Ohio Form IT 1040 - Income Tax Return Instructions

Highlights for 2011

Pell Grant Deduction. Ohio taxpayers may now be eligible for a deduction of limited taxable grant amounts

Public Service Payments. This exempts public service income (including that for highway services) or income from certain transfer agreements from income tax

Ohio Historical Society. Ohio taxpayers may now donate to the Ohio Historical Society, a 501(c)(3) nonprofit organization that allocates these funds toward a matching grants program to support state and local history-related projects throughout Ohio

Ohio Income Tax Tables. Ohio's individual income tax brackets have been adjusted to reflect a 4% reduction in Ohio’s income tax rates, the final phase of a multi-year commitment made in 2005 to cut your income tax rates a total of 21%

Accident and Health Insurance Premiums for Certain Relatives. This allows a deduction from federal adjusted gross income of certain insurance premiums paid for adult children and others

Direct Deposit. Direct deposit options have been expanded for electronic filing to allow taxpayers to split direct deposits into three different accounts

Larger Personal Exemption. The personal and dependent income tax exemption increased to $1,650 for the 2011 taxable year, up from $1,600 for 2010.

Low Income Tax Credit. Taxpayers whose Ohio taxable income is $10,000 or less are entitled to a tax credit that results in zero tax liability.

Ohio Veterans Bonus Amounts. Taxpayers do not have to include in federal adjusted gross income any bonuses that the Ohio Department of Veterans Services paid to, or on behalf of, resident veterans of the Persian Gulf, Afghanistan and Iraq conflicts during the taxable year 14

IMPORTANT: Ohio will follow the lead of the IRS by extending the filing deadline for taxable year 2011 to April 17, 2012.

DO'S AND DON'TS FOR TAX FILERS

Please review your return before filing and read our instructions carefully. To avoid a delay in processing your tax return, please . . .

DO

  • Sign your tax return and place your W-2(s), W-2G(s) and/or 1099-R(s) loose on top of page 1 of your return.
  • Correct your address. If you use a tax preparer to file your return electronically, and you have moved since last year's filing, make sure that your current address is on file with the preparer.
  • Use the Ohio IT 40P voucher only to pay your individual income tax due.
  • Use the correct tax form for the year you are filing. And be sure to enter the school district number for the taxable year for which you are filing your return.
  • Include pages 1 and 2 when filing Ohio form IT 1040EZ. Place any other supporting documents or statements after the last page of your return.
  • Include pages 1 and 2, and, if applicable, pages 3 and/or 4 when filing Ohio form IT 1040. Place any other supporting documents or statements after the last page of your return.
  • Include page 3 of Ohio form IT 1040 if you are claiming any Schedule A adjustments on line 2 of Ohio form IT 1040. Complete line items on Schedule A if you have an adjustment. Be sure to fill in the total line for this schedule and send in all pages of the return.
  • Include page 4 of Ohio form IT 1040 if you enter an amount greater than -0- on line 7 and/or line 13 of Ohio form IT 1040. Complete line items on Schedules B, C, D and/or line 66 if you have any credits. Be sure to fill in the total line for these schedules and send in all pages of the return.
  • Check the full-year resident box on page 1 of Ohio form IT 1040 if you qualify as "resident military personnel stationed outside Ohio" and you are taking the line 37 deduction.
  • When making two-sided copies, make sure that pages 1 and 2 of Ohio form IT 1040 are on the same sheet of paper and that pages 3 and 4 are on the same sheet of paper.

DON'T

  • Include pages 2, 3 and 4 of Ohio form IT 1040 if you are filing IT 1040EZ.
  • Staple checks and/or forms to your return.
  • Staple W-2(s), W-2G(s) and/or 1099-R(s) to your return.
  • Use the Ohio form IT 40P voucher to pay your school district income tax due (instead, use Ohio form SD 40P).
  • Use the Ohio form SD 40P voucher to pay your individual income tax due (instead, use Ohio form IT 40P).

Where Should I Mail My Return?

Please see the chart below for mailing information. For school district income tax, please see page SD 6 for mailing information. Be sure to sign your return before mailing. If you are enclosing a payment with your return, be sure to enclose Ohio form IT 40P (found on our Web site at http://www.tax.ohio.gov/) with your check or money order. This will ensure proper crediting of your payment.

Ohio Form

Payment and IT40P Enclosed?
Address
IT 1040EZ
No
Ohio Department of Taxation
P.O. Box 182294
Columbus, OH 43218-2294
IT 1040EZ
Yes
Ohio Department of Taxation
P.O. Box 182850
Columbus, OH 43218-2850
IT 1040
No
Ohio Department of Taxation
P.O. Box 2679
Columbus, OH 43270-2679
IT 1040
Yes
Ohio Department of Taxation
P.O. Box 2057
Columbus, OH 43270-2057

Direct Deposit Options Have Expanded for Electronic Filing

Direct deposit is fast, simple, safe and secure. For more information, please see our information release entitled "Announcement of Direct Deposit Options for Ohio Income Tax Refunds," which is available on our Web site at http://www.tax.ohio.gov/.

Taxpayers have the option to split direct deposits of their income tax refund in up to three accounts. File your return electronically using the Ohio I-File or IRS e-file method and have your refund deposited automatically into your checking or savings account as well as in an Individual Retirement Account or Annuity (IRA) or a preexisting program administered by the Ohio Tuition Trust Authority (OTTA).

The option to split the direct deposit in up to three accounts is not available if you file using the TeleFile method or if you paper file your return. However, you can still direct deposit your refund directly into your checking or savings account if you TeleFile.

CAUTION! You cannot request a deposit of your refund to an account that is not in your name (such as your tax preparer’s account).

The Ohio Department of Taxation is not responsible for a lost refund if you enter the wrong account information. Check with your bank or other financial institution (such as a mutual fund, brokerage firm or credit union) in the United States to get the correct routing and account numbers and to make sure your direct deposit will be accepted. Do not use the routing number on a deposit slip because it may be different from the routing number on your checks.

If you choose the Ohio I-File or IRS e-file method and you want us to directly deposit your tax refund in up to three of your accounts at a bank or other financial institution, you must tell us the order in which you want the deposits made.

CAUTION! Some financial institutions will not allow a joint refund to be deposited into an individual account. If the direct deposit is rejected, a check will be sent instead. The Ohio Department of Taxation is not responsible if a financial institution rejects a direct deposit.

Important Tips

  • Deposits cannot be made if your refund is less than $1.
  • Deposits will be made in the same order that you tell us.
  • You cannot split your refund into a paper check and direct deposit.
  • If you made an error on your return that results in a reduced refund, we will reduce the amount(s) in the last account(s) that is not an IRA or OTTA.
  • If you made an error on your return that results in an increased refund, we will increase the amount in the first account that is not an IRA or OTTA.
  • If the refund is increased and you only choose either an IRA account or an OTTA account, we will issue a check to you for the increased amount.

Filing Requirements

Who Must File an Ohio Income Tax Return?

Every Ohio resident and every part-year resident (see page 15 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 (see “Exception” below);
  • Ohio lottery winnings;
  • Income or gain from Ohio property;
  • Income or gain from a sole proprietorship doing business in Ohio;
  • 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 income tax return if...

  • you are single and your federal adjusted gross income is less than or equal to $11,650 and you have no Schedule A adjustments.
  • you are married, filing jointly and your federal adjusted gross income is less than or equal to $13,300 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 2011 most taxpayers must file on or before April 17, 2012 (for exceptions, see “What if I Need More Time To File?” below and “Income Taxes and the Military” on page 14). Returns for fiscal year filers 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 Ohio 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. If the Ohio Department of Taxation audits your tax return, you must be able to prove all claims and items listed on your return.

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 17, 2012 on Ohio form IT 40P (available on our Web site at http://www.tax.ohio.gov/). Interest will accrue on any tax not paid by April 17, 2012, and penalties also may apply.

Exception: Certain military personnel may have an additional extension of time to file and to pay (see “Income Taxes and the Military” on page 14).

I’m Not Able To Pay By April 17, 2012. What Should I Do?

By law all tax is due on this date except for certain members of the military (see "Exception" at left). Whatever amount you pay by the required due date will reduce the amount of interest and late-payment penalty that you will be charged. Even if you are unable to pay the full amount of tax, you must file your return by the due date (or by the extended due date).

What Form Should I Use to File My Taxes?

We encourage all Ohio taxpayers to file their income tax returns electronically. However, if you choose to file using the paper option you can use either Ohio form IT 1040EZ or IT 1040. See the chart below to determine which form is right for you.

How Do I Round to the Nearest Dollar?

Ohio law requires you to round to the nearest whole dollar. When completing the Ohio income tax return, drop any cents less than 50 cents and increase amounts from 50 cents to 99 cents to the next highest dollar.

Do Both Nonresident, Married FilingJointly 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 on page 11 does not apply, then both spouses must sign the Ohio income tax return (please see “Filing Status” on page 15 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 on our Web site at http://www.tax.ohio.gov/.

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 43-48. If during 2011 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 http://www.tax.ohio.gov/, from your local school board office or by calling toll-free 1-800-282-1782.

Do I Need to Enclose a Copy of MyFederal Income Tax Return?

Enclose a copy of your federal income tax return if the amount shown on line 1 on page 1 of Ohio form IT 1040EZ or IT 1040 is zero or a negative amount.

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 federal income tax paper returns that paid practitioners prepare on behalf of their clients. 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 pre- parer 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.

Should I Make Estimated Tax Payments in 2012?

You have to make estimated Ohio income tax payments for year 2012 only if the sum of (i) your year 2011 overpayment credited to year 2012 (see line 24 on page 2 of form IT 1040) and (ii) your year 2012 Ohio income tax withholding is not equal to or greater than either of the following:

  • 100% of the year 2011 Ohio income tax (see page 2 of Ohio form IT 1040: line 15 minus line 22); OR
  • 90% of the year 2012 tax.

For purposes of these tests, you must reduce your year 2011 overpayment credited to year 2012 by any year 2011 tax payment that you made after April 17, 2012.

If you don't meet either of the tests above, you must timely pay enough estimated Ohio income tax so that the sum of (i) your year 2011 overpayment credited to year 2012, (ii) your year 2012 withholdings and (iii) your timely made estimated Ohio income tax payments is not less than either of the two tests above.

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 received or other sources of income not subject to withholding.

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.

2012 Estimated Tax Payment Due Dates

1st quarter - April 17, 2012
2nd quarter - June 15, 2012
3rd quarter - Sept. 17, 2012
4th quarter - Jan. 15, 2013

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 (available at http://www.tax.ohio.gov/) with your employer.

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 our Web site at: http://www.tax.ohio.gov.

Is Unemployment CompensationTaxable to Ohio?

In general, unemployment compensation that is included in federal adjusted gross income is taxable to Ohio. The exclusion of $2,400 of unemployment compensation allowed in taxable year 2009 has expired. For taxable year 2011, the total unemployment compensation paid to you in 2011 and included in federal adjusted gross income is taxable. For additional information visit our Web site at http://www.tax.ohio.gov/ and click on "Frequently Asked Questions.”

Can Dependent Children ClaimThemselves if They File Their Own Tax Return?

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

What if a Taxpayer Is Deceased?

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 federal income tax return.
  • Check the “Deceased” box after the applicable Social Security number on page 1 of the return.
  • 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 Move After Filing My Tax Return and I’m Due a Refund?

You will need to notify the post office servicing your old address and fill out a changeof- address form.

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

Your cancelled check or credit card statement can 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.

What if I Need to Correct My IncomeTax Return After I File?

You can make any change or correction to your return by filing an Ohio form IT 1040X.

Use this form to amend your 2011 Ohio form IT 1040EZ or IT 1040. You can obtain Ohio form IT 1040X from our Web site at http://www.tax.ohio.gov/ or by calling 1-800-282-1782.

If you correct your federal income tax return for 2011 or you are audited by the IRS, in order to avoid penalties, you must amend and file your Ohio income tax return within 60 days of the final determination of the IRS change.

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 17, 2012. However, this penalty does not apply if your total payments made by April 17, 2012 equal or exceed 90% of your total Ohio tax.

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 “Income Taxes and the Military” on page 14), interest is due from April 18, 2012 until the date the tax is paid.

If you file your return after the unextended due date and if you paid and/or will pay any tax after the unextended due date, you owe interest unless your refund, if any, is greater than any tax you paid after the unextended due date. Interest is due on late-paid tax even if the IRS has granted you a filing extension. The interest rate for calendar year 2012 is 3%.

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 Business in Ohio Apportion Income?

Each full-year nonresident and each part-year resident who is engaged in business (as a sole proprietor or through a partnership, 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) from our Web site at http://www.tax.ohio.gov/ to determine the proper amount of credit to claim in Schedule D of Ohio form IT 1040. See page 15 for an explanation of “residency status.”

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 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 cannot 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 43b on page 28 for a more detailed explanation.

What Is the Accident and Health Insurance Premium and What Are the Qualifications?

Ohio House Bill 1, effective beginning in taxable year 2010, allows the deduction from federal adjusted gross income (FAGI) of amounts used to pay for accident and health insurance premiums for the taxpayer and his/her dependents. This deduction is only available for taxpayers who are not eligible to participate in any subsidized medical care insurance plan offered by their employer and who are not eligible for Medicare or Medicaid. A subsidized health insurance plan is a plan where your employer, your spouse’s employer, a retirement plan or Medicare pays any portion of the total premium for health insurance coverage. The deduction is not available to self-employed taxpayers because such taxpayers deduct all of their family accident and health insurance premiums on IRS form 1040 before arriving at FAGI.

House Bill 1 expands the definition of “dependent," for this provision only, to include those who would be a dependent under the Internal Revenue Code definition, without regard to the gross income test or the support test.

For purposes of this deduction only, “dependent” includes any of the following relationships to the taxpayer:

  • A child or a descendent of a child.
  • A brother, sister, stepbrother or stepsister.
  • The father or mother, or an ancestor of either.
  • A stepfather or stepmother.
  • A son or daughter of a brother or sister of the taxpayer.
  • A brother or sister of the father or mother of the taxpayer.
  • A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
  • An individual (other than an individual who at any time during the taxable year was the spouse of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.

“Dependent,” for purposes of this deduction, does not include an individual who is not a citizen or national of the United

States unless such individual is a resident of the United States or Mexico or Canada. Below are examples of taxpayers who can take this deduction:

Example 1: A husband and wife are both employed but neither of their employers offers a subsidized health insurance plan. Neither the husband nor wife is eligible for Medicare or Medicaid. They pay $8,000 per year in premiums for accident and health insurance. They did not deduct any portion of the $8,000 premium as an itemized deduction on their federal tax return. If their federal adjusted gross income as shown on line 1 of Ohio form IT 1040 is $50,000, they can include the $8,000 of premiums on line 8 of the worksheet on page 27. The taxpayer will enter on line 2 of Ohio form IT 1040 the eligible amount from Schedule A, line 43a and the net amount from Schedule A, line 47.

Example 2: A taxpayer purchases an accident and health insurance plan for herself and her 30-year-old sister. Neither the taxpayer nor her sister is eligible for Medicare or Medicaid, and neither is employed by an employer that offers a subsidized health insurance plan. The taxpayer earns $65,000 per year and pays accident and health insurance premiums of $8,000 per year. The taxpayer did not deduct any portion of the $8,000 premium as an itemized deduction on her federal tax return. Her sister earns $20,000 per year, lives in her own home and pays for her own support. Although her sister is not a dependent for any other purpose, she is a dependent in determining the deductibility of premiums paid for an accident and health insurance plan. This is because the income test and support test in the definition of “qualifying relative” (Internal Revenue Code section 152) are disregarded for this purpose. Therefore, the taxpayer can include the $8,000 on line 8 of the worksheet on page 27.

Separate from the Ohio tax provisions, but having an impact in the same area, are recent changes to Ohio and federal insurance laws that have been amended to raise the age of adult children who can be covered by the parents’ accident and health policies. Ohio House Bill 1 requires accident and health insurance companies to offer coverage for adult children of policyholders up to age 28. The federal Patient Protection and Affordable Care Act, 111 PL 148, allows exclusion from FAGI of amounts paid for accident and health insurance premiums for the taxpayer, spouse, dependents and adult children who have not attained the age of 27.

In the following examples, the taxpayer cannot take the deduction:

Example 1: A taxpayer has a health care insurance plan through her employer. She also has coverage for her 24-year-old son, which the insurance company provides pursuant to the provisions of Ohio House Bill 1. The health care insurance premium for this coverage is $265 every two weeks, of which $100 is deducted from the taxpayer’s pay and $165 is paid by her employer. The taxpayer cannot include the insurance premiums payments on line 8 of the worksheet because amounts paid by the taxpayer for an employer-subsidized accident and health plan are not deductible.

Example 2: A taxpayer, who is a self-employed independent contractor, purchases an accident and health insurance plan for himself, his wife and his 25-year-old daughter. The taxpayer is a sole proprietor and earns a net profit of $100,000. He pays accident and health insurance premiums of $10,000 a year. The company does not offer health insurance coverage for his employees. His daughter works with him and is paid an annual salary of $25,000, lives in her own home and is self-supporting. The taxpayer cannot include the $10,000 on line 8 of the worksheet on page 27 because the taxpayer took the deduction on line 29 of the IRS return for health insurance premiums paid by self-employed individuals.

For additional information, visit the Ohio Department of Insurance’s Web site at insurance.ohio.gov.

Income Taxes and the Military

State and federal income tax laws contain special provisions for members of the military and their families. Details on some of the major issues facing military families during the income tax filing season can be found below.

For more details regarding income taxes and the military, visit our Web site at http://www.tax.ohio.gov/, click on Individual Income Tax and scroll down to “Income Taxes and the Military."

You can also reach us by e-mail at Military-Info@tax.state.oh.us.

Key Issues

Ohio Resident Military Personnel

Military pay and allowances for Ohio resident servicemembers who are stationed inside Ohio, and their spouses, will continue to be subject to Ohio individual income tax. These amounts will also be subject to school district income tax if the service- member was domiciled in a taxing school district - even if the servicemember did not reside in the school district at any time during the taxable year.

For an additional explanation, see page 24.

Resident Military Personnel StationedOutside Ohio

Although military pay earned while on active duty and stationed outside of Ohio is exempt from Ohio income tax and may be deducted to the extent that it is included in federal adjusted gross income, you are still required to file an Ohio personal income tax return.

Ohio Revised Code section 5747.01(A) (24) provides that for taxable years beginning on and after Jan. 1, 2007, an Ohio resident servicemember can deduct active duty military pay and allowances that are included in federal adjusted gross income if those amounts are received for active duty service while the servicemember is stationed outside Ohio.

The term “stationed” refers to an Ohio resident servicemember’s permanent duty station. For purposes of this exemption, "permanent duty station" has the same meaning as specified in Ohio Revised Code 5103.20, Article II, Subparagraph (U), that is, it means the military installation where an active duty servicemember - or, concerning this exemption, an Ohio resident servicemember in the National Guard or military reserve forces - is currently assigned and is physically located under competent orders that do not specify the duty as temporary. Periods of training in which a servicemember, either individually or as part of a unit, departs from his/her permanent place of duty and then returns following the completion of the training, are not included in the definition of “stationed.” However, periods of active duty outside Ohio for purposes other than training, or periods of training greater than 30 days outside Ohio, as described on page 24, qualify a servicemember for this exemption.

For an additional explanation, see pages 15 and 24.

Nonresident Military Servicemembersand Their Spouses

A November 2009 federal law exempts military spouses who are not residents of a state where they are living with their spouse from the income taxes of the state, provided they are a resident of the same state as their spouse. However, nonresident military and nonresident spouses serving in Ohio are strongly encouraged to file Ohio form IT 10 each year to avoid a possible billing notice from the state of Ohio. You must also file by May 31, 2012, Ohio form IT DA, Affidavit of Non-Ohio Residency/Domicile for Taxable Year 2011. Ohio form IT 10 and the affidavit are available on our Web site at http://www.tax.ohio.gov/.

For an additional explanation, see page 24.

National Guard and Reserves

Ohio resident members of the National Guard and reserves are entitled to the deduction for military pay received while stationed outside the state, if eligible.

Also, resident members of the National Guard and reserves are eligible for certain tax extensions and other benefits, if stationed in a combat zone. The military retirement pay received for National Guard and reserves service is also exempt from Ohio income taxes.

For an additional explanation, see page 24.

Military Retirement Income

Retirement pay received for service on military active duty or the National Guard or reserves, as well as pay received by a surviving spouse through the Survivor Benefit plan, has been exempt from the Ohio income tax since 2008.

For an additional explanation, see page 25.

Military Injury Relief Fund

You do not have to include in federal adjusted gross income any military injury relief fund amounts you received on account of physical injuries or psychological injuries, such as post-traumatic stress disorder, if those injuries are a direct result of military action in Operation Iraqi Freedom or Operation Enduring Freedom. But you must include in federal adjusted income any other military injury relief fund amounts you received. These amounts are deductible for Ohio adjusted gross income.

For an additional explanation, see page 25.

Ohio Resident Veterans Bonus

You do not have to include in federal adjusted gross income any bonuses that the Ohio Department of Veterans Services paid to, or made on behalf of, resident veterans of the Persian Gulf, Afghanistan and Iraq conflicts during the taxable year.

Payments that the state of Ohio makes under the Ohio Veterans Bonus Program are excludable from the gross income of the recipients for federal income tax purposes. Therefore, the taxpayer cannot deduct from Ohio adjusted gross income any portion of the bonus because no portion of the bonus is included in federal adjusted gross income.

Completing the Top Portion of Ohio Form IT 1040

How to Complete Your Income Tax Return

Ohio forms IT 1040EZ and IT 1040 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 2010.
  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 as shown below:
1
2
3
A
N
Y
S
T
R
E
E
T

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

Name(s), Address and Social Security Number(s). Enter your name and address on page 1 and your Social Security number on pages 1 and 2 of your return (if married filing jointly, also enter your spouse’s Social Security number on page 1).

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. Mark this box if you qualify as “resident military personnel stationed outside Ohio” and you are taking the line 37a deduction.
  • Part-year Resident. Mark this box if you permanently moved into or out of Ohio during 2011, not counting being away temporarily. 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 31).
  • Nonresident. Mark this box if you resided outside of Ohio all year. Write the two- letter abbreviation of the state where you resided for 2011 in the space provided. For more information, please see our information release 2007-08 entitled “Personal Income Tax: Residency Guidelines,” which is available on our Web site at http://www.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.

Military Personnel. If you are currently a member of the military and you have questions about your residency status, see page 14 for a detailed explanation regarding some of the key issues facing military families during the income tax filing season.

Filing Status

Your filing status must be the same as your federal income tax filing status for 2011 with the following exception: If you marked the box labeled “Qualifying widow(er) with dependent child” on your federal 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 federal income tax return, you must file a joint Ohio income tax return. Even if you are both Ohio nonresidents, if you filed a joint federal income tax return, you must file a joint Ohio income tax return, but you may claim the nonresident credit (Schedule D) for income neither earned nor received in Ohio. If you and your spouse filed separate federal 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 can 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 or qualifying widow(er), or married filing separately and your tax (line 15 of Ohio form IT 1040EZ or line 18 of IT 1040) is $1 or more, you can 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 15 of Ohio form IT 1040EZ or line 18 of IT 1040) is $2 or more, each of you can 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 listed on pages 43-48. 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.

If you are unsure of your Ohio school district, use The Finder on our Web site as described on page 42.

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

Income Tax Table 1, which begins on page 35, 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 41.

Line Instructions for Ohio Form IT 1040

Line 1 - Federal Adjusted Gross Income

Enter the amount from your 2011 federal

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 36 OR

IRS form 1040NR-EZ, line 10.

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 a penalty.

Zero or Negative Federal Adjusted Gross Income. If you have a zero or negative federal adjusted gross income, you must include a copy of page 1 of IRS form 1040, 1040A, 1040EZ, 1040NR, 1040NR-EZ or 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 federal 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 on our Web site at http://www.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. See pages 23-29 to 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 of Ohio form IT 1040).

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 DependentExemptions

Personal Exemptions. You can claim a personal exemption of $1,650 for yourself and, if filing a joint return, your spouse can claim an additional $1,650.

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 federal income tax return. You can claim a $1,650 deduction for each dependent.

Tip for Lines 4 and 9 - Every taxpayer who files an Ohio income tax return is entitled to a personal exemption of $1,650 (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.

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 16. If you had Ohio income 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 the $88 credit 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 income tax tables on pages 35-41, calculate your tax on your Ohio taxable income (line 5).

  • If your taxable income is less than $100,000, your tax has been calculated for you as shown in Income Tax Table 1, or you can use Income Tax Table 2.
  • If your taxable income is $100,000 or more, you must use Income 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. See pages 29-31 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 (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 9 - Exemption Credit

Multiply your total number of personal and dependent exemptions by $20 and enter the amount on line 9. See "Tip" at left.

Line 11 - Joint Filing Credit

CAUTION! To qualify for this credit, you and your spouse must each have qualifying Ohio adjust ed 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 (see the following examples).

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 38a 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:

$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 $308, then the joint filing credit will be $62:

$308 - from line 10a x .20 - from table above Joint filing credit = $62 (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 14 - 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 of 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 of July 1, 1995 to June 30, 2005. In all cases, the taxpayer or the pass-through entity must have installed 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 2011 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 of 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 can 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 2011 individual Ohio income tax return. The grant request form is available on our Web site at http://www.tax.ohio.gov/; 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 16 - Interest Penalty

If line 15 minus the sum of line 19 and your 2010 overpayment credited to 2011 is $500 or less, enter -0- on line 16. If line 15 minus the sum of line 19 and your 2010 overpayment credited to 2011 is greater than $500, you may owe an interest penalty. You must complete Ohio form IT/SD 2210 to determine if a penalty is due. This form is available on our Web site at http://www.tax.ohio.gov/.

Line 17 - Unpaid Use (Sales) Tax

Use line 17 of Ohio form IT 1040 to report the amount of unpaid use (sales) tax, if any, that you may owe from out-of-state purchases that you made in 2011 (for example, mail order or Internet purchases). Complete the worksheet on page 33. A detailed explanation of the Ohio use tax is on page 32.

If you did not make any out-of-state purchases during 2011, enter -0- on line 17. If you did make any out-of-state purchase during 2011 and if you paid no sales tax on that purchase, then you are required to complete the use tax worksheet on page 33 to determine the amount of Ohio use tax you owe (which is the sales tax on that purchase).

Line 19 - Ohio Income 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, box 14; or 1099-R, box 12). See the sample W-2 and W-2G on page 16 and the sample 1099-R on page 17.

  • Place legible state copies of your W-2(s), W-2G(s) or 1099-R(s) 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 cannot 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 21b on page 22.

Line 20 - 2010 Overpayment Creditedto 2011, 2011 Estimated Tax Payments and Any Other 2011 Tax Payments

Enter the total estimated income tax payments submitted with your 2011 Ohio form IT 1040ES, extension payment(s) made with Ohio form IT 40P, plus any overpayment you credited to 2011 from your 2010 Ohio form IT 1040, line 24.

  • You cannot 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 cannot 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 21b below.

Line 21a - Refundable Business Jobs Credit

If the Ohio Tax Credit Authority of the Ohio Department of Development (ODOD) has granted you this credit for 2011, you should enter the certified amount on line 21a. This amount is considered a payment that can be refunded in whole or in part if your total payments on line 22 exceed the amount shown on line 18. For further details about this credit, call the ODOD at 614-466-4551 or 1-800-848-1300.

Line 21b - 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 Trust 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-1(s), which reflect the amount of Ohio tax paid. In addition, see line 32 of the instructions on page 23.

The K-1(s) 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.

Line 21c - Historic Preservation Credit

Include a copy of the certificate that you received from the Ohio Department of Development (ODOD). For additional information, visit the ODOD's Web site at www. development.ohio.gov/urban/OHPTC or call 614-995-2292 or 1-800-848-1300.

Line 21d - Motion Picture Production Credit

Include a copy of the certificate that you received from the Ohio Department of Development (ODOD). For additional information, visit the ODOD's Web site at www.ohiofilmoffice.com/Incentives.html or call 614-644-5156 or 1-800-848-1300.

Line 25 - Donations

STOP. A donation will reduce the amount of the refund that you are due. If you decide to donate, this decision is final. If you do not want to donate, leave lines 25a-d blank. If you do not have an overpayment on line 23 but you want to donate, you may do so by writing a check and mailing it directly to the fund. See page 34 for more information.

Line 28 - Interest and Penalty Due

Except for certain military servicemembers (see “Income Taxes and the Military” on page 14), interest is due from April 18, 2012 until the date the tax is paid.

If you file your return after the unextended due date and you paid and/or will pay any tax after the unextended due date, you owe interest unless the refund, if any, shown on line 30 is more than any tax you paid after the unextended due date. Interest is due on late-paid tax even if the IRS has granted you a filing extension. The interest rate for calendar year 2012 is 3%.

Penalty may be due on late-filed returns and/or late-paid tax. For more information, see page 12.

Line 29 - Amount Due Plus Interest and Penalty

Add lines 27 and 28 to calculate the amount you owe.

  • Do not mail cash.
  • Make payment by electronic check or credit card (see page 8); OR
  • Make your paper check or money order payable to Ohio Treasurer of State. Write your Social Security number on your paper check or money order and include Ohio form IT 40P (see our Web site at http://www.tax.ohio.gov/) and your payment with Ohio form IT 1040.

If you cannot pay the amount you owe, you still must file the return by April 17, 2012 to avoid the late filing penalty (but see “Income Taxes and the Military” on page 14).Also see "I'm Not Able To Pay By April 17, 2012..." on page 10.

Line 30 - Your Refund

This is your refund after any reduction on line 28. If line 28 is more than the overpayment shown on line 26, you will have an amount due. Enter this amount on line 29 and follow the instructions.

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 changeof- address form.

Adjustments or Credits

Will you claim any adjustments on line 2 or will you claim a credit on lines 7 or 13 of your Ohio form IT 1040?

YES. Please continue to read the line instructions on pages 23-31.

NO.STOP! You only have to complete and file pages 1 and 2 of Ohio form IT 1040.

Personal Schedule A - Adjustments

Line 31 - Non-Ohio State or Local Government Interest and Dividends

Enter the total amount of interest and/or dividends you received from obligations or securities issued by non-Ohio state governments, their local governments and/or their authorities if the interest and/or dividends are not included in your federal adjusted gross income. Also include on this line the amortized portion of the original issue discount on such obligations and securities.

Line 32 - Pass-Through Entity Add-Back

Enter Ohio form IT 1140 taxes and Ohio form IT 4708 taxes, which should be shown on your IRS K-1(s) to the extent that those taxes were deducted in arriving at your federal adjusted gross income.

In addition, each taxpayer having an interest in a qualifying pass-through entity must also enter on this line the taxpayer’s proportionate share of expenses and losses that the pass-through entity incurred with respect to the pass-through entity’s direct or indirect transactions with the pass-through entity’s 40% or more related members. This provision does not apply to the pass-through entity’s sales of inventory to such related members to the extent that those losses are calculated in accordance with Internal Revenue Code 482. See Ohio Revised Code section 5733.40(A).

Line 33a - Federal Interest and Dividends

Enter interest or dividends on obligations of the United States government that are exempt from federal taxation but are not exempt from state taxation.

Line 33b - College Tuition Expenses

Enter any reimbursement received during the taxable year of any amount deducted for college tuition and fees in any previous taxable year to the extent that the amount is not otherwise included in Ohio adjusted gross income.

If you received a distribution during 2011 reported to you on a 2011 IRS form 1099-Q from the CollegeAdvantage program and any portion of such distribution was not used to pay for qualified higher-education expenses and was not due to the beneficiary’s death, disability or receipt of a scholarship, you may be required to include an adjustment on line 33b. Follow the instructions for items 1 through 3 below for such distributions.

  1. You do not have to show on this line the amount of distributions relating to the cost of tuition credits or units that you purchased before Jan. 1, 2000.
  2. If you are the CollegeAdvantage account owner or beneficiary and a portion of the distribution reported to you on your CollegeAdvantage year 2011 form 1099-Q relates to original contributions or purchases by the account owner (or beneficiary) that are not excluded under item 1 above, then the nonearnings portion (usually the original contribution or purchase price unless the account has declined in value below these amounts) related to such portion of the distribution must be included in Ohio adjusted gross income to the extent that either the account owner or the beneficiary has taken an Ohio contribution deduction for such contributions or purchases in this or a prior taxable year. Add this adjustment to the total reported for line 33b.
  3. Include on line 33b the earnings portion of the distribution reported to you on IRS form 1099-Q to the extent that you have not otherwise included these earnings in Ohio adjusted gross income (line 3 on Ohio form IT 1040) for either the current taxable year or for any previous taxable year or years.

Contribution Carryovers: CollegeAdvantage account owners or beneficiaries should also reduce any contribution deduction carryovers to future years to the extent that the nonearnings distributions in item 2 above (i) exceed contribution deductions taken in this and prior years and (ii) are reflected in your contribution deduction carryover to future years’ returns.

Line 33c - Ohio Public Obligations

Enter any loss resulting from the sale/disposition of Ohio public obligations to the extent that such losses have been deducted in determining federal adjusted gross income.

Line 33d - Medical Savings Account

Enter net withdrawals made from a medical savings account (line 43b) for nonmedical purposes if the amount of the withdrawal was deducted on a previous year’s Ohio income tax return. See the medical savings account worksheet on page 28.

Line 33e - Deducted Expenses

Enter reimbursements received in 2011 for any expenses that you deducted on a previously filed Ohio income tax return if the amount of the reimbursement was not included in federal adjusted gross income for 2011.

Line 33f - Lump Sum Distribution

Enter any lump sum distribution amount that you reported on IRS form 4972. For information about miscellaneous federal tax adjustments, see our Web site at http://www.tax.ohio.gov/.

Line 33g - Bonus Depreciation

Add 5/6 of the Internal Revenue Code section 168(k) bonus depreciation allowed under the Internal Revenue Code in effect on Dec. 15, 2010. Also add 5/6 of the excess of the Internal Revenue Code section 179 depreciation expense allowed under the Internal Revenue Code in effect on Dec. 15, 2010 over the amount of section 179 depreciation expense that would have been allowed based upon Internal Revenue Code section 179 in effect on Dec. 31, 2002. See our information release dated Nov. 7, 2002 entitled "Ohio Bonus Depreciation Adjustments," which is available on our Web site at http://www.tax.ohio.gov/.

CAUTION! Any income item amounts you deduct on lines 35a-45 must be included in your federal adjusted gross income Personal Income Tax and must be included on line 1 of the Ohio income tax return.

You cannot deduct on Schedule A any item already deducted in arriving at the federal adjusted gross income amount you show on line 1 of the Ohio income tax return.

Line 35a - Federal Interest and Dividends

Enter interest and dividend income (included in line 1) from obligations issued by the United States government or its possessions/territories that are exempt from Ohio tax by federal law. Examples include U.S. savings bonds (Series E, EE, H or I), Treasury notes, bills and bonds, and Sallie Maes.

Examples of interest income that are not deductible:

  • Interest paid by the IRS on a federal income tax refund.
  • Interest income from Fannie Maes or Ginnie Maes.

For a more complete listing, see our information release IT 1992-01 entitled “Exempt Federal Interest Income,” which is available on our Web site at http://www.tax.ohio.gov/.

Line 35b - Depreciation Expense

Deduct 1/5 of the Internal Revenue Code sections 168(k) and 179 depreciation adjustments that you added back on each of your last five years’ Ohio income tax returns. You can take this deduction even if you no longer directly or indirectly own the asset. See our information release IT 2002-02 entitled "Ohio Bonus Depreciation Adjustments," which is available on our Web site at http://www.tax.ohio.gov/.

Line 36 - Residents of Neighboring Statesand Nonresident Military Personnel andTheir Spouses

Because of reciprocity agreements that Ohio has with the border states of Indiana, Kentucky, West Virginia, Michigan and Pennsylvania, you do not have to file an Ohio income tax return if the following two conditions apply:

  • You were a full-year
  • Your only source of income within Ohio was from wages, salaries, tips or other employee compensation.

If Ohio income tax was withheld on this income and you meet the two conditions set forth above, you can file an Ohio income tax return to get a full refund. Enter the amount from line

1 onto line 2 and onto line 36, Schedule A. Be sure to include page 3 of Ohio form IT 1040 when you send in your return.

Exceptions: Nonresidents and part-year residents must enter -0- on line 36 if either of the following circumstances applies:

  1. You were a part-year resident of Ohio or you had additional sources of income from Ohio or do not meet the two conditions set forth above. If so, you must file Ohio form IT 1040 and claim the nonresident/ part-year resident credit on Schedule D; OR
  2. The reciprocal agreements do not apply. These agreements do not apply to you if you own directly or indirectly at least 20% of a pass-through entity having nexus in Ohio. Ohio Revised Code section 5733.40(A) (7) reclassifies compensation from such pass-through entities to a distributive share of the income from the pass-through entity. You must claim the nonresident/ part-year resident credit on Schedule D. Also, please see “How Should Full-Year Nonresidents and Part-Year Residents Engaged in Business in Ohio Apportion Income?” on page 12.

Nonresident Military Personnel and Their Spouses. The Servicemembers Civil Relief Act of 2003, as amended in 2009, is a federal law that provides that a state cannot consider a servicemember or his/her spouse to be a resident or a nonresident simply because he/she is present in the state - or absent from the state - due to military orders of the servicemember. Additionally, the 2009 amendment to the act provides that the wage and salary income of the nonresident spouse of a servicemember is exempt from the income tax of the state in which the servicemember and spouse are stationed and living, provided that the servicemember and spouse are residents of the same state. This provision does not apply to taxable years prior to 2009.

Military payroll authorities will generally withhold income tax for the state of legal residence shown on the servicemember's federal form DD 2058. A servicemember who had state income tax withheld in error should have the military payroll authorities correct the state of legal residence shown on his/her federal form DD 2058. A servicemember's nonresident spouse who had Ohio income tax withheld and who claims exemption under the 2009 amendment to the Servicemembers Civil Relief Act of 2003 should file an Ohio income tax return claiming a refund. Free e-filing of Ohio income tax forms is available at http://www.tax.ohio.gov/.

Line 37a - Military Pay for OhioResidents

Ohio Revised Code section 5747.01(A) (24) provides that for taxable years beginning on and after Jan. 1, 2007 an Ohio resident servicemember can deduct active duty military pay and allowances that are included in federal adjusted gross income if those amounts are received for active duty service while the servicemember is stationed outside Ohio. Do not deduct on this line any other types of income such as civilian wages, interest, dividends and capital gains. Please note that the Nov. 11, 2009, amendment to the Servicemembers Civil Relief Act of 2003 described in line 36 does not apply to Ohio-domiciled spouses of servicemembers who reside with their spouses outside the state. These spouses are presumed to retain their Ohio domicile.

The term “stationed” refers to an Ohio resident servicemember’s permanent duty station. For purposes of this exemption, "permanent duty station" has the same meaning as specified in Ohio Revised Code 5103.20, Article II, Subparagraph (U), that is, it means the military installation where an active duty servicemember - or, concerning this exemption, an Ohio resident servicemember in the National Guard or military reserve forces - is currently assigned and is physically located under competent orders that do not specify the duty as temporary. Periods of training in which a servicemember, either individually or as part of a unit, departs from his/her permanent place of duty and then returns following the completion of the training, are not included in the definition of “stationed.” However, periods of active duty outside Ohio for purposes other than training, or periods of training greater than 30 days outside Ohio, as described below, qualify a servicemember for this exemption.

Military pay and allowances for Ohio resident servicemembers who are stationed inside Ohio, and their spouses, will continue to be subject to Ohio individual income tax. These amounts will also be subject to school district income tax if the service- member was domiciled in a taxing school district - even if the servicemember did not reside in the school district at any time during the taxable year.

Examples of military pay and allowances that do qualify for this deduction include the following amounts, but only if the taxpayer receives the amounts while he/she is stationed outside Ohio:

  • Military pay and allowances received while a member of the active component of the U.S. armed forces and assigned to a permanent duty station outside Ohio.
  • Military pay and allowances received while a member of the active component of the U.S. Armed Forces, who is assigned to a permanent duty station inside Ohio, only for periods of duty outside Ohio for purposes other than training, or periods of training greater than 30 days outside Ohio.
  • Military pay and allowances received while a member of the National Guard or the reserve components of the U.S. Armed Forces in an active duty status outside Ohio, or for periods of training greater than 30 days outside Ohio.
  • Military pay and allowances received while a member of a unit of the National Guard or the reserve components of the U.S. Armed Forces under federal mobilization orders under which the unit mobilizes for training at a non-Ohio location followed by an operational deployment to any non-Ohio location.
  • Military pay and allowances received by cadets at the U.S. service academies, specifically the Military Academy, the Air Force Academy, the Coast Guard Academy and by midshipmen at the Naval Academy. Cadets and midshipmen are serving on active duty under the provisions of 38 United States Code section 101(21) and are eligible for this deduction for the pay they receive while stationed at these facilities to the extent that this pay is included in federal adjusted gross income (line 1 on Ohio form IT 1040). However, this deduction is not available for pay received for service in the Reserve Officer Training Corps.

Examples of military pay and allowances that do not qualify for this deduction are explained in our information release IT 2008-02 entitled “Military Taxpayer Guide to Taxable Income and Deductions,” which is available on our Web site at http://www.tax.ohio.gov/.

Line 37b - Military Retirement Incomeand Military Injury Relief Fund

Military Retirement Income. Taxpayers who retired from service in the active or reserve components of the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard or National Guard can deduct their military retirement income to the extent that income is not otherwise deducted or excluded in computing federal or Ohio adjusted gross income.

Taxpayers who served in the military and receive a federal civil service retirement pension are also eligible for a limited deduction if any portion of their federal retirement pay is based on credit for their military service. These retirees can deduct only the amount of their federal retirement pay that is attributable to their military service.

If you are eligible for this limited deduction, refer to your federal civil service retirement benefit handbook to determine the number of years of your military service. Divide the number of years of military service by the total number of years of combined military service and civilian employment with the U.S. government. Take this fraction and multiply it by the amount of your federal civil service pension you have included on line 1 of this return. The resulting number is the amount of your federal civil service pension that you can deduct on line 37b.

Example: Included on line 1 of Ohio form IT 1040 is $60,000, which the taxpayer received as a federal civil service pension. The taxpayer has 15 years of military service and 45 years of combined military service and civilian employment with the U.S. government. The fraction is 15/45 = 1/3. The taxpayer can deduct $20,000 on line 37b: 1/3 X $60,000.

If you do not have your federal civil service retirement handbook, contact the U.S. Office of Personnel Management (OPM) at 1-888767- 6738 or TDD 1-800-878-5707. You can also e-mail OPM at retire@opm.gov or use its Web site at www.opm.gov/retire to request the booklet. Please be sure to specify that you want a replacement booklet (there are other types). An OPM customer service representative will tell you how much military and total service time you have in your retirement calculation and can mail you a screen print or short form letter with the information.

The military retirement income also applies to such amounts received by the surviving spouse or the former spouse of each military retiree who is receiving payments under the survivor benefit plan.

Please note that we may later ask you for a copy of the divorce agreement and federal form 1099-R as verification for the deduction. Note: Child support receipts, regardless of the source, are not included in federal adjusted gross income, so you cannot deduct these amounts.

Military Injury Relief Fund. Also enter on this line military injury relief fund amounts that you reported on line 1 (federal adjusted gross income). You do not have to include in federal adjusted gross income, and you cannot enter on line 37b, those military injury relief fund amounts you received on account of physical injuries or psychological injuries, such as post-traumatic stress disorder, if those injuries are a direct result of military action in Operation Iraqi Freedom or Operation Enduring Freedom. But you must include on lines 1 and 37b any other military injury relief fund amounts you received.

Line 38a - State or Municipal IncomeTax Overpayments

Did you file a 2011 IRS form 1040A or 1040EZ? If yes, you do not qualify for this deduction.

If you filed an IRS form 1040, then you may be eligible for the state or local income tax refund deduction on line 38a.

Refer to line 10 of your 2011 IRS form 1040 and enter this amount. If line 10 is blank, you are not entitled to this deduction.

Line 38b - Refund or Reimbursement for Itemized Deductions

Deduct refunds or reimbursements of expenses you originally deducted on a prior year federal income tax return if the following conditions are met:

  • The refund or reimbursement was included in your federal adjusted gross income on your 2011 federal income tax return, form 1040, line 21; AND
  • The expense for which you were refunded or reimbursed was deducted as an itemized deduction on Schedule A of a prior year federal income tax return.

Example: Sue claimed an itemized deduction of $500 for medical expenses on her 2010 federal income tax return. In 2011 she received a medical expense reimbursement for $200 from her insurance company, and she reported the $200 on line 21 of her 2011 federal income tax return. Sue is entitled to deduct the $200 reimbursement on line 38b of this return.

Line 38c - Repayment of IncomeReported

Enter on this line any amount of income that you paid back in a subsequent year if that amount meets the following three requirements:

  • For federal income tax purposes you claimed either (i) an itemized deduction on Schedule A of your 2011 federal income tax return for the amount repaid OR (ii) a tax credit on your 2011 federal income tax return based upon the amount repaid; AND
  • You do not deduct this amount on any other line on your Ohio tax return for this year or any other year; AND
  • In the year you received the income, the income did not qualify for either the resident or nonresident/part year resident credits on Schedules C or D on your Ohio income tax return.

For information about miscellaneous federal tax adjustments, see our Web site at http://www.tax.ohio.gov/.

Line 39 - Disability and Survivorship Benefits

You may deduct the following:

  • Benefits from an employee’s disability plan paid as the result of a permanent physical or mental disability. Note that the disability must be (or presumed to be) permanent. “Disability” means a permanent physical or mental impairment that makes you unable to work for pay in jobs for which you are qualified by training and experience.
  • Survivorship benefits paid from a qualified survivorship plan as the result of the death of a covered employee.

You may not deduct the following:

  • Payments that otherwise qualify as retirement or pension benefits. Upon reaching your plan’s minimum retirement age, the disability benefits received under that plan become retirement or pension benefits and are no longer deductible as disability or survivorship. If you are uncertain of the minimum retirement age under your plan, please contact your plan administrator for this information.
  • Temporary wage continuation plans.
  • Payments for temporary illnesses or injuries (for example, sick pay provided by an employer or third party).
  • Pension payments that another individual was receiving but he/she died and you are now receiving these payments (pension continuation benefits). These amounts are not deductible survivorship benefits.

See Ohio Administrative Code (Ohio Rule) 5703-7-08 on our Web site at http://www.tax.ohio.gov/.

Line 40 - Social Security and Certain Railroad Retirement Benefits

Deduct the following benefits only to the extent that they are included in your federal adjusted gross income:

  • Social Security benefits
  • Tier I and Tier II railroad retirement benefits
  • Supplemental railroad retirement benefits
  • Dual railroad retirement benefits
  • Railroad disability

Line 41 - Tuition Investments in Ohio CollegeAdvantage Savings Plan

Contribution Deduction. You may deduct purchases of tuition units and contributions to the Ohio Tuition Trust Authority’s CollegeAdvantage 529 Savings Plan, up to $2,000 per beneficiary per year if these amounts do not qualify as a deduction on page 1 of IRS form 1040. Qualifying purchases exceeding the $2,000 limitation may be deducted on future years’ returns, subject to the annual $2,000-perbeneficiary limitation. Married taxpayers may deduct up to a maximum of $2,000 per beneficiary whether their filing status is married filing jointly or married filing separately. For information on contribution carryovers, see page 23, line 33b.

Adjustment for Earnings on Certain Distributions. The earnings portion of distributions from Internal Revenue Code section 529 programs can generally be excluded from federal adjusted gross income if the distribution is used solely to fund qualified higher-education expenses. If the earnings portion of a 2011 distribution from Ohio’s CollegeAdvantage program is excluded from federal adjusted gross income (line 1 on this return), then no further adjustment is required on line 41.

For federal income tax purposes, however, there are certain situations where, due to the coordination of benefits from an Internal Revenue Code 529 program with other federal tax benefits for higher-education expenses (such as the federal American Opportunity Tax Credit), the earnings on a distribution from the CollegeAdvantage program that are actually used to pay qualified higher-education expenses cannot be excluded from federal adjusted gross income. If any portion of the earnings reported to you on your 2011 IRS form 1099-Q from the CollegeAdvantage program is used to pay qualified higher- education expenses, and if because of certain federal tax limitations such earnings are not excluded from your federal adjusted gross income, you can exclude such portion by adding it to the total included on line 41.

Adjustment for Distributions at a Loss. If a distribution reported to you on 2011 IRS form 1099-Q reflects a loss (the earnings in box 2 is negative), you can add this loss to your total on line 41 as a positive number if this loss is not deducted in computing federal adjusted gross income (line 1 on Ohio form IT 1040).

For more information, please call 1-800-AFFORD-IT (1-800-233-6734) or visit the tuition trust Web site at www.collegeadvantage.com.

The recent passage of HB 167 authorized an income tax deduction for the otherwise taxable portion of a federal Pell Grant or Ohio College Opportunity Grant used to pay room and board for a student enrolled in a post-secondary educational institution. Both the Pell Grant and Ohio College Opportunity Grant are treated as scholarships for purposes of determining their taxability at the federal level. For scholarships to be exempt from federal tax, they must be used to pay qualified education expenses. Any portion of a scholarship used to pay expenses that are not qualified education expenses is taxable and included in federal adjusted gross income. Accordingly, if a grant is used to pay for both qualified and nonqualified education expenses, a portion of the grant is tax-free and a portion is taxable for federal purposes. Room and board expenses are taxable nonqualified education expenses.

Pell Grant Deduction Worksheet for Line 41

1. Enter the amount of Pell Grant(s) you received in 2011. This is reported on a letter received from your educational institution ______
2. Enter the portion of worksheet line 1 used to pay qualified education expenses, including tuition and fees, course-related expenses such as books, supplies, equipment and any special fees required for a course . ______
3. Enter here worksheet line 1 minus line 2. If -0-, you are not eligible for the Ohio Pell Grant deduction. If greater than -0-, go to line 4 ______
4. Enter here the portion of worksheet line 3 that you reported as a taxable amount on line 7 of IRS form 1040; line 1 of IRS form 1040EZ; or line 7 of IRS form 1040A. If -0-, you are not eligible for the Ohio Pell Grant deduction. If greater than 0, go to line 5 ______
5. Enter here the portion of worksheet line 4 applied to room and board expenses only. Also enter this amount on line 41 of Schedule A on Ohio form IT 1040 ______

Line 42 - Ohio National Guard Reimbursements and Benefits

Deduct on line 42 the following amounts, but only if (i) these amounts are in your federal adjusted gross income (line 1 on Ohio form IT 1040) and (ii) you have not already deducted these amounts elsewhere on Schedule A:

  • Receipt of Ohio Adjutant General- authorized Ohio National Guard reimbursement for group life insurance premiums paid; AND
  • Receipt of Ohio Adjutant General- authorized payment of death benefits received as a beneficiary of an active duty member of the Ohio National Guard who died while performing active duty.

Line 43a - Unreimbursed Long-TermCare Insurance Premiums, Unsubsidized Health Care Insurance Premiums and Excess Health Care Expenses

There are several deductions included in this line:

  • Unreimbursed premiums for subsidized and unsubsidized long-term care insurance plans and unreimbursed premiums for unsubsidized health care insurance plans;
  • Excess medical expenses; AND
  • Accident and health insurance premiums paid for certain dependent relatives.

Unreimbursed Health Care Expenses. Enter on line 1a, 1b or 1c of the worksheet below the costs for qualifying health care expenses. Some examples of qualifying health care expenses include unreimbursed costs for the following:

1a:

  • Prescription medicine or insulin
  • Hospital costs and nursing care
  • Medical, dental and vision examinations and treatment by a certified health professional
  • Eyeglasses, hearing aids, braces, crutches and wheelchairs

1b:

  • Insurance premiums for health care insurance plans (including both unsubsidized and subsidized plans, Medicare premiums and supplemental Medicare insurance)

1c:

  • Premiums for long-term care insurance

Note: You must reduce the health care insurance premiums amount you enter on worksheet line 1b by the amount of the self-employed health insurance deduction that you claimed on line 29 on IRS form 1040.

Unreimbursed Long-Term Care Insurance Premiums and Unsubsidized Health Care Insurance Premiums. Enter on line 2a of the worksheet below the amount you paid during 2011 for unreimbursed long-term care insurance premiums for you, your spouse and your dependents. Enter on line 2b the unreimbursed premiums you paid for unsubsidized health care insurance premiums for you, your spouse and your dependents.

Health Care Expenses Worksheet for Line 43a

Do not include on this worksheet any amounts excluded from federal adjusted gross income under a cafeteria plan or under any flexible spending plan.

1a. Enter the unreimbursed health care expenses you paid ______
1b. Enter the unreimbursed premiums you paid for dental, vision and health insurance. See Note 1 below. Do not include any amount you claimed for the self-employed health insurance deduction on line 29 of IRS form 1040 ______
1c. Enter the unreimbursed premiums you paid for long-term care insurance. See Note 1 below ______
1d. Add lines 1a, 1b and 1c. ______
2a. Enter the amount from line 1c above ______

2b. During the year, were you eligible to participate in any subsidized health insurance plan or Medicare? See Note 2 below.

Yes. Enter -0- on line 2b, unless Note 3 below applies.

No. Enter on line 2b the unreimbursed premiums you paid for unsubsidized dental, vision and health care insurance. See Note 3 below

2c. Add lines 2a and 2b and enter the total on both lines 2c and 2d
3. Line 1d minus line 2c; if less than -0-, enter -0- on this line
4. Enter your federal adjusted gross income (from line 1 of your Ohio form IT 1040). If less than -0-, enter -0- on this line
5. Statutory factor
6. Multiply line 4 by line 5 and enter here
7. Line 3 minus line 6. If less than -0-, enter -0-
8. Enter the amount paid for health insurance coverage for certain dependent relatives (see Note 4 below)

9. Line 2d plus line 7 plus line 8. Enter this amount on line 43a of Schedule A on Ohio form IT 1040.

Notes:

  1. Do not enter on lines 1b or 1c any amount included on line 1a.
  2. A subsidized health insurance plan is a plan where your employer, your spouse’s employer, a retirement plan or Medicare pays any portion of the total premium for health insurance coverage.
  3. If you or your spouse were eligible to participate in a Medicare and/or a subsidized health insurance plan for only a portion of the year, you may enter on line 2b the dental, vision and health care insurance premiums that you paid for that portion of the year during which you and your spouse were not eligible to participate in a Medicare and/or a subsidized health insurance plan.
  4. Amount entered on line 8 must be included in federal adjusted gross income, line 37a, and not previously excluded by adjustments on the federal 1040 return that occur prior to the federal adjusted gross income.

An unsubsidized health care insurance plan is a plan for which your current or former employer or your spouse’s current or former employer does not pay for any part of the plan’s costs and does not reimburse you or your spouse for any part of the plan’s costs. Most people who receive wage or salary income from an employer participate in one or more subsidized plans; such plans are not unsubsidized health care insurance plans. If you are unsure, check with your employer.

Example 1: Sue has a health care insurance plan through her employer. She has $50 deducted from her paycheck each month to pay for her portion of her health care insurance premium costs. Her employer contributes $450 each month toward the health care insurance premium costs that total $500 each month. This is a subsidized plan, so Sue is not participating in an unsubsidized health care insurance plan. Sue cannot use her $50 monthly payment on lines 2a and 2b of the worksheet, but she can include this amount on line 1b.

Note: If you are eligible for Medicare coverage, you cannot use line 2b of the worksheet to report any unsubsidized health care insurance plan premiums paid while you were eligible for Medicare coverage.

Example 2: Sue is retired and qualifies for Medicare for the entire year. She pays $50 each month for supplemental health insurance and $20 each month for Medicare B premiums. Sue cannot use her $50 or $20 monthly payments on line 2b of the worksheet, but she can include these amounts on line 1b.

Accident and Health Insurance Premiums for Certain Relatives. You may be able to take a deduction for accident and health insurance premiums that you paid for yourself, your spouse and your "dependents," as defined on page 13. If you answer "yes" to any of the three questions below, you are not eligible to take this deduction:

  1. During the year, were you eligible to participate in any subsidized health insurance plan? Yes No
  2. Did you claim the self-employed health insurance deduction on line 29 of IRS form 1040? Yes No
  3. During the year, were you eligible for medical care coverage through Medicare or Medicaid? Yes No

If you answered "No" to all three of the above questions, you will need to answer the following question: Did you claim an itemized deduction on your federal income tax return for any portion of the accident and health insurance premiums paid? Yes No

If "Yes," enter the amount, if any, of the accident and health insurance premiums for which you did not take an itemized deduction on your federal income tax return:

$________

This is the maximum amount of your accident and health insurance premium deduction. Enter this amount on line 8 of the worksheet on page 27.

If "No," you may be able to deduct the full amount of unreimbursed accident and health insurance premiums that you paid. Enter this amount on line 8 of the worksheet on page 27.

Medical Savings Account Worksheet for Lines 33d and 43b

1. Amount you contributed during 2011, but no more than $4,279. Do not include on this line any amount you entered on line 25 of IRS form 1040 ______
2. If joint return, amount your spouse contributed to a separate account during 2011, but no more than $4,279 ______
3. Amount of medical savings account earnings included on line 1 of your 2011 Ohio form IT 1040 ______
4. Subtotal (add lines 1, 2 and 3) ______
5. 2011 withdrawals from the account for nonmedical purposes . ______
6. If line 5 is less than line 4, subtract line 5 from line 4 and enter here and on line 43b of Schedule A of Ohio form IT 1040
7. If line 4 is less than line 5, subtract line 4 from line 5 and enter here and on line 33d of Schedule A of Ohio form IT 1040.

Note for lines 1 and 2: Do not show on either line any contribution to medical savings accounts if the contribution is excluded from box #1 on your IRS form W-2, Wage and Tax Statement.

Note for line 5: If any prior year contribution exceeded the deductible limit for that year, please contact the Ohio Department of Taxation’s Personal Income Tax Division’s legal counsel at 1-800-282-1780 to help you determine the amount you should enter on line 5 of this worksheet.

Line 43b - Medical Savings Account

You may be able to deduct the amount of funds you deposited into a medical savings account. If filing a joint return, your spouse may also be able to deduct his/her funds deposited into his/her medical savings account. For 2011 the maximum amount of deposited funds you may be able to deduct is $4,279. If filing a joint return, each spouse may deduct up to $4,279 of funds deposited into his/her account for a maximum joint deduction of $8,558. Any investment income or interest earned on the funds deposited into a medical savings account is also deductible if the income or interest is included in your federal adjusted gross income (line 1 of your Ohio form IT 1040). Note: You must reduce the amount of this deduction by any amount that you claimed on line 25 of your IRS form 1040.

To determine if you are eligible for this deduction, complete the medical savings account worksheet below. For further information, please see “What Is a Medical Savings Account and What Are the Qualifications?” on page 12.

Example: Bob and Sue file a joint tax return for 2011. Bob contributed $2,000 to his medical savings account while Sue contributed $5,000 to hers. Bob’s account earned $120 in interest and Sue’s earned $300, which were included in their federal adjusted gross income. These amounts are not deductible in arriving at federal adjusted income. They are entitled to a medical savings account deduction of $6,719 ($2,000 for Bob’s contribution, $4,279 for Sue’s contribution and the combined interest income of $420).

Line 43c - Qualified Organ DonorExpenses

Deduct on this line up to $10,000 of qualified organ donation expenses you incurred during the taxable year. If your filing status is married filing jointly, each of you can deduct on this line up to $10,000 of qualified organ donation expenses you each incurred during the taxable year. “Qualified organ donation expenses” means unreimbursed travel and lodging expenses that you incur in connection with your donation, to another human being, of your human liver, pancreas, kidney, intestine, lung or any portion of your human bone marrow.

Please note that you can claim this deduction only once for all taxable years. If you claim the deduction for this year, you cannot claim this deduction in any subsequent year. If your filing status is married filing jointly and if you and your spouse both claim the deduction for this year, both you and your spouse cannot claim this deduction in any subsequent year. However, if your filing status is married filing jointly but only one spouse claims this deduction for this year, the other spouse can claim the deduction in a subsequent year, regardless of your spouse’s filing status in that subsequent year.

You can also deduct matching contributions that you made to another person’s Individual Development Account when the account has been established by a county department of human services. For further information, contact your local county department of human services.

Line 44 - Wage Expense

Deduct the amount of employer wage and salary expenses that you did not deduct for federal income tax purposes because you instead claimed the federal targeted jobs tax credit or the work opportunity tax credits.

Line 45 - Interest Income from Ohio Public Obligations

Deduct interest income earned from Ohio public obligations and Ohio purchase obligations if the interest income was included in your federal adjusted gross income. You can also deduct any gains resulting from the sale or disposition of Ohio public obligations to the extent that the gain was included in your federal adjusted gross income.

Deduct income from providing public services under a contract through an Ohio state project (including highway services) if the income was included in your federal adjusted gross income. You can also deduct income from a certain transfer agreement or an enterprise transferred under that agreement if the income was included in your federal adjusted income. See Ohio Revised Code sections 126.60-126.605.

Schedule B - Nonbusiness Credits

Line 48 - Retirement Income Credit

To qualify for the Ohio retirement income credit, you must meet all of the following:

  • You received retirement benefits, annuities or distributions that were made from a pension, retirement or profit-sharing plan; AND
  • You received this income because you have retired; AND
  • This income is included in your Ohio adjusted gross income on line 3. Note: Social Security and railroad retirement benefits required to be shown on line 40 and military retirement income required to be shown on line 37b do not qualify for this credit.

If you are filing a joint return, combine the total qualifying retirement income for both spouses to determine the credit from the table above.

Note: Retirement buy-out amounts, attrition buy-out amounts and other similar amounts reported on IRS form W-2 qualify for this credit only if the amounts are paid under a retirement plan.

Example: Bob and Sue are retired and file a joint return. Bob has $5,000 in qualifying retirement income included in Ohio adjusted gross income on line 3. Sue has $2,000 in qualifying retirement income included in Ohio adjusted gross income on line 3. The total of the two qualifying retirement incomes is $7,000. The table above shows a credit of $130 for retirement income of more than $5,000, but not more than $8,000. They are entitled to claim on line 48 an Ohio retirement income credit of $130.

Line 49 - Senior Citizen Credit

You can claim a $50 credit if you were 65 or older before Jan. 1, 2012. If you are filing a joint return, only one credit of $50 is allowed even if you and your spouse are both 65 or older.

If you take or have previously taken the lump sum distribution credit, you cannot take the $50 senior citizen credit on this year's return or any future year's return.

Line 50 - Lump Sum Distribution Credit

This credit is available only to individuals 65 or older before Jan. 1, 2012. If you received a lump sum distribution from a pension, retirement or profit-sharing plan, whether on account of retirement or separation from employment, and if you are 65 or older, you may be able to take advantage of a special tax treatment that uses the $50 senior citizen tax credit multiplied by your expected remaining life years.

If the answers to questions 1 through 6 below are all “Yes,” you can claim the lump sum distribution credit. If you answer “No” to any of the questions, you do not qualify for this credit.

  1. Were you 65 or older before Jan. 1, 2012?
  2. . Was the lump sum distributed from a qualified employee benefit plan (pension, profit-sharing, stock bonus, Keogh, Internal Revenue Code 401(k), STRS, PERS, SERS, etc.)?
  3. Was the distribution made from all of the employer’s qualified plans of one kind in which the employee had funds?
  4. Was the distribution for the full amount credited to the employee?
  5. Was the distribution paid within a single taxable year?
  6. Was the distribution made because the employee died, quit, retired, or was laid off or fired?

If you take this credit, you cannot take the $50 senior citizen’s credit on this year’s return or on any future year’s return. For more information, see page 2 of Ohio form LS WKS, which is available on our Web site at http://www.tax.ohio.gov/.

Note 1: Retirement buy-out amounts, attrition buy-out amounts and other similar amounts reported on IRS form W-2 do not qualify for this credit.

Note 2: Distributions from university retirement plans and from government- sponsored deferred compensation plans do not qualify for this credit because these plans are not described in Internal Revenue Code section 401(a).

Line 51 - Child Care and DependentCare Credit

If your Ohio adjusted gross income (line 3) is less than $40,000 and if you made payments that qualified for the federal child care and/or dependent care credit, you are entitled to this credit. Complete the worksheet on page 30 to calculate the amount of credit you may claim.

Note: If line 3 on page 1 of the Ohio form IT 1040 is $40,000 or more, you are not entitled to this credit.

2011 Child Care and Dependent Care Worksheet for Line 51

1. Enter the amount from line 9 of IRS form 2441, Child and Dependent Care Expenses _______
2. If line 3 of your Ohio form IT 1040 is less than $20,000, enter 100% on this line. If line 3 of your Ohio IT 1040 is equal to or greater than $20,000, but less than $40,000, enter 25% on this line. All others enter -0- on this line . X _____%
3. Multiply line 1 of this worksheet by the rate shown on line 2. Enter this amount here and on line 51 (Schedule B) on Ohio form IT 1040 _______

Line 52 - Lump Sum Retirement Credit

Lump sum distributions that you received on account of retirement from a qualified retirement plan may qualify for the lump sum retirement credit. A lump sum distribution is one where you receive your entire balance from a qualified pension, retirement or profit- sharing plan during one taxable year. If you received income in a lump sum distribution during 2011 or are entitled to an unused retirement income exclusion from an earlier year, then you will need special instructions on how to compute your tax credit.

For more information, see page 1 of Ohio form LS WKS, which is available on our Web site at http://www.tax.ohio.gov/.

Note 1: Retirement buy-out amounts, attrition buy-out amounts and other similar amounts reported on IRS form W-2 do not qualify for this credit.

Note 2: Distributions from university retirement plans and from government- sponsored deferred compensation plans do not qualify for this credit because these plans are not described in Internal Revenue Code section 401(a).

Line 54 - Displaced Worker Training Credit

Ohio law provides a $500 maximum credit per taxpayer for amounts you pay for qualified displaced worker training during the 12-month period after you lose your job. Qualified displaced worker training is job training or education that improves your ability to perform a new job after you have lost your previous job. Displaced worker training includes apprenticeships, internships and educational classes. Use the worksheet below.

It does not include amounts paid for computer purchases or upgrades, professional organizational fees, meals, mileage, transportation or outplacement firms that help you to develop skills used to find a new job - for example, career planning, profile analysis, skills assessment, resume writing, marketing action plan, etc., that are paid in one’s endeavor to find a new job. These training classes are not to improve the skills that one would use in performing the functions or tasks associated with a new job.

Line 55 - Ohio Political Contributions Credit

You can claim a credit against your tax for monetary contributions you made during the year to the campaign committee of candidates for any of the following Ohio offices:

  • Governor
  • Lieutenant governor
  • Secretary of state
  • Auditor of state
  • Treasurer of state
  • Attorney general
  • Chief justice of the Ohio Supreme Court
  • Justice of the Ohio Supreme Court
  • Ohio Board of Education
  • Ohio Senate
  • Ohio House of Representatives

The amount of the credit is the lesser of the combined total cash contributions you made during the year or $50 ($100 for married filing joint returns).

Line 56 - Adoption Credit

You can claim a credit against your tax if you adopted a minor child (under 18 years of age) during the taxable year. The amount of the credit is $1,500 per child adopted. This is a one-time credit per child. Any unused amounts can be carried forward for up to two years. The adoption must be final and recognizable under Ohio law in the year for which you first claim the credit.

Schedule C - Full-Year Ohio Resident Credit

Line 58 - Income Subjected to Tax by Other States

If you were a full-year Ohio resident during 2011 and you had income subjected to tax by other states or the District of Columbia, you may qualify for the Ohio resident tax credit. The credit is the lesser of lines 60 or 61.

This line amount is the portion of your Ohio adjusted gross income subjected to a tax on income in other states or the District of Columbia while you were a resident of Ohio, less related deductions allowed in computing federal adjusted gross income and increased or decreased by related adjustments on Schedule A of the Ohio form IT 1040.

CAUTION! Limitation: Do not include income for which you have directly or indirectly deducted or were entitled to deduct in computing federal adjusted gross income, any state income tax paid on that income. See our information release IT 2006-02 entitled "Inapplicability of Ohio Resident Credit with Kentucky Corporate Income Tax," which is on our Web site at http://www.tax.ohio.gov/.

Do not include wages, salaries, tips or commissions earned by full-year Ohio residents in Indiana, Kentucky, West Virginia, Michigan or Pennsylvania and certain income earned by military nonresidents that is shown on line 36. This income is not taxed and does not qualify for the credit.

Line 60 - Determining the Factor

The factor must be four digits to the right of the decimal. Do not round to the nearest ten-thousandth. Example: Enter .435762 as .4357.

Line 61 - Other States’ Income Tax

Enter the amount of 2011 income tax, less all related nonrefundable credits other than withholding, estimated tax payments and carryforwards from previous years, paid to other states or the District of Columbia. In general, this amount will be the amount shown on the line on the other state’s income tax return that is equivalent to line 15 of Ohio form IT 1040.

CAUTION! Limitation: Do not include income for which you have directly or indirectly deducted, or were entitled to deduct in computing federal adjusted gross income, any state income tax paid on that income.

Schedule D - Nonresident/ Part-Year Resident Credit

Line 63 - Income Not Earned or Received in Ohio

Enter the portion of Ohio adjusted gross income from line 3 that was not earned and received in Ohio. You must complete and include Ohio form IT 2023 (which is available on our Web site at http://www.tax.ohio.gov/) to calculate this credit unless your only income from Ohio sources were wages reported on your W-2(s) and you and/or your family members do not directly or indirectly own the business that paid you those wages.

Do not include on this line pass-through entity distributive shares of income allocated or apportioned to Ohio. Do not include on this line any amount shown on line 46.

Note: Retirement buy-out amounts, attrition buy-out amounts and other similar amounts reported on your W-2(s) should not be included on this line to the extent that such amounts are based upon employment or previous employment within Ohio. Do not include on this line any severance pay, termination pay, final pay or “golden parachute” amounts if you (i) earned in Ohio any portion of such amounts and/or (ii) were employed in Ohio by the payor or the payor’s affiliate prior to or at the time of your receipt of such amounts.

Line 65 - Determining the Factor

The factor must be four digits to the right of the decimal. Do not round to the nearest ten-thousandth. Example: Enter .435762 as .4357.

Schedule E - Nonrefundable Business Credits

Business owners may be entitled to claim on Ohio Schedule E one or more nonrefundable business credits. These credits include the following:

  • Credit for contributions to candidates for Ohio statewide office or General Assembly
  • Job retention credit
  • Credit for selling alternative fuel
  • Job training credit
  • Credit for eligible new employees in an enterprise zone
  • Credit for certified ethanol plant investments
  • Credit for purchases of grape production property
  • Technology investment credit
  • Enterprise zone day care and training credits
  • Ohio historic preservation credit nonrefundable portion

Note: You can obtain Ohio Schedule E from our Web site at http://www.tax.ohio.gov/ or by contacting the taxpayer service center listed on the inside back cover.

Unpaid Use (Sales) Tax Explanation and Instructions for Ohio Forms IT 1040EZ and IT 1040 and the TeleFile Worksheet

TIP: This line will be -0- if you made no catalog, Internet or out-of-state purchases. If you do have catalog, Internet or out-of-state purchases, many out-ofstate retailers already collect use (sales) tax on your purchase. Your receipt will show it as a sales tax amount. If the retailer charges you sales tax on your purchase, you do not have to use the Ohio income tax return to pay additional use tax to Ohio. Use line 14 on Ohio form IT 1040EZ, line 17 on IT 1040 or line 13b on the TeleFile worksheet to pay your Ohio use (sales) tax for those purchases on which you did not pay any state sales tax to the out-of-state retailer at the time you made your purchase.

Use line 14 on Ohio form IT 1040EZ, line 17 on IT 1040 or line 13b on the TeleFile worksheet to report the amount of unpaid use (sales) tax (if any) on out-of-state purchases that you made if you used, stored or consumed in Ohio the item or service you purchased (for example, Internet, television/ radio ads, catalog purchases or purchases made directly from an out-of-state company) and for which you paid no sales tax on that purchase(s). Please complete the use tax worksheet on page 33 to determine if you owe this tax.

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 14 of Ohio form IT 1040EZ, line 17 of IT 1040 or line 13b of the TeleFile worksheet.

Ohio’s Use Tax

Ohio’s use tax has been part of our tax laws since 1936. The use tax rate is equal to the sales tax rate in your county. Every state with a sales tax also has a companion use tax. The use tax laws were passed to eliminate the disadvantage to Ohio retailers when Ohio shoppers buy from out-of-state sellers who do not collect Ohio sales tax.

Who Benefits From the Tax?

  • You and Our Schools: One-third of Ohio’s sales and use tax supports our elementary and secondary schools. The remaining two-thirds pays for state services - higher education, parks, public safety, etc.
  • County Governments and Transit Authorities: The sales and use tax is the largest source of financing for the local criminal justice system and public transportation systems.
  • Ohio Retailers: The use tax protects Ohio jobs and helps Ohio retailers by keeping prices competitive with out-ofstate merchants who don’t collect sales tax.

Can You Give Me an Example?

If you buy a taxable item or service from an out-of-state retailer and pay no sales tax, Ohio requires you to pay the Ohio use tax if you will use, store or consume the item or service in Ohio. The use tax applies when you buy from catalog or Internet retailers. The use tax rate is equal to the sales tax rate in the Ohio county where you will use, store or consume the item or service.

Example: Rita lives in Tuscarawas County. She orders a new bedspread from the Catalog Linen Company based in New York. The price is $125. The catalog company collects no sales tax. Rita is liable for paying Ohio’s use tax:

Taxable purchase: $125

Ohio + Tuscarawas County use tax rate = 6.5%

Use tax: $125 x .065 = $8.13

Round this $8.13 use tax amount to the nearest whole dollar: $8

Rita would enter $8 on line 14 of Ohio form IT 1040EZ, line 17 of IT 1040 or line 13b on the TeleFile worksheet.

What if I Have Already Paid Tax on My Out-of-State Purchase?

If you previously paid to another state sales tax on the purchase or if you have previously paid your Ohio use tax by filing Ohio form VP USE, then you do not have to report on line 14 of Ohio form IT 1040EZ, line 17 of IT 1040 or line 13b of the TeleFile worksheet any use tax on that purchase.

I Owe Ohio Use Tax - How Do I Pay It?

You can pay your use tax when you file your Ohio income tax return. Complete the worksheet on page 33.

If you do not have to file an Ohio income tax return (see page 10) but you owe Ohio use tax, you must file Ohio form VP USE to pay the tax. This form is on our Web site at http://www.tax.ohio.gov/.

Donations that Apply to Ohio Forms IT 1040EZ and IT 1040 and the TeleFile Worksheet

A donation will reduce the amount of the refund that you are due. If you decide to donate, 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, do not enter an amount on lines 18a-d on Ohio form IT 1040EZ, lines 25a-d on IT 1040 or lines 13d1-4 on the TeleFile worksheet.

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 2012 federal income tax return.

Military Injury Relief - Use Ohio form IT 1040EZ, line 18a; IT 1040, line 25a; or line 13d-1 of the TeleFile worksheet to donate 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 do not have an overpayment on Ohio form IT 1040EZ, line 17 or IT 1040, line 23, or you do not have an overpayment and are filing by TeleFile, but you want to donate to provide grants to such individuals, you may do so by writing a check payable to Ohio Treasurer of State - ODJFS and mailing it to:

Ohio Department of Job and Family Services
Military Injury Relief Fund
P.O. Box 182367
Columbus, OH 43218-2367

Natural Areas/Endangered Species - Use Ohio form IT 1040EZ, line 18b; IT 1040, line 25b; or line 13d-2 of the TeleFile worksheet to donate to protecting Ohio’s state nature preserves, natural areas and endangered species habitat. Donations are desperately needed to make the difference between adequate management of Ohio’s most fragile habitats and ongoing degradation due to invasive exotic species and other threats. Please assist us in protecting your natural heritage.

If you do not have an overpayment on Ohio form IT 1040EZ, line 17 or IT 1040, line 23, or you do not have an overpayment and are filing by TeleFile, but you want to donate to protect Ohio’s natural areas, you may do so by writing a check payable to the “Natural Areas and Endangered Species Fund” and mailing it to:

Ohio Department of Natural Resources
Division of Natural Areas and Preserves
2045 Morse Road, Building C-3
Columbus, OH 43229-6693

For more information, visit http://ohiodnr.com/NaturePreserveCheckoff/tabid/876/Default.aspx.

Wildlife Species and Endangered Wildlife - Use Ohio form IT 1040EZ, line 18c; IT 1040, line 25c; or line 13d-3 of the TeleFile worksheet 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. Your generous donation will continue to help support Ohio’s native wildlife - a natural treasure! If you do not have an overpayment on Ohio form IT 1040EZ, line 17 or IT 1040, line 23, or you do not have an overpayment and are filing by TeleFile, but you want to donate to provide grants to protect Ohio’s natural heritage, you may do so by writing a check payable to the “Nongame and Endangered Wildlife Special Account” and mailing it to:

Ohio Department of Natural Resources
Division of Wildlife
2045 Morse Road, Building G-2
Columbus, OH 43229-6693

To make a donation online or to learn more, visit wildohio.com, scroll to the bottom and select “Support Wildlife - Donate Today!"

Ohio Historical Society - Use Ohio form IT 1040EZ, line 18d; IT 1040, line 25d; or line 13d-4 of the TeleFile worksheet to donate to the Ohio Historical Society. The Ohio Historical Society is a 501(c)(3) nonprofit organization that allocates these funds toward a matching grants program to support state and local history-related projects throughout Ohio.

If you do not have an overpayment on Ohio form IT 1040EZ, line 17 or IT 1040, line 23, or you do not have an overpayment and are filing by TeleFile, but you want to donate to provide grants to promote and protect Ohio’s rich history, you may do so by writing a tax-deductible (for 2012) check payable to “The Ohio Historical Society Income Tax Contribution Fund” and mailing it to:

The Ohio Historical Society
Attn: Business Office
800 E. 17th Ave.
Columbus, OH 43211-2474

Donations may also be made online at http://www.ohiohistory.org/.