Frequently Asked Questions

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on the category you are interested in. A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

Should the wages of a nonresident investor of an Ohio S corporation who lives in Michigan and works in Ohio be included on IT 1140 and/or IT 4708 if the investor-employee owns at least 20% of the Ohio S corporation, or does the reciprocity agreement between Michigan and Ohio apply?

The reciprocity agreements apply only to “compensation” earned in Ohio by a resident of a neighboring state.  However, wages that an S corporation pays to an investor-employee who owns a “20% or greater” direct or indirect equity investment in the S corporation are reclassified from “compensation” to a “distributive share of income” from the entity.  See R.C. 5733.40(A)(7).  Thus, these amounts are not subject to the reciprocity agreements.

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