Legal Resources

Tax Reform Frequently Asked Questions
What is changing?What is changing?How is small business defined?What is business income?How can a taxpayer determine what income qualifies for the small business deduction or the business income deduction?What is changing?When will the Ohio Earned Income Credit (EIC) be effective?Why is the tax credit being made available?What is changing?When will the gambling loss deduction repeal be effective?Why is the gambling loss deduction being repealed?Will the repeal dampen the economic benefit being derived from the casinos?What is changing?Why was this change made?When will the means testing of the personal exemption credit be effective?What is changing?Why is the indexing to inflation being suspended?When will indexing to inflation be suspended?What is changing?If a replacement levy or a new levy is put on the ballot in August or November of 2013, will these levies receive the full 10% and 2.5% reimbursement from the state when collection begins in 2014?What impact does it have if the replacement levy or new levy is placed on the ballot in 2013 but collection is delayed until 2015?Is this a tax increase for Ohioans?Can voters approve a straight renewal of an existing levy and continue to receive the 10% and 2.5% reimbursement from the state on such renewals for levies placed on the ballot in 2014 and beyond?What is the homestead exemption?How has the homestead exemption changed?When did the resumption of a means-tested homestead exemption begin?Who qualifies for the means-tested homestead exemption?I'm 65 but my spouse is younger than I am. Are we eligible for the homestead exemption?How do I apply for the homestead exemption? What is changing?Doesn’t a higher sales tax disproportionately impact lower income families?What is taxed under R.C. 5739.01(B)(12), “specified digital products” ?When did digital products become taxable?Are electronically delivered photos, magazines and newspapers taxed as specified digital products?Are specified digital products delivered via cable television systems taxed as specified digital products?Are specified digital products delivered thorough a “satellite broadcasting service” subject to tax?Is prewritten computer software taxable as specified digital products?When do magazine subscriptions become taxable?Why are magazine subscriptions being made taxable?Are newspaper subscriptions being taxed?Will out-of-state magazine publishers be required to collect and remit sales tax for the subscriptions?Why change from associate membership to full membership?What is changing?When does the tax increase take effect?Why is the tax rate for little cigars being increased?How might behavior change as a result of the higher tax?Is any portion of the tax increase going to smoking cessation programs?Will the product have a tax stamp, similar to packages of cigarettes?How do we know the tax has been paid on other tobacco products if there is no stamp affixed?Are there any implications for the Master Settlement Agreement?What is changing?When does this change take effect?Are businesses with less than $150,000 now required to pay CAT?Isn’t this a tax increase on small businesses?So if my business generates $3M in receipts, is my entire CAT obligation $2,100?What is changing?What is the effective date of this change?What is the new rate for motor fuel?Does this mean that gas stations are no longer subject to the CAT?Do gas stations have to pay CAT and the Rack Tax on motor fuel sales?Will this change cost me more at the pump?What is Nonbusiness income?Does my product meet the definition of a “little cigar” for purposes of Ohio’s other tobacco products tax if my product is small like a cigarillo and has a filter, but is covered completely by a natural leaf tobacco wrapper?Can this deduction be taken twice – both by the entity and the investor?Does the small business deduction flow through to school district income taxes?How is the Small Business Investor Income Deduction calculated? Is schedule IT SBD required to be electronically filed as part of the Ohio return or mailed with a paper return?Do sole-proprietors (non-pass through entities) qualify for the Small Business Investor Income deduction – or must the income come from a partnership, S corporation or LLC? A taxpayer is a "statutory employee" for federal purposes receiving a form W-2 from a Limited Liability Company (LLC) that he does not own. He reports this W-2 income on federal Schedule C, but does not pay self-employment tax. Can this income be included on IT SBD line 1a?Does net rental income reported on Schedule E qualify for the deduction? Does net royalty income reported on Schedule E qualify for the deduction?Are royalties received from the use of land for mineral rights eligible for the Business Income Deduction? If a sale of business property is treated as ordinary income on Form 4797 of the federal 1040, does this income qualify for the SBD? Would a capital gain arising from the sale of a business asset also qualify?If the Pass-through entity files a 4708 composite return versus an 1140 withholding return, can the individual still take advantage of the Small Business Investor Income deduction? Taxpayer has Subchapter S ordinary income from the K-1 (100% Ohio source) reported on federal Schedule E. Does it make any difference if the shareholder is a material participant or not?On the Schedule (IT SBD), Part I, Section A, Line 1b requires a taxpayer to include not only guaranteed payments, but compensation received from a pass-through entity. If a shareholder receives compensation from the entity of which the shareholder owns more than 20%, and also ordinary income from the entity, are the W2 income and the ordinary income both included to compute the deduction?Does the deduction for self-employment retirement plans page 1 of federal form 1040 impact the deduction on the Ohio return?What's the deadline to apply?I already receive the homestead exemption. Do I have to reapply to receive benefits under the new program?Where do I apply? May I file electronically?How do I show proof of age?How will I know if my application has been approved?What documentation do I need to provide to prove my disability? For estate planning purposes, I placed the title to my property in a trust. Can I still receive the homestead exemption?Will I have to apply every year to receive the homestead exemption?Will I receive an annual notification of my property tax reduction under the homestead exemption?I’ll save quite a bit of money through the homestead exemption. Will this hurt my local schools? What is the income threshold for the means-test?I received the Homestead Exemption in 2013, what happens if I move?What is OAGIWill my OAGI be verified?Does the deduction for self-employment health insurance on page 1 of federal form 1040 impact the deduction on the Ohio return?If a business claims bonus depreciation or an excess Section 179 deduction, it is required to add-back 5/6 of the bonus depreciation and excess Section 179 deduction. Can taxpayers claim a deduction of the 5/6 add-back?Regarding partnership K-1s: A CPA is preparing a partnership return with all Ohio residents, but files state composite returns in PA, KY and IN. For Ohio purposes, does the partner get full credit for the Small Business Investor Income deduction if the partner receives a credit for withholding taxes paid to the other states?Does the IRS section 199 domestic production deduction reduce Ohio’s small business deduction? I received income from an entity that has a fiscal year end of 3/31/14. May I claim all of the income even though most of it was earned in 2013, or do I need to pro-rate and only claim the entity income earned during the 3 months of 2014?I receive Ohio royalty income and have no property or payroll in Ohio or everywhere else. Are my royalties considered sales for purposes of the sales factor in the apportionment ratio on the IT SBD, part II?I have a trucking business in Ohio, but the business makes some deliveries to other states. Should the income generated from sales to other states be considered business income for purposes of this deduction? And if so, how do I determine if these are sales within Ohio or “everywhere sales”?Is an annual membership fee that covers digital books, movie downloads and free shipping taxed as a specified digital product?My college gives me two options for purchasing my course textbook. (1) I can purchase a physical textbook or (2) I purchase an access code that allows me to view my course’s textbook in an electronic format via a learning management system. Are the sales of the textbook subject to sales tax?My college includes the cost of my electronic course textbook in my course fee. However, I may “opt out” of including an electronic book in my course fee for a reduction in the price of the course fee. Is the textbook subject to sales tax?