Ohio Tax Form IT 1040 - Individual Income Tax Return Instructions

Who Must File an Ohio Income Tax Return?

Every Ohio resident and every part-year resident (see page 10 for a discussion of “residency”) is subject to the Ohio income tax. Every nonresident having Ohio-sourced income must also file. Examples of Ohio-sourced income include the following:

  • Wages earned in Ohio (Note: See “Exception,” below);
  • Ohio lottery winnings;
  • Income or gain from Ohio property;
  • Income or gain from a sole proprietorship doing business in Ohio; AND
  • Income or gain from a pass-through entity doing business in Ohio.

Exception. A full-year nonresident living in a border state does not have to file if the nonresident’s only Ohio-sourced income is wages received from an unrelated employer.

You do not have to file an Ohio return if . . .

  • you are single, 65 or older AND your federal adjusted gross income is less than or equal to $11,500 AND you have no Schedule A adjustments.
  • you are married, filing jointly, 65 or older AND your federal adjusted gross income is less than or equal to $13,000 AND you have no Schedule A adjustments.
  • your only source of income is retirement income that is eligible for the retirement income credit (line 48) AND the credit is the same or larger than your tax before credits (line 6).
  • your exemption amount (line 4) is the same as or more than your Ohio adjusted gross income (line 3).

When Do I Have to File?

For calendar year 2008 most taxpayers must file on or before April 15, 2009 (for exceptions, see “What if I Need More Time To File?” and “Military Personnel Stationed Outside Ohio” on page 8). Returns for other tax periods are due on the 15th day of the fourth month following the close of your taxable year.

What Tax Records Do I Need to Keep?

Keep a copy of your completed income tax return. Also keep copies of any documents that you used to prepare your return. Keep these records for at least four years from the later of the filing due date or the date that you filed the return. The Ohio Department of Taxation may audit your tax return. If so, you must be able to prove all claims and items listed on your return.

Can Dependent Children Claim Themselves if They File Their Own Tax Return?

Yes! Ohio law differs from federal law. Ohio law permits dependents who are claimed on their parents’ tax return to claim themselves on their own tax return.

What if I Want a Receipt to Prove That I Paid?

Your cancelled check or credit card statement may be used as proof of our receipt of your tax payment. If you make payment with a money order, be sure to keep a copy for your records.

How Should Investors in a Pass-Through Entity Report Income?

A pass-through entity is a partnership, S corporation or limited liability company treated as a partnership or an S corporation for federal income tax purposes. Unless the exception, below, applies, each investor in any pass-through entity doing business in Ohio must file Ohio form IT 1040.

Exception: Such investors do not have to file Ohio form IT 1040 if ALL of the following apply:

  • the investor is a full-year nonresident; AND
  • the pass-through entity files Ohio form IT 4708, annual composite income tax return, on behalf of the investor; AND
  • the investor has no other Ohio-sourced income or, if the investor has other Ohio-sourced income, that income is also reported on another Ohio form IT 4708.

How Should Full-Year Nonresidents and Part-Year Residents Engaged in Businessin Ohio Apportion Income?

Each full-year nonresident and each part-year resident who is engaged in business (as a sole proprietor or through a partner-ship, S corporation or limited liability company) in Ohio must apportion his/her business income inside and outside of Ohio. If you file Ohio form IT 1040, use Ohio form IT 2023 (income allocation and apportionment worksheet) to determine the proper amount of credit to claim in Schedule D of Ohio form IT 1040. See page 10 for an explanation of “residency.”

What if a Taxpayer Is Deceased?

If the taxpayer dies before filing the return, the taxpayer’s personal representative has to file and sign the return on behalf of the taxpayer who died. A personal representative can be the executor, administrator or anyone who is in charge of the deceased taxpayer’s property.

Important:

• Use the same filing status as shown on the IRS income tax return.

• Check the “Deceased” box after the applicable Social Security number on page 1 of the return.

CAUTION: We cannot rewrite a decedent’s refund check by making it payable to the estate of the decedent or adding an executor’s name.

What if I Need More Time to File?

You must first qualify for an IRS extension of time to file. Ohio does not have an Ohio extension request form but honors the IRS extension. You should include with the Ohio income tax return a copy of your IRS extension or your extension confirmation number or a printed copy of the IRS acknowledgment. An extension of time to file does not extend the time for payment of the tax due. So, except as set forth below, you must make extension payments by April 15, 2009 on Ohio form IT 40P (see pages 5 or 43 of these instructions). Interest will accrue on any tax not paid by April 15, 2009, and penalties also may apply.

Exception: Certain military personnel may have an additional extension of time to file and to pay (see “Military Personnel Stationed Outside Ohio,” at right).

Do I Owe Penalties and Interest?

A failure-to-file penalty, the greater of $50 per month up to a maximum of $500, or 5% per month up to a maximum of 50% of the tax, may be charged if you fail to file your Ohio income tax return by the due date or the extended due date.

A failure-to-pay penalty of double the interest charged generally will apply if you do not pay the tax by April 15, 2009. However, this penalty does not apply if (i) you obtained an IRS extension of time to file, (ii) your total payments made by April 15, 2009 equal or exceed 90% of your total Ohio tax (make any required payments electronically via our Web site at tax.ohio.gov or use Ohio form IT 40P on pages 5 or 43 of these instructions) and (iii) you pay the balance due by the extended due date (make any required payments electronically via our Web site or use another Ohio form IT 40P, also available on our Web site).

An additional $50 bad-check charge may be imposed against any taxpayer whose payment is dishonored by the bank.

Except for certain military servicemembers (see “Military Personnel Stationed Outside Ohio,” at right), interest will be applied from the date the tax should have been paid (April 15, 2009) until the date of payment. The interest rate for 2009 is 5%. Penalties also may apply.

How Do I Round to the Nearest Dollar?

You are required to round to the nearest whole dollar. To do so, drop any cents less than 50 cents and increase amounts from 50 cents to 99 cents to the next highest dollar.

What if I Need to Correct My Income Tax Return After I File?

You can make any change or correction to your return by filing an amended Ohio income tax return (Ohio form IT 1040X). Use this form to amend your 2008 Ohio form IT 1040 or IT 1040EZ (you can get Ohio form IT 1040X from our Web site at tax.ohio.gov or by calling 1-800-282-1782).

If you correct your IRS income tax return for 2008 or you are audited by the IRS, you must amend and file your Ohio income tax return within 60 days of the final determination of the IRS change.

 CAUTION The IRS informs us of all changes it makes to your IRS income tax return. To avoid penalties, be sure to file your Ohio amended return within 60 days of the final determination of the IRS change.

Should I Make Estimated Tax Payments in 2009?

Estimated tax is the method used to pay tax on income when your withholding and credits do not cover your tax liability. You must pay estimated tax if you expect your 2009 tax to be more than $500 after subtracting your withholding and credits. Common examples of income sources that make quarterly estimated payments necessary are self-employment income, pensions, commissions, lump sum payments, capital gains, dividends, interest, alimony or other sources of income not subject to withholding.

If you estimate that you will owe more than $500 in tax for 2009 (after subtracting your estimated withholding and credits), then you should make quarterly estimated payments either on Ohio form IT 1040ES or by filing and paying electronically (see pages 5 or 43 of these instructions).

CAUTION If you are required to make estimated payments and do not, you may be subject to an interest penalty on your underpayment of estimated taxes. Use Ohio form IT/SD 2210 (see tax.ohio.gov) to calculate the interest penalty on your underpayment amount.

2009 Estimated Tax Payment Due Dates

  • 1st quarter – April 15, 2009
  • 2nd quarter – June 15, 2009
  • 3rd quarter – Sept. 15, 2009
  • 4th quarter – Jan. 15, 2010

TIP – If you don’t want to make estimated payments, increase the amount of Ohio tax that your employer withholds from your wages. To do this, file a revised Ohio form IT 4 (Employee’s Withholding Exemption Certificate found at tax.ohio.gov) with your employer.

Military Personnel Stationed Outside Ohio

For detailed information, visit our Web site at tax.ohio.gov and see our 2008 information release IT 2008-02 entitled “Military Taxpayer Guide to Taxable Income and Deductions.”

If you were an Ohio resident during taxable year 2008, active duty military pay that you received while you were stationed outside Ohio is not taxed. See line 37 instructions on page 21.

You can also calculate a resident tax credit if your nonmilitary pay was taxed by another state. See Schedule C instructions on page 26.

If you were not an Ohio resident, Ohio does not tax your military pay (see line 36 instructions on page 20). However, Ohio does tax your nonmilitary pay included in your federal adjusted gross income if the nonmilitary pay was earned in Ohio (see Schedule D instructions on page 27).

Income from nonmilitary Ohio employment and Ohio profits and gains from Ohio rental property are examples of income taxed by Ohio. If you are unsure of your state of residency, see “Ohio Residency Status” on page 10.

Each taxpayer who is (i) either a member of the National Guard or a reserve component of the armed forces of the United States, (ii) called to active duty pursuant to an executive order issued by the president of the United States or an act of Congress of the United States and (iii) eligible for a federal extension of time to file his/her IRS income tax return automatically receives an extension of time to file the Ohio income tax return and to pay the Ohio income tax. The Ohio extension is for the same length of time as the federal extension. During the extension period, these taxpayers do not have to pay any interest, interest penalty or penalty on any tax due.

Do I Have to File a School District Income Tax Form?

Many Ohio school districts have an additional income tax. These school districts are marked with an asterisk (*) on pages 38-42 in this booklet. If during 2008 you were a full-year or part-year Ohio domiciliary and you either lived in or were domiciled in one of these districts during all or part of the year, then by the due date for filing your Ohio income tax return you must also file an Ohio form SD 100, School District Income Tax Return, with the Ohio Department of Taxation. You can electronically file your school district return, or you can get Ohio form SD 100 from our Web site at tax.ohio.gov, from your local school board office or by calling toll- free 1-800-282-1782.

What Is a Medical Savings Account and What Are the Qualifications?

A medical savings account is used to pay eligible medical expenses of the account-holder or the account-holder’s spouse and/or the account-holder’s dependents. A medical savings account can be opened by or on behalf of a person that participates in a sickness and accident plan, a plan offered by a health maintenance organization or a self-funded, employer-sponsored health-benefit plan pursuant to the federal Employee Retirement Income Security Act.

You must designate an administrator for the medical savings account at the time you open the account. Account-holders are generally permitted to withdraw the funds at any time for any reason. However, account administrators may not return any funds deposited during the year of deposit except for reimbursement of eligible medical expenses. Any withdrawals for a nonqualifying medical purpose may result in increased Ohio taxes. An “eligible medical expense” includes any expense for a service rendered by or for an article, device or drug prescribed by a licensed health care provider or provided by a Christian Science practitioner. See line 44 instructions on page 23 for a more detailed explanation.

Do Both Nonresident, Married Filing Jointly Taxpayers Have to Sign the Return?

General Rule: If your filing status on your IRS income tax return is married filing jointly and the exception discussed below does not apply, then both spouses must sign the Ohio income tax return (please see “Filing Status” on page 11 of these instructions for more information about your filing status for your Ohio income tax return).

Exception to the General Rule: Your spouse does not have to sign a married filing jointly return only if all three of the following apply:

  • Your spouse resided outside Ohio for the entire year; AND
  • Your spouse did not earn any income in Ohio; AND
  • Your spouse did not receive any income in Ohio.

See Ohio Administrative Code (Ohio Rule) 5703-7-18, which is available through our Web site at tax.ohio.gov.

Does Ohio Follow the Alternative Preparer Signature Procedures?

The Ohio Department of Taxation follows IRS Notice 2004-54, which provides for alternative preparer signature procedures for IRS income tax paper returns that paid practitioners prepare on behalf of their clients. Except as set forth below, paid preparers must follow those same procedures with respect to the following Ohio paper returns: individual income tax, school district income tax, withholding tax (employer and pass-through entity) and corporation franchise tax. See Ohio Revised Code sections 5703.262(B) and 5747.08(F).

Exception: The paid preparer should print (rather than write) his/ her name on the form if the taxpayer checks “Yes” to the question, “Do you authorize your preparer to contact us regarding this return?”

Can My Tax Preparer Contact the Tax Department About My Tax Return?

Yes. Just check the “Yes” box below your tax preparer’s name on the bottom of page 2 on Ohio form IT 1040EZ or IT 1040. By checking the “Yes” box, you are authorizing your preparer to contact the Ohio Department of Taxation concerning questions that arise during the processing of your Ohio income tax return.

Checking “Yes” also authorizes your preparer to provide the department with information that is missing from the return, to contact the department for information about the processing of the return or the status of your refund or payments, and to respond to mathematical error notices, offsets and return preparation notices that you have received from the department and have shown your preparer.

Where Can I Find the Ohio Law References About Income Taxes?

To see the sections of the Ohio Revised Code that relate to the line items on Ohio form IT 1040, go to http://tax.ohio.gov/divisions/ ohio_individual/individual/documents/2008_it_form_law_ references.pdf.

Filling Out Your Income Tax Return

Ohio forms IT 1040 and IT 1040EZ have been designed for electronic scanning, which allows for faster processing with fewer errors. In order to avoid unnecessary delays caused by manual processing, taxpayers should use the following guidelines:

  1. Use black ink ONLY.
  2. Use this form ONLY for the taxable year 2008.
  3. Round numbers to the nearest dollar. Do not print over the preprinted zeros in the boxes on the far right of the return, which designate cents (.00).
  4. Print your numbers and letters (UPPERCASE only) inside the boxes

If the boxes don’t appear on your return, do not hand-draw the boxes.

Name(s), Address and Social Security Number(s). If you received a preprinted label with your Ohio form IT 1040/IT 1040EZ booklet, please read the instructions, below. If your label is lost or damaged, enter your name, address and Social Security number(s) on your return (if married filing jointly, please also enter your spouse’s Social Security number).

Your Mailing Label – What Does It Mean?

Why Use the Label? The mailing label on the front of the instruction booklet is designed to speed processing at our service center and prevent errors that delay refund checks. Do not place the label on your return until you have finished completing all of the lines of your return.

In addition to your name, address and Ohio income tax reference number, the label contains other postal information. The illustration below shows you where these items appear.

Did You Receive a Label With the Correct Information?

YES...If you are using either computer software or our electronic fill-in forms (found on our Web site at tax.ohio.gov) to prepare your Ohio income tax return, please do not use the label.

If you are manually preparing your Ohio income tax return, take the label off the back of the tax booklet and place it on the “Name” space on the return. However, if the label shows each spouse’s name but you are filing separate returns, do not use the label.

Note: You must fill in your Social Security number(s) in the space(s) provided.

NO...If you received a label with incorrect information, do not use the label. Print your name, address and Social Security number in the spaces provided. If this is a joint return, print both names and Social Security numbers in the spaces provided.

If you didn’t receive a label, please print your name, address and Social Security number in the spaces provided. If this is a joint return, print both names and Social Security numbers in the spaces provided.

County

If your home address is an Ohio home address, indicate on page 1 of the return the county for that address. Otherwise, leave this line blank.

Ohio Residency Status

If your filing status is married filing jointly, each spouse must indicate his/her residency.

  • Resident. Mark this box if you were a resident of Ohio all year. If you were away temporarily, you were a full-year resident of Ohio.
  • Nonresident. Mark this box if you resided outside of Ohio all year. Write the two-letter abbreviation of the state where you resided for 2008 in the space provided. For more information, please see our personal income tax information release entitled “Residency Guidelines,” which is available on our Web site at tax.ohio.gov. Nonresidents who earn and receive all income outside of Ohio will not have an Ohio tax liability.

Nonresidents who earn or receive some income within Ohio will be able to claim the nonresident credit with respect to all items of income not earned and not received in Ohio.

  • Part-year Resident. Mark this box if you permanently moved into or out of Ohio during 2008, not counting being away temporarily.

CAUTION Part-year residents should use the nonresident/ part-year resident credit in Schedule D for income earned while they were a resident of another state (see page 27 of these instructions).

Military Personnel Stationed Outside Ohio. Military personnel who are stationed outside Ohio and who are claiming to have a home of record outside Ohio must file by June 1, 2009 the Ohio form ITDA-M, Affidavit of Non-Ohio Domicile for Taxable Year 2008 – Military. The affidavit form is available on our Web site at tax.ohio.gov. If Ohio income tax was mistakenly withheld, you must submit U.S. Department of Defense form DD 2058 or its equivalent to the applicable military authorities to change your military state of residence.

Filing Status

Your filing status must be the same as your IRS income tax filing status for 2008 with the following exception: If you marked the box labeled “qualifying widow(er) with dependent child” on your IRS income tax return, then mark the “single or head of household or qualifying widow(er)” box on your Ohio income tax return.

CAUTION If you and your spouse filed a joint IRS income tax return, you MUST file a joint Ohio income tax return. Even if you are both Ohio nonresidents, if you filed a joint IRS income tax return, you must file a joint Ohio income tax return, but you can claim the nonresident credit (Schedule D) for income neither earned nor received in Ohio. If you and your spouse filed separate IRS income tax returns, you MUST file separate Ohio income tax returns.

Ohio Political Party Fund

The Ohio General Assembly established this fund to support public financing of Ohio political parties. Monies from this fund may only be used for administrative costs associated with party headquarters and party fund-raising drives, organization of voter registration and get-out-the vote campaigns not related to any particular candidate or election.

If your filing status is single or head of household, married filing separately or qualifying widow(er) and your tax (line 16 of Ohio form IT 1040 or line 12 of Ohio form IT 1040EZ) is $1 or more, you may choose to have $1 go to this fund by checking the “Yes” box on the return. If your filing status is married filing jointly and your tax (line 16 of Ohio form IT 1040 or line 12 of Ohio form IT 1040EZ) is $2 or more, each of you may choose to have $1 go to this fund by checking the “Yes” boxes on the return. Checking “Yes” will neither increase the tax due nor reduce the refund shown on your return.

Ohio School District Number

Every Ohio public school district has an identification number. These numbers are shown on pages 38-42 of this booklet.

Look up the number for the Ohio school district in which you were domiciled for the majority of the year and write it in the space provided. Nondomiciliaries should enter 9999 in the space provided.

If you are unsure of your Ohio school district, use The Finder on page 37 of these instructions.

What Is the Difference Between Tax Table 1 and Tax Table 2?

Income Tax Table 1, which begins on page 30, shows the tax amount for $50 increments of income. The tax is calculated on the midpoint income for all of the income in that $50 range. The tax amount listed on Income Tax Table 1 may be slightly lower or higher than the tax amount computed by using Income Tax Table 2, which is shown on page 36.

What if I Move After Filing My Tax Return and I’m Due a Refund?

If you move after filing your tax return and you are expecting a refund, please notify the post office servicing your old address and fill out a change-of-address form.

Ohio Form IT 1040 Line Instructions

Round all numbers to the nearest whole dollar.

Line 1 – Federal Adjusted Gross Income

Enter the amount from your 2008 IRS income tax return:

IRS form 1040, line 37 OR

IRS form 1040A, line 21 OR

IRS form 1040EZ, line 4 OR

IRS form 1040NR, line 35.

CAUTION In all cases, line 1 on your Ohio income tax return must match your federal adjusted gross income as defined in the Internal Revenue Code. There are no exceptions to this requirement. Federal adjusted gross income includes, but is not limited to, wages, salaries, commissions, interest, dividends, business income, capital gains/losses, pensions, rents and miscellaneous income. Failure to report all items of income may result in the application of penalty.

Zero or Negative Federal Adjusted Gross Income. If you have zero or a negative federal adjusted gross income, you must include a copy of page 1 of your IRS form (1040, 1040A, 1040EZ, 1040NR, 1042-S or equivalent) with your Ohio form IT 1040 return.

Nonresident Taxpayers. If you and/or your spouse are not residents of Ohio and your filing status for federal income tax purposes is married filing jointly, then you must show the same adjusted gross income as on your IRS income tax return. You must show this amount even if you or your spouse did not earn or receive any income in Ohio. See Ohio Administrative Code (Ohio Rule) 5703-7-18, which is available through our Web site at tax.ohio.gov.

Line 2 – Ohio Adjustments

Schedule A (lines 31-47) on page 3 of Ohio form IT 1040 lists the additions and deductions to your federal adjusted gross income. Turn to pages 19-25 of these instructions and read about the adjustments you must make.

  • If you have no additions or deductions to your Ohio income, leave line 2 blank.
  • You must complete the applicable line items on Schedule A, page 3 of this return if you have any additions or deductions. Then copy the net adjustments from line 47 onto line 2 of this return (enclose page 3). Important: If you show any amount on this line other than -0-, you must include page 3 when you mail your return.

Line 4 – Personal and Dependent Exemptions

Personal Exemptions. You can claim a personal exemption of $1,500 for yourself and, if filing a joint return, your spouse can claim an additional $1,500.

Tip for Lines 4 and 9 – Every taxpayer who files an Ohio income tax return is entitled to a personal exemption of $1,500 (line 4) and a $20 exemption credit (line 9). You are entitled to this deduction and credit even if you can be claimed as a dependent on another taxpayer’s tax return.

Dependent Exemptions. Ohio allows a dependent exemption for dependent children and persons other than yourself and your spouse to whom you provide support and claim on your IRS tax return. You may claim a $1,500 deduction for each dependent.

Line 5 – Ohio Taxable Income

Subtract line 4 from line 3:

  • Your exemption amount on line 4 may be more than your Ohio adjusted gross income on line 3. If so, enter -0- on lines 5 through 17. If you had Ohio tax withheld or made an estimated or extension payment, you must complete and file this return to receive any overpayment.

Note: If the amount on this line is $10,000 or less, you owe no tax. Be sure to enter $93 on line 53 and complete Schedule B. Enter on line 7 the amount you show on line 57 and enclose page 4 of Ohio form IT 1040.

Line 6 – Tax on Line 5

Using the tax tables on pages 30-36 of these instructions, figure your tax on your Ohio taxable income (line 5).

  • If your taxable income is less than $100,000, your tax has been figured for you as shown in Tax Table 1, or you may use Tax Table 2.
  • If your taxable income is $100,000 or more, you must use Tax Table 2.

Note: Income Tax Table 1 shows the tax amount for $50 increments of income and is calculated on the midpoint income for all of the income in that $50 range. The tax amount listed on Income Tax Table 1 may be slightly lower or higher than the tax amount computed by using Income Tax Table 2.

Line 7 – Nonbusiness Credits from Schedule B

Schedule B on page 4 of the Ohio form IT 1040 return has a list of the nonbusiness credits that you may be allowed to take. Turn to page 25 of these instructions to read about the credits for which you may be eligible.

If you can claim any of these credits, you will need to complete Schedule B. Enter on line 7 the total credits from line 57 and enclose page 4 of Ohio form IT 1040.

Important: If you show any amount on this line other than -0-, you must include page 4 when you mail your return.

Line 11 – Joint Filing Credit

CAUTION To qualify for this credit, you and your spouse must each have qualifying Ohio adjusted gross income of at least $500 after you have figured your Schedule A adjustments.

If you are a married couple filing a joint Ohio income tax return, you may qualify for a joint filing credit. You can take this credit only if each spouse has qualifying Ohio adjusted gross income of $500 or more. Qualifying Ohio adjusted gross income does not include income from Social Security benefits, most railroad retirement benefits, military retirement income, interest, dividend and capital gain distributions, royalties, rents, capital gains, and state or local income tax refunds. This credit is limited to a maximum of $650.

Example 1: Bob and Sue file a joint return. Sue earned $200,000 from her current employment. Bob’s only source of income is $500 from his state and municipal income tax refunds included in federal adjusted gross income. This $500 is deducted on line 38 and is not included in Bob and Sue’s Ohio adjusted gross income. Therefore, they do not qualify for Ohio’s joint filing credit. However, if Bob had another source of qualifying income of $500 or more not deducted on Schedule A, he and Sue would qualify for the credit.

If you do not qualify for the joint filing credit, enter -0- on line 11.

If you do qualify for the joint filing credit, calculate it this way:

If your Ohio taxable income (line 5) is: Your credit is:

If your Ohio taxable income (line 5) is: Your credit is: 
$25,000 or less .... 20% of line 10a
More than $25,000, but not more than $50,000 .. 15% of line 10a
More than $50,000, but not more than $75,000 ... 10% of line 10a
More than $75,000 ..... 5% of line 10a
The credit is limited to a maximum of $650. 

Example 2: If your Ohio taxable income (line 5) is $20,000 and the amount on line 10a is $332, then the joint filing credit will be $66:

  $332 – from line 10a
  x .20 – from table above
Joint filing credit = $ 66 (rounded)

If you qualify for this credit, but you and your spouse do not each have a W-2 form showing $500 or more of income, then you must include with the return a separate statement explaining the income that qualifies for this credit. You must show that each spouse has $500 or more of qualifying income included in Ohio adjusted gross income (line 3) in order to take the joint filing credit.

Line 15 – Manufacturing Equipment Grant

For taxable years ending on or after July 1, 2005, the Ohio Revised Code section 5747.31 manufacturer’s credit converts to a grant administered by the Ohio Department of Development. For taxable years ending before July 1, 2005, the credit continues to apply.

The manufacturer’s grant applies to each sole proprietor who purchased new manufacturing machinery and equipment during the qualifying purchase period July 1, 1995 to June 30, 2005. The manufacturer’s grant also applies to each taxpayer having an interest in pass-through entities that purchased new manufacturing machinery and equipment during the qualifying purchase period July 1, 1995 to June 30, 2005. In all cases, the taxpayer or the pass-through entity must install the new manufacturing machinery and equipment in Ohio no later than June 30, 2006.

The grant is claimed as a direct reduction to the taxpayer’s 2008 Ohio income tax liability and is nonrefundable. The concepts, definitions and computations that apply to the credit also apply to the grant.

If the taxpayer’s taxable year ended on or after July 1, 2005, the grant applies not only to the qualifying new manufacturing machinery and equipment purchased during the period Jan. 1, 2005 to June 30, 2005, but also to qualifying equipment purchased in 2004 and earlier purchase years. Thus, for each taxpayer whose taxable year ended on or after July 1, 2005, the grant applies to (i) the 1/7 amounts from 2005 qualifying purchases, (ii) the 1/7 amounts from pre-2005 qualifying purchases for which the taxpayer claimed the manufacturer’s credit on prior years’ income tax returns and (iii) unused credit carryforwards (limited to a three- year carryforward period).

If a C corporation elected S corporation status and at the time of the election the C corporation would have been able to claim the manufacturing credit or grant, then those individuals who owned the stock in the corporation at the time of the election may claim the grant for “unused” manufacturing credits. For purposes of claiming the grant, unused manufacturing credits include both the (i) unused 1/7 amounts that would have been available to the C corporation in each of the next six franchise tax years had the C corporation not made the “S” election and (ii) unused carryforward amounts that would have been available to the C corporation in each of the next three franchise tax years had the C corporation not made the “S” election.

Note: The grant applies only if both of the following conditions are met:

  1. The taxpayer files a grant request form with the taxpayer’s 2008 individual Ohio income tax return. The grant request form is available on both the Ohio Department of Taxation’s Web site (tax.ohio.gov) and on the Ohio Department of Development’s Web site (www.odod.state.oh.us),

    AND

  2. The purchaser of the qualifying new manufacturing machinery and equipment filed a “notice of intent” with the Ohio Department of Development by the date of the taxpayer’s timely filed Ohio tax return, including extensions, for the taxpayer’s taxable year that included Sept. 30, 2005. However, a timely filed notice of the intent to claim the credit constitutes a timely filed notice of the intent to claim the grant.

Line 17 – Interest Penalty

If line 16 minus the sum of (i) line 20, (ii) your 2007 overpayment credited to 2008 and (iii) the amount on line 22 is $500 or less, enter -0- on line 17. Otherwise, you may owe an interest penalty unless the sum of (i) line 20, (ii) your 2007 overpayment credited to 2008 and (iii) the amount on line 22 is equal to or greater than one of the following:

  • 90% of your 2008 Ohio income tax (line 16, 2008 Ohio form IT 1040); OR
  • 100% of your 2007 Ohio income tax (line 16, 2007 Ohio form IT 1040 or line 12, 2007 Ohio form IT 1040EZ).

Use Ohio form IT/SD 2210 to compute the interest penalty and enter on line 17 the total interest penalty shown on that form. Include Ohio form IT/SD 2210 with your Ohio form IT 1040.

Note: You can obtain Ohio form IT/SD 2210 from our Web site at tax.ohio.gov.

Line 18 – Unpaid Ohio Use (Sales) Tax

Use line 18 of the Ohio form IT 1040 income tax return to report the amount of unpaid use (sales) tax (if any) that you may owe from out-of-state purchases that you made in 2008 (for example, mail order or Internet purchases). Complete the worksheet on page 29 of these instructions. A detailed explanation of the Ohio use tax is on page 28 of these instructions.

If you did not make any out-of-state purchases during 2008, enter -0- on line 18. If you did make any out-of-state purchase during 2008 and if you paid no sales tax on that purchase, then you are required to complete the use tax worksheet on page 29 of these instructions to determine the amount of Ohio use tax you owe (which is the sales tax on that purchase).

Note: If you report your Ohio use tax on your income tax return, any unpaid portion of the total tax is subject to collection, including penalty and interest, under Ohio Revised Code Chapter 5747. If you previously paid your Ohio use tax by filing Ohio form VP USE, then you do not have to report the use tax on line 18 of Ohio form IT 1040.

Tax Worksheet for Line 18 of Ohio Form IT 1040

a. During 2008 did you make any of the purchases described above?

 No – STOP – You do not need to report on your Ohio income tax return any Ohio use tax. Enter -0- on line e below and on line 14 of Ohio form IT 1040EZ.

 Yes – Complete line b of this worksheet to determine if you owe Ohio use tax on your purchase(s).

  

b. Did the retailer charge you sales tax (Ohio or any other state) on each such out-of-state purchase?

 Yes – STOP – You do not owe any Ohio use tax. Enter -0- on line e below and on line 14 of Ohio form IT 1040EZ.

 No – You owe Ohio use tax on your purchase(s). Complete lines c, d and e of this worksheet.

  
c. Enter the total of such out-of-state purchases on which you paid no sales tax and no Ohio use tax. $ .00 $ .00
d. Enter your county use tax rate. Please use the decimal rates on page 29 of these instructions to calculate your use tax. X . _ _ _ _ 
e. Multiply line c by line d. This is the amount of Ohio use tax that you owe on your out-of-state purchase(s). Write the amount here (round to the nearest dollar) and on line 14 of Ohio form IT 1040EZ. This amount is part of your income tax liability. $ .00 $ .00

Line 20 – Ohio Tax Withheld

Enter the total amount of Ohio income tax withheld. This is normally shown on your tax statement form (W-2, box 17; W-2G; or 1099-R). See sample W-2 on page 12 of these instructions.

  • Place legible state copies of your W-2, W-2G or 1099-R on top of Ohio form IT 1040. Please do not staple, tape or glue.
  • You cannot claim on the Ohio return any taxes withheld for another state, a city or a school district.
  • If you are a direct or indirect investor in a pass-through entity, you may not claim on this line taxes withheld on your behalf by a pass-through entity. For proper reporting of taxes withheld on your behalf by a pass-through entity, see line 22b instructions, below.

Line 21 – Ohio Estimated Tax and Ohio Form IT 40P Extension Payments for 2008 and Amount of 2007 Overpayment Credited to 2008

Enter the total estimated income tax payments submitted with your 2008 Ohio form IT 1040ES, extension payment(s) made with Ohio form IT 40P, plus any overpayment you credited to 2008 from your 2007 Ohio form IT 1040, line 25.

  • You may not claim as an estimated payment a prior year’s refund that you requested but did not receive. Instead, please contact us about any refund you requested but did not receive.
  • If you are a direct or indirect investor in a pass-through entity, you may not claim on this line estimated taxes paid by a pass-through entity. For proper reporting of the amount of tax paid on your behalf by a pass-through entity, see line 22b instructions, below.

Line 22a – Refundable Business Jobs Credit

If the Ohio Tax Credit Authority of the Ohio Department of Development has granted you this credit for 2008, you should enter the certified amount on line 22a. This amount is considered a payment that may be refunded in whole or in part if your total payments on line 23 exceed the amount shown on line 19. For further details about this credit, call the Ohio Department of Development at 614-466-4551.

Line 22b – Refundable Pass-Through Entity Credit

If you are a direct or indirect investor in a pass-through entity that filed and paid Ohio tax on Ohio form IT 4708 (Composite Income

Tax Return for Certain Investors in a Pass-Through Entity) or Ohio form IT 1140 (Pass-Through Entity and Withholding Tax Return), you should enter the amount of Ohio tax paid on your behalf by the pass-through entity or trust. Investors and trust beneficiaries who claim this credit for taxes paid on their behalf must include IRS K-1s, which reflect the amount of Ohio tax paid. In addition, see line 32 instructions on page 19.

The K-1 should show the amount of your distributive share of income, the amount of Ohio tax paid, the legal name of the entity and the entity’s federal employer identification number (FEIN).

Line 22c – Historical Building Rehabilitation Credit

Include a copy of the certificate that you received from the Ohio Department of Development. Enter on line 22 the total of lines 22a, 22b and 22c.

Line 24 – Amount Overpaid

If line 23 is greater than line 19, you have overpaid. Subtract line 19 from line 23 and enter the amount of overpayment on line 24.

Note: The total of lines 25 through 28 cannot exceed the total overpayment shown on line 24.

Lines 26, 27, 28 – Donations

STOP A donation will reduce the amount of the refund that we will send you. If you decide to donate to the Military Injury Relief Fund or to Ohio wildlife or nature preserves, this decision is final. You cannot change your mind and later ask for your donations to be refunded. If you do not want to donate, leave lines 26, 27 and 28 blank.

Because your tax return is confidential, we cannot release your name to the fund administrators, but the administrators extend appreciation to those who donate. Please note that your donation may be tax deductible on the year 2008 IRS income tax form.

Military Injury Relief Fund. Use line 26 to donate all or part of your overpayment shown on line 24 to the Military Injury Relief Fund. The Military Injury Relief Fund provides grants to individuals injured while in active service as a member of the United States’ armed forces while serving under Operation Iraqi Freedom or Operation Enduring Freedom. If you wish to donate, write the amount on line 26.

If you do not have an overpayment on line 24, but you want to donate to provide grants to such individuals, you can do so by writing a check payable to Ohio Treasurer of State (ODJFS) and mailing it to the Ohio Department of Job and Family Services, Military Injury Relief Fund, P.O. Box 182367, Columbus, OH 432182367.

Wildlife and Natural Areas. If you have an overpayment on line 24, you may donate part or all of it to either or both of the two programs administered by the Ohio Department of Natural Resources. The natural resources programs work to protect your natural heritage.

Use line 27 to donate to help all of Ohio’s wildlife. The Division of Wildlife uses these funds to establish habitat and protect open spaces for wildlife. Past donations have helped to restore populations of endangered species, including peregrine falcons, bald eagles and snowshoe hares. Your generous donation will continue to help support Ohio’s native wildlife – a natural treasure!

Use line 28 to donate to the preservation of Ohio’s nature preserves and scenic rivers. You can help create a rich and lasting legacy for all Ohioans. Your generous donation supports the protection of Ohio’s endangered species, as well as preserves high-quality natural areas and streams.

If you do not have an overpayment on line 24, but you want to donate to protect Ohio’s natural heritage, you can do so by writing a check payable to either the “Nongame and Endangered Wildlife Special Account” (wildlife) or the “Natural Areas and Preserves Special Account” (nature preserves). Mail your check to the Ohio Department of Natural Resources, Deputy Directors’ Office, 2045 Morse Road, Building D-3, Columbus, OH 43229-6693.

Line 29 – Refund to Be Sent to You

Subtract the sum of the amounts on lines 25, 26, 27 and 28 from line 24. The remainder is the amount of refund that the department will send to you.

CAUTION If you move after filing your tax return and are expecting a refund, please notify the post office servicing your old address and fill out a change-ofaddress form.

Line 30 – Amount You Owe

If line 23 is less than line 19, you owe more tax. Subtract line 23 from line 19 and enter the tax you owe on line 30.

  • Make your personal check or money order payable to Ohio Treasurer of State. Write your Social Security number on your personal check or money order and include Ohio form IT 40P (see pages 5 or 43 of these instructions) and your payment with Ohio form IT 1040.
  • You can also pay by electronic check or credit card (see pages 5 or 43 of these instructions).

If you cannot pay the amount you owe, you must file the return by April 15, 2009 to avoid the late filing penalty (but see “Military Personnel Stationed Outside of Ohio” on page 8 of these instructions).

 

Ohio Tax Help Links