FAQs - Employer Withholding

In error, I withheld Ohio state income tax for an employee who lives in a state that has a reciprocal agreement with Ohio. How can my employee get a refund of their erroneous withholding?

A resident of Indiana, Kentucky, Michigan, Pennsylvania or West Virginia who had Ohio state income tax erroneously withheld from their wages during the preceding calendar year can file an Ohio IT 1040 to request their refund.

The reciprocity wages earned in Ohio should be deducted on Schedule A of the Ohio IT 1040 and deducted on line 2 on the front of the Ohio IT 1040. Any remaining tax is deducted by calculating a non-resident credit on Schedule D.

Note that individuals claiming refunds due to Ohio tax withholding on reciprocity wages should not file the Ohio IT AR, Application for Personal Income Tax Refund, but should file the Ohio IT 1040 as indicated above.

*CAUTION: The reciprocal agreements apply only to employee compensation. Therefore, a resident of a state that borders Ohio that has Ohio source income (for example, income from a trade or business derived from Ohio sources, rental income from property located in Ohio, etc.) cannot claim the reciprocity deduction nor nonresident credit with respect to that income, but must pay Ohio income tax on that income.