FAQs - Pass Through Entity

Regarding interest income earned from a PTE: (a) Is PTE-earned interest income taxable to Ohio if the person is an out-of-state resident and (b) If the interest income is also taxed by another state, can the non-Ohio resident properly claim a credit on the Ohio individual income tax return?

(a) Yes. Generally, PTE-earned interest income is business income which is apportioned in and out of Ohio rather than completely allocated to the state of residency (regardless of whether the investor is a resident of a state contiguous to or not contiguous to Ohio).

(b) Regardless of whether or not such interest is taxed by another state, a nonresident individual filing the IT 1040 can claim the nonresident Schedule D credit with respect to (i) income that is not apportioned to Ohio and (ii) income that is not allocated to Ohio.

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