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Federal vs. Ohio Tax Rules | Tax Tip of the Week | No. 140 April 4, 2012

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , trackback

What Makes Ohio Different?

Generally speaking, the Ohio tax laws follow federal rules.  There are, however, several important differences you should know about.  This week, we will look at several of those differences. 

– Gambling Income:  On the federal return, if you itemize deductions, you can deduct gambling losses to the extent of gambling income.  On the Ohio return, there is no place to deduct gambling losses.  (Note:  if you pay taxes on gambling income to another state, make sure you file a non-resident return with that state so you don’t pay taxes on that income a second time to Ohio.  You will receive a credit for taxes paid to another state).   

– Social Security:  Depending on your income, as much as 85% of your Social Security income may be included in your federal taxable income.  In Ohio, any federal taxable Social Security income is not included in your Ohio taxable income. 

– United States Treasury Interest:  Interest, for example, from US Savings Bonds is fully taxable on your federal tax return.  That interest, however, is not included in your Ohio tax return. 

– Municipal Bond Interest:  In most cases, interest earned on tax-free municipal bonds is not taxable on the federal tax return.  However, it depends which state issued the municipal bonds whether or not the interest is taxed in Ohio.  If the bonds were issued in Ohio, it is not taxable.  If the bond was issued by a different state that interest income would be taxable. 

– Military Retirement Income:  Any retirement income you receive from serving as active duty military or in the reserves is generally taxable federal income.  A few years ago, Ohio now allows you to exclude that income on the state return.  (Note:  If you retired, for example, with 15 years of military service and 45 years of combined military and civilian service- a portion of the pension may qualify for exclusion on the Ohio return.  Call us if this applies to anyone you know).

 – Unsubsidized Health Insurance and Long-term Care Insurance (LTC) Premiums:  On the federal return, these insurance premiums are only deductible if they (and all other medical expenses) exceed 7.5% of your AGI.  Furthermore, the amount of deductible LTC premiums is determined by your age.  Ohio allows a full deduction of all unsubsidized health insurance and 100% of LTC premiums paid on the state return. 

– Political Contributions:  Amounts donated for political purposes are never deductible on the federal return.  Ohio does allow up to a $50 tax credit for donations made to candidates running for any state-wide office. 

These are just a few of the tax rules that make our state so special! 

Give us a call to discuss your state questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

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…until next week.



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