Income - Ohio Residency and Residency Credits
Please see Information Release IT 2018-01 entitled “Residency Guidelines - Tax Imposed on Resident and Nonresident Individuals for Taxable Years 2018 And Forward” as well as the “General Information for the Ohio IT 1040” section of the individual income tax instructions. Additional information can be found on the Department's Ohio Residency page.
A taxpayer’s residency status is specific to the individual. In a given tax year, each taxpayer is a resident, a nonresident, or a part-year resident of Ohio.
Note: It is possible for two spouses, even if included on a joint return, to have different residency statuses.
- Resident - An Ohio resident is subject to Ohio’s individual income tax on all of their income. A resident taxpayer is allowed a “resident” credit for the lesser of income subjected to tax in another state, or the amount of tax paid to another state on that income. If the income is from a state that imposes no tax, a resident will get no credit.
Tax paid to another state includes both amounts reported on the taxpayer's individual income tax return and amounts paid on the individual taxpayer's behalf by a pass-through entity on a composite income tax return.
- Nonresident – A nonresident with income earned in Ohio will be subject to Ohio tax. A nonresident taxpayer is allowed a “nonresident” credit for all income not earned or received in Ohio.
- Part-year resident - A part-year resident is eligible for the nonresident credit for the portion of the year they were a nonresident and eligible for the resident credit for the portion of the year they were a resident.
See R.C. 5747.05(A), (B) and (C). See also Ohio Adm. Code 5703-7-03.
An individual is a “resident” of Ohio if they are domiciled in Ohio, subject to the tests contained in R.C. 5747.24.
See R.C. 5747.01(I)(1).
An individual is domiciled at their true, fixed, permanent home and principal establishment. It is where they ultimately intend to return from any period of absence. Once a domicile has been established, it continues until it is abandoned in favor of a new one.
Generally, any individual with an abode in Ohio is presumed to be an Ohio resident. The abode can be either owned or rented. An individual’s temporary absence from their Ohio abode, no matter how long, does not make them a nonresident of Ohio.
An individual is a “resident” of Ohio if they are domiciled in Ohio. The key question is not where the individual is physically located. Instead, it is whether the individual has abandoned their domicile in favor of a new one. Thus, an individual can be domiciled in a location even if they spent no time there.
See the FAQs “Who is a resident of Ohio for income tax purposes?” and “How do I challenge the presumption that I am an Ohio resident for tax purposes?” for more information on how to determine domicile.
For example, an individual whose permanent home is in Ohio, but works outside of Ohio during the entire tax year, is still domiciled in Ohio and thus a resident. The individual has not abandoned their Ohio domicile merely by their absence from the state. This could include someone who spends the entire tax year in another state or a foreign country.
Additionally, a student whose permanent home is in Ohio, but attends college in another state, is still domiciled in Ohio and thus a resident. Again, the individual has not abandoned their Ohio domicile merely by attending college in another state. See the FAQ “Where am I a resident while I am away at college?” for more information on domicile for college students.
An individual is a “nonresident” of Ohio if they are not a resident during any portion of the tax year. See R.C. 5747.01(J). While most individuals are presumed to be Ohio residents, certain individuals can change that presumption by timely filing the Ohio Nonresident Statement (form IT NRS). To be eligible to file the IT NRS, an individual must meet all of the following five criteria:
- You had no more than 212 contact periods in Ohio during the tax year;
- You had at least one abode outside of Ohio for which you did not claim depreciation during the tax year. Your abode outside Ohio cannot be used as a vacation home, or a rental or other income-generating property;
- You did not hold an Ohio driver’s license or state ID card during the tax year;
- You did not receive the Ohio homestead property tax exemption or the owner-occupied tax reduction during the tax year; AND
- You did not receive in-state tuition at an Ohio institution of higher learning based on an Ohio abode during the tax year. This requirement applies only to the individual(s) signing the statement. It is not applicable to their dependents.
If the IT NRS is properly completed and filed by October 15th following the close of the tax year, the individual is irrebuttably presumed to be a nonresident of Ohio. The IT NRS only applies to the tax year for which it is filed; it does not cover past or future tax years.
Alternatively, instead of filing form IT NRS, nonresidents who meet the above criteria may check a box in the "Ohio Nonresident Statement" section on page 1 of the Ohio IT 1040.
Married individuals can choose to file a joint statement or separate statements, regardless of the filing status they use on their income tax returns. Nonresidents who file a joint return and both meet the above criteria can each check the appropriate box on the Ohio IT 1040 instead of filing form IT NRS.
See R.C. 5747.24(B).
An individual is a “part-year resident” if they change their domicile during a tax year. In other words, a part-year resident is an individual who is a resident for part of a tax year, and a nonresident for the rest of the tax year.
Because a part-year resident must change domicile during the tax year, it is unlikely that an individual will be a part-year resident of Ohio in consecutive tax years. Instead, such an individual is more likely a full-year resident or nonresident of Ohio.
See the FAQ “Who is a resident of Ohio for income tax purposes?” for more information on how to determine domicile.
See R.C. 5747.01(J).
No. An individual who splits time between two states is not a part-year resident. Instead, the individual remains domiciled in only one state, and merely travels to the other state.
Since domicile does not change, the individual is either a full-year resident or nonresident. (See the FAQs “Who is a resident of Ohio for income tax purposes?” and “How do I challenge the presumption that I am an Ohio resident for tax purposes?” for more information on how to determine domicile.)
Generally, only individuals who are asserting that they are nonresidents of Ohio need to keep track of their contact periods.
You have a contact period in Ohio if all of the following are true:
- You have an abode outside of Ohio;
- You are away overnight from your abode; AND
- While away, you spend any portion of two consecutive days in Ohio.
You do not have to spend the night in Ohio. For example, if you spend portions of Monday and Tuesday in Ohio but stay in a hotel in Kentucky on Monday night, you would still have a contact period in Ohio. You must spend consecutive days in Ohio to have a contact period. For example, if you spend portions of Monday and Wednesday in Ohio, but not Tuesday, then you would not have a contact period in Ohio.
See R.C. 5747.24(A).
Any individual can challenge the presumption of Ohio residency by providing documentation showing that they are a nonresident. You can provide information, such as:
- An out-of-state driver’s license or state identification card;
- Your voter registration;
- Your vehicle registration;
- Your property records;
- Proof of your contact periods with Ohio; AND
- Any other relevant information allowed under Ohio law.
Certain information cannot be considered in determining your residency status. These items include but are not limited to all of the following:
- The location of your bank;
- The location of your legal, accounting and medical professionals;
- The location of any business(es) you own and/or operate; AND
- The location of your friends and family except for your spouse.
For a complete list of all information that cannot be considered, see Ohio Adm. Code 5703-7-16.
The burden of proof needed to challenge the presumption of residency is based on how much time the individual spent in Ohio during the tax year. Ohio uses “contact periods” to measure the amount of time spent in the state. (See the FAQ “What is a ‘contact period’?” for more information.)
If you had fewer than 213 contact periods in Ohio during the tax year, you must provide enough documentation to show that it is more likely than not that you were a nonresident. If you had 213 or more contact periods, you must provide clear and convincing documentation that you were a nonresident.
See R.C. 5747.24.
You are a resident where you are domiciled, regardless of where you spend the majority of your time. An individual is domiciled at their true, fixed, permanent home and principal establishment. It is where they ultimately intend to return from any period of absence. Once a domicile has been established, it continues until it is abandoned in favor of a new one.
Generally, an individual who is attending college out of state does not intend to abandon their domicile and permanently reside at the location of their college. Thus, students attending college out of state generally are residents of their home state.
Note: If you obtained a driver’s license, obtained in-state tuition, and/or registered to vote in the state where you attend college, then you have likely abandoned your domicile in your home state.
Please see the FAQs under the “Military” subheading for more information on topics related to servicemembers and Ohio income tax. Additionally, you can read Information Release 2008-02 entitled "Ohio Taxable Income and Deductions for Servicemembers and Civilian Spouses."
Please see the “Income – School District” FAQs and the Department's School DIstrict page for more information on residency and other topics related to Ohio's school district income tax.
A nonresident taxpayer is allowed a “nonresident” credit for all income not earned or received in Ohio. The credit is calculated on the Ohio Schedule of Credits using the taxpayer’s non-Ohio portion of their Ohio adjusted gross income. Taxpayers must use form IT NRC to calculate the non-Ohio portion of their Ohio adjusted gross income.
For more information on form IT NRC, see the individual and school district income tax instructions. Additionally, you can review the presentation “Personal Income Tax Updates” from the Department of Taxation’s Ohio Virtual Tax Academy.
See R.C. 5747.05(A) and Ohio Adm. Code 5703-7-03.
Non-Ohio income should not be reported on form IT NRC. Instead, form IT NRC uses the taxpayer’s Ohio portion of their Ohio adjusted gross income to determine their nonresident portion of Ohio adjusted gross income. Thus, taxpayers are only required to report their Ohio-sourced income on form IT NRC.
Nonbusiness income and business income are reported in different sections of the IT NRC. Depending on how they are earned, interest, dividends, capital gains, rents and royalties may be nonbusiness income or business income.
Amounts that are nonbusiness income should be reported on the appropriate line of Section I. Amounts that are business income should be reported on the appropriate line of the Section III completed for the business that generated the income. These amounts will ultimately be reported on line 5 of Section I.
No item of income can be included on the IT NRC as both nonbusiness and business income.
See R.C. 5747.20, 5747.22, and 5747.231.
Income listed in Section I, Part B of the IT NRC can only be allocated to Ohio if it was earned while you were a resident of Ohio. Therefore, full-year nonresidents do not need to report any of the income listed in Section I, Part B of the form. These types of income have no impact on the calculation of your nonresident credit.
Generally, full-year residents do not need to complete the IT NRC because they are not entitled to the nonresident credit. However, if a full-year resident is filing a joint return with a part-year or full-year nonresident of Ohio, the resident taxpayer must include all of his/her income in Section I of the IT NRC.
The resident taxpayer’s income must be reported on the appropriate line(s) in Column B (Ohio Amount) to ensure that the spouse’s nonresident credit is calculated correctly. The resident taxpayer does not need to complete Sections II or III of the IT NRC.
If you received an Ohio IT K-1 from a pass-through entity in which you are an investor, you do not have to complete a Section III for that entity. Instead, you can check the box(es) in Section II and attach the IT K-1(s) to your IT NRC. You must report the corresponding amounts from the IT K-1 in columns B and C of Section II as follows:
An Ohio resident is subject to Ohio's individual income tax on all their income. A resident taxpayer is allowed a "resident" credit for the lesser of income subjected to tax in another state, or the amount of tax paid to another state on that income. The credit is calculated on the Ohio Schedule of Credits using the information from form IT RC to determine the portion of the taxpayer's Ohio adjusted gross income subjected to tax in another state and the tax paid on that income. Taxpayers must use form IT RC to calculate these amounts.
See R.C. 5747.05(B) and Ohio Adm. Code 5703-7-03.
Only income earned while a resident of Ohio and subjected to income tax by another state or the District of Columbia is eligible for the resident credit. "State" means only one of the 50 United States of America. State does not include any country, province or city. Additionally, individuals cannot claim a resident credit for income earned in a state without an individual income tax. Thus, those states are not listed in the IT RC.
See R.C. 5747.05(B).
Generally, income taxes paid by an individual to another state or the District of Columbia, including amounts paid by a PTE on behalf of its investors on a composite income tax return, are eligible for the Ohio resident credit. However, any taxes paid that are directly or indirectly deducted, or are required to be deducted, in computing the investor’s federal adjusted gross income are not eligible for the Ohio resident credit. Therefore, taxes paid by a PTE as part of a workaround for the federal state and local tax (SALT) deduction limitation will not qualify for the Ohio resident credit.
See R.C. 5747.05(B)(4)(a).
The Ohio Resident Credit is based on the portion of Ohio adjusted gross income (OAGI) subjected to income tax by another state. Because the Business Income Deduction (IT BUS) reduces OAGI, it may be that the income being taxed by the other state(s) is no longer in OAGI and thus no longer eligible for the Resident Credit.
In making this determination, resident taxpayers may allocate their Business Income Deduction against any Ohio business income first. Any remaining portion of the deduction should be allocated against the non-Ohio portion of business income.
Example: Jamie has $300,000 of business income and takes the maximum $250,000 deduction on the Ohio Schedule of Adjustments (formerly the Ohio Schedule A). Jamie determines that $150,000 of the business income is Ohio-sourced and $150,000 is sourced to Indiana. Jamie’s Indiana tax return shows $150,000 of income taxed and she paid $4,845 in income tax to Indiana. In determining what portion of her OAGI was taxed by Indiana, she must allocate the $250,000 BID.
She allocates $150,000 of the BID against the Ohio portion of business income. The remaining $100,000 of the BID is allocated against the $150,000 of Indiana business income. This means that only $50,000 ($150,000 - $100,000) of the Indiana-sourced business income is still in Jaime’s OAGI. So when she calculates her Resident Credit, she reports the portion of OAGI subjected to tax by other states as $50,000.