382
Columbus, OH 43218-2382

Your Ohio withholding account will be inactivated if you no longer have employees working in Ohio for whom you are required to withhold tax. If at a later date you again have employees working in Ohio, your withholding account can be reactivated by contacting us either by e-mail, phone (Call_Us) or by mail.

No, you cannot continue to use the Ohio withholding number. If a new federal EIN is issued, you must apply for a new Ohio withholding number that corresponds with the new federal EIN. You can obtain a new Ohio number by calling our Registration Unit at 1-888-405-4089 or by completing and submitting form IT-1. Also, you will need to close the withholding account for the prior business, including filing all payroll tax returns up through the date of closure.