OHIO I-FILE TAX RETURN
RETURN YEAR 2011

Caution Any income amounts you deduct here MUST be included in your federal adjusted gross income. Do not deduct any item below already deducted from your federal adjusted gross income.

Schedule A - Deductions
Federal Interest and Dividends 

Enter interest and dividend income included in your federal adjusted gross income from obligations issued by the United States government or its possessions/territories that are exempt from Ohio tax by law. 

Examples are U.S. savings bonds (Series E, EE, H or I ), Treasury notes and bills and/or Sallie Maes. For a more complete listing, see our Web site at:

http://tax.ohio.gov/ohio_individual/individual/information_releases/it199201.aspx

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.
1/5th depreciation expense adjustment for IRC section 168(k) & 179 bonus depreciation

Deduct one-fifth of the Internal Revenue Code sections 168(k) and 179 depreciation adjustments 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 tax.ohio.gov.

http://tax.ohio.gov/corporation_franchise/information_releases/picft200202.aspx

Residents of Neighboring States and Nonresident Military Personnel

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 resident of one of these states; AND

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 but you meet the two conditions set forth above, you can file an Ohio income tax return to get a full refund.

Exceptions: Nonresidents and part-year residents must enter -0- 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 above, claim the nonresident/part-year resident credit on Schedule D.

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.

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) to determine the proper amount of credit to claim in Schedule D of Ohio form IT 1040. Here are the IT 2023 instructions and form:

http://tax.ohio.gov/portals/0/forms/ohio_individual/individual/2011/pit_it2023_instructions.pdf

http://tax.ohio.gov/portals/0/forms/ohio_individual/individual/2011/pit_it2023.pdf

 

Nonresident Military Personnel and Their Spouses.

The Servicemembers Civil Relief Act of 2003, as amended in 2009, is a federal law which 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. 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 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 Form DD 2058. A servicemember's nonresident spouse who had Ohio income tax withheld and who claims exemption under the 2011 amendment to the Servicemembers Civil Relief Act should file an Ohio income tax return claiming a refund.

If your home of record was Ohio for all of 2011, then you are not entitled to a deduction for your military pay.

 

Ohio Resident Military Personnel

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 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, is 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 servicemember 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. 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 include the following:

 

  • 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 and who departs Ohio for a period of temporary duty for unit or individual training of 30 days or less (e.g., training exercises, basic and advanced training courses, and additional skill training courses).
  • 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 for training status who departs Ohio for a period of temporary duty for unit or individual training of 30 days or less (e.g., unit annual training, training exercises, basic and advanced training courses, and additional skill training courses).

  • Military pay and allowances received for service in a combat zone because that pay is not included in federal adjusted gross income.
Military Retirement Income and Injury Relief Fund Receipts

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 in your federal adjusted gross income. The resulting number is the amount of your federal civil service pension that you can deduct. 

Example: The taxpayer has included $60,000 in federal adjusted gross income 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: 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 1-888-767-6738 or TDD 1-800-878-5707. You may also e-mail OPM at retire@opm.gov or use its Web site at http://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. 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 IRS form 1099-R as verification for the deduction. Note that child support receipts, regardless of the source, are not included in federal adjusted gross income, so you cannot deduct these amounts.

  

Also enter the military injury relief fund amounts you reported in your federal adjusted gross income. You do not have to include in federal adjusted gross income, and you cannot enter 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 Operating Enduring Freedom. But you must include any other military injury relief fund amounts in your federal adjusted gross income and then deduct these amounts you received.

 

State and local overpayments

Amount of state and local overpayments shown on line 10 of your 2011 Federal Form 1040.  If you filed a Federal Form 1040A or 1040EZ you are not entitled to this deduction. 

 

Refund or Reimbursements

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

  • The refund or reimbursement was included in your federal adjusted gross income on your 2011 IRS 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 IRS 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.

 

Repayment of Income 

Enter 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 IRS income tax return for the amount repaid OR (ii) a tax credit on your 2011 IRS income tax return based upon the amount repaid; AND
  • You do not deduct this amount on any other part of 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.

Example: Jane Carpenter received a $1,000 bonus from her employer in 2010 and included the bonus in her 2010 federal adjusted gross income. In 2011 Jane had to repay $200 of the bonus because her employer computed the year 2010 bonus wrong. The three requirements, above, are met. Jane is entitled to a $200 deduction.

 

Miscellaneous Federal Tax Adjustments

                                                    For Taxable Year 2011

Notice Concerning Ohio Revised Code 5701.11 and “Miscellaneous Federal Tax Adjustments”

Because of recent amendments to Ohio Revised Code section 5701.11, taxpayers will not have to make any “miscellaneous federal tax adjustments” on their year 2011 Ohio income tax returns or their year 2011 school district income tax returns. Furthermore, residents of “earned income only” school districts should enter -0- in the earned income part of SD 100 for year 2011.

HOWEVER, the recent legislation does not change taxpayer responsibilities when it comes to Internal Revenue Code section 168(k) bonus depreciation and Internal Revenue Code section 179 first-year cost recovery. Taxpayers must continue to make the “5/6 add-back” (5747.01 (20) (a), (i), (ii)) for taxable year 2011 of the IT-1040, and may continue to take the “1/5 deduction” (5747.01 (21) (a), (b), (c)) on each year for the five years immediately following the year of the “5/6 add-back.”

Taxpayers with additional questions about this subject may wish to visit tax.ohio.gov.

Taxpayers may submit a question to the Ohio Department of Taxation using this “Contact Us” option.

If a previously filed Ohio return is impacted by this change, we recommend amending the Ohio return in order to take advantage of the change in the legislation. The Ohio Amended Individual Income Tax Return, form IT 1040X and the Ohio Amended School District Income Tax Return, form SD 100X can be found on our website at

http://tax.ohio.gov/forms.aspx

 

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 the 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 your reaching your plan’s minimum retirement age, the disability benefits you receive under that plan become retirement or pension benefits and are no longer deductible as disability or survivorship benefits. 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 for additional information about this deduction. http://codes.ohio.gov/oac/5703-7-08

 

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 and railroad unemployment benefits

 

Tuition Investments in 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-per-beneficiary limitation, until all unused portions are deducted. 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. You may not use any contribution deduction carryover to 2011 to the extent that the carryover has been reduced due to the recapture of contribution deductions. See Schedule A Additions for more information.

Note: This deduction does not apply to investments in Internal Revenue Code section 529-qualified tuition plans offered by other states.

Adjustment for Earnings on Certain Distributions. The earnings portion of distributions from Internal Revenue Code section 529 programs may 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, then no further adjustment is required.

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 Hope and Lifetime Learning Credits and Coverdell Education Savings Account distributions), the earnings on a distribution from the CollegeAdvantage program that are actually used to pay qualified higher-education expenses may not 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 may exclude such portion by adding it to the total. Note: This special earnings exclusion only applies to distributions from the CollegeAdvantage program and not to distributions from Internal Revenue Code 529-qualified tuition plans offered by other states.

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 may add this loss to your total as a positive number if this loss is not deducted in computing federal adjusted gross income. CollegeAdvantage is an Internal Revenue Code 529-qualified tuition program administered by the Ohio Tuition Trust Authority.

For more information, please call 1-800-AFFORD-IT (1-800-233-6734)
or visit the tuition trust Web site at http://www.collegeadvantage.com/ohio-529-plans

Pell Grant Deduction

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.

PellGrantWorksheet

 

Ohio National Guard Reimbursements and Benefits

Deduct here the following amounts, but only if; (i) these amounts are in your federal adjusted gross income 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.

 

Unsubsidized Health Insurance, Long-Term Care Insurance & Excess Medical Expenses

There are several deductions included:

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

Enter the amount you paid in 2011 for Unsubsidized Health Insurance, Long-Term Care Insurance & Excess Medical Expenses. An unsubsidized health 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 and therefore are not participating in an unsubsidized health insurance plan. If you are unsure, check with your employer.

Some examples of qualifying health care expenses include unreimbursed costs for the following:

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

Note: You must reduce the amount of health-insurance premiums by the amount of the self-employed health-insurance deduction that you claimed on line 29 of your federal form 1040.

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. However, Sue may deduct her $50 monthly payment in the second part of the I-File Insurance and Medical Cost worksheet as unreimbursed premiums she paid for dental, vision and health insurance.

Note: If you are eligible for Medicare coverage, you cannot use the first part of the I-File Insurance and Medical Cost 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. However, Sue may deduct her $50 and $20 monthly payments in the second part of the I-File Insurance and Medical Cost worksheet as unreimbursed premiums she paid for dental, vision and health insurance.

 

Accident and Health Insurance Premiums for Certain Relatives and 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 from 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 is $50,000, they can include the $8,000 of premiums on the worksheet. The taxpayer will enter the eligible amount on Schedule A. As noted above, Ohio House Bill 1 expands the definition of “dependent” for this provision only.

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 the worksheet.

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 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 the worksheet of the instructions because the taxpayer took the deduction on line 25 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.

 

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 above. 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 the worksheet. 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 the worksheet.

 

Ohio 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 can 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.

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.

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).

 

Organ Donation and Amount Contributed to an Individual Development Account

Deduct 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 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.

Wage and Salary Expense (employers only)

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.

 

Interest income from Ohio Public Obligations and Ohio Purchase Obligations and gains from the sale or disposition of Ohio Public Obligations and public service payments received from the state of Ohio

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 may 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.