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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