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.

How should a resident taxpayer account for the Business Income Deduction in calculating their Ohio Resident Credit?

The Ohio Resident Credit is based on the portion of Ohio adjusted gross income (OAGI) subjected to income tax by another state. Because the Business Income Deduction (BID) reduces OAGI, it may be that the income being taxed by the other state(s) is no longer in OAGI and thus no longer eligible for the Resident Credit.

In making this determination, resident taxpayers may allocate their Business Income Deduction against any Ohio business income first. Any remaining portion of the deduction should be allocated against the non-Ohio portion of business income.

Example: Jamie has $300,000 of business income and takes the maximum $250,000 deduction on Ohio Schedule A. Jamie determines that $150,000 of the business income is Ohio-sourced and $150,000 is sourced to Indiana. Jamie’s Indiana tax return shows $150,000 of income taxed and she paid $4,845 in income tax to Indiana. In determining what portion of her OAGI was taxed by Indiana, she must allocate the $250,000 BID.

She allocates $150,000 of the BID against the Ohio portion of business income. The remaining $100,000 of the BID is allocated against the $150,000 of Indiana business income. This means that only $50,000 ($150,000 - $100,000) of the Indiana-sourced business income is still in Jaime’s OAGI. So when she calculates her Resident Credit, she reports the portion of OAGI subjected to tax by other states as $50,000.

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