State and federal income tax laws contain special provisions for members of the military (including the Ohio National Guard) and their families. Certain military servicemembers may not have a filing requirement due to the deductions available under Ohio law. However, the Department of Taxation recommends that you file an Ohio IT 1040 or IT 10 to avoid a failure-to-file notice (delinquency billing). Similarly, if your home of record is located within an Ohio school district with an income tax, the department recommends filing an SD 100 even if there is no school district tax liability.
Some of the major tax issues facing military families are detailed below.
Taxability of military servicemembers — Certain deductions are available to military servicemembers based on their residency status. A military servicemember is a resident of their "state of legal residency." This is generally the same as the servicemember's "home of record" unless it is subsequently changed. The servicemember's state of legal residency does not change based on military orders.
- Ohio resident servicemembers can use the following chart to determine how his/her income is treated for Ohio tax purposes:
- Ohio nonresident servicemembers can use the following chart to determine how his/her income is treated for Ohio tax purposes:
Taxability of civilian spouses of military servicemembers — Certain deductions are available to a servicemember’s civilian spouse based on the spouse’s residency status. A servicemember's civilian spouse will generally retain their original state of legal residence, if the servicemember and spouse have the same state of legal residence and the spouse is only accompanying the servicemember as part of military orders.
Additionally, effective for tax years 2018 and forward, a civilian spouse can elect to have the same state of legal residence as the servicemember. This includes the tax year in which the couple was married, as well as any subsequent tax year during the marriage.
- Ohio resident civilian spouses can use the following chart to determine how his/her income is treated for Ohio tax purposes:
- Ohio nonresident civilian spouses can use the following chart to determine how his/her income is treated for Ohio tax purposes:
Military retirement pay — Generally, retired servicemembers are entitled to deduct “retired personnel pay” that is related to service in the uniformed services, the reserve components thereof, or the Ohio National Guard. “Uniformed services” include the Army, Navy, Air Force, Marine Corps, Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, and/or the Public Health Service.
If the retired personnel pay is tied to a plan such as the federal civil service retirement system or the federal employee’s retirement system, the portion of that income that is based on the retired servicemember’s time in the uniformed services is eligible for the Ohio income tax deduction.
Military injury relief fund and veteran’s disability severance payments — These amounts are not subject to federal income tax and thus should not be included in the taxpayer’s federal adjusted gross income (AGI). Because the amounts are not included in federal AGI, they are not taxable to Ohio. If a taxpayer errantly included these amounts on his/her federal income tax return, s/he should file an amended return with the IRS to remove the income. After that return is accepted, the taxpayer can file an amended Ohio IT 1040 showing the lower federal AGI and request an Ohio refund. If the amount is included in the taxpayer’s federal AGI and the IRS does not accept the change, s/he can still file an amended Ohio IT 1040 to deduct the income and request a refund.
Ohio Veterans Bonus — Ohio awards a bonus to certain veterans. Complete details on the bonus and how to apply are found at http://www.veteransbonus.ohio.gov. Ohio Resident Veterans Bonus payments are not included in federal adjusted gross income and thus, are not deductible on the Ohio IT 1040.
If you receive a notice from the Department, see the FAQ “What should I do if I receive an individual income tax ‘Failure to File’ notice?” in the FAQ category "Military" for information on how to respond.
See R.C. 5747.01(A)(22), (23), (24), (26), (27) and 5747.01(GG).
Military Tax Resources
- 2020 Individual and School District income tax instructions – See the “Ohio Income Tax for Military Servicemembers and Their Civilian Spouses” section of the instructions.
- Frequently Asked Questions — This page contains answers to some of the more frequently-asked questions concerning income taxes and the military.
- Information Release IT 2008-02 — “Ohio Taxable Income and Deductions for Servicemembers and Civilian Spouses”.
- IRS resources for military families — The IRS website provides general information regarding federal tax exemptions and related tax information for members of the military.
Taxpayers with additional questions regarding this subject may contact the Department by e-mail at Military-Info@tax.state.oh.us, or calling 1-800-282-1780 (1-800-750-0750 for persons who use text telephones (TTYs) or adaptive telephone equipment).