IT 2004-01 Recent Federal Law Change Affecting Military
Servicemembers Requires Modification To Year 2003 Ohio Income
Tax Return – February 2004
Recently-enacted federal law, Servicemembers Civil Relief
Act, requires modifications to Ohio’s year 2003 Ohio
income tax return, form IT-1040. Section 511(d) of that act
states, "A tax jurisdiction may not use the military
compensation of a nonresident servicemember to increase the
tax liability imposed on other income earned by the
nonresident servicemember or spouse subject to tax by the
jurisdiction."
For taxable year 2003, a nonresident servicemember – whether
filing a married filing joint return, a head of household
return, a married filing separate return, or a single return
– can use line 34 of Schedule A on the back side of the year
2003 Ohio form IT-1040 to deduct her/his military
compensation and all other types of
the nonresident servicemember’s income not sitused to or
earned in Ohio. Examples of other types of such income not
sitused to or earned in Ohio generally include interest
income, dividend income, capital gains from the sale or
exchange of stocks and bonds, and lottery prizes and awards
other than prizes and awards paid by the Ohio Lottery
Commission. Examples of income sitused to or earned in Ohio,
which the nonresident servicemember cannot deduct, include
the following: wages earned in Ohio from employment other
than employment as a servicemember with any of the armed
services, capital gains from the sale of real estate located
in Ohio and from the sale of tangible property located in
Ohio, and prizes and awards paid by the Ohio Lottery
Commission.
The Ohio Department of Taxation has revised the year 2003
Ohio form IT-1040 and instructions to reflect this change.
You can view the revisions to the form and instructions by
visiting our Web site and selecting
"forms>Ohio income tax > individual " from our home
page. Nonresident servicemembers claiming this
deduction on line 34 on an Ohio income tax form as the form
previously existed should insert on that line, "Nonres.
servicemembers deduction."
Nonresident servicemembers can continue to claim the personal
exemption deduction and personal exemption credit – even if
the nonresident servicemember is filing a married filing
joint return with her/his spouse and none of the nonresident
servicemember’s income is included in Ohio adjusted gross
income. However, for nonresident servicemembers who are
filing a married filing joint return and who want to claim
the married filing joint credit provided under Ohio Revised
Code section 5747.05(G), the Ohio adjusted gross income must
include, for each spouse, at least $500 of income other than
interest, dividends and distributions, royalties, rents, and
capital gains. Because of the deduction provided by the new
federal law, most nonresident service members will no longer
be able to claim this credit.
In addition, the Ohio Revised Code section 5747.05(A)
nonresident credit cannot be claimed in connection with any
portion of the nonresident servicemembers’s income deducted
on line 34 of the year 2003 Ohio income tax return. Because
of the deduction provided by the new federal law, most
nonresident servicemembers will no longer be able to claim
this credit, either.
If you have questions regarding how this new law affects
"e-filing" of Ohio income tax returns, please
email us and choose "electronic filing" from the "subject
category" or call 614/433-7773. If you have questions
regarding how this new law affects the filing of paper Ohio
income tax returns, please
email us and choose "forms" from the "subject category"
or call 614/433-7606.
If you have other questions please call 1-800-282-1780 (Ohio
Relay Services for the Hearing or Speech Impaired:
1-800-750-0750), or access the department’s Web site
(tax.ohio.gov) and e-mail your questions to
us.