Ohio Personal Income Tax Residency Update

In the past year, there have been two Ohio residency developments that are of importance.  Back in December 2014, Ohio House Bill 494 was signed into law, increasing the number of contact periods an individual can have with Ohio before residency is breached.  The second development centers around the Cunningham v. Testa case that was decided on July 8, 2015 related to the Affidavit of Non-Ohio Domicile.

Criteria for Ohio Residency Determination

House Bill 494 increased the amount of contact periods a person could have with Ohio from 182 to 212.  According to Ohio Information Release IT 2015-02, individuals would be presumed not to be domiciled in Ohio if:

An individual is irrebuttably presumed not to be domiciled in Ohio for any portion of the taxable year if the individual has fewer than 213 contact periods in Ohio during the taxable year and meets ALL of the following criteria:

  1. The individual did not change domicile to or from Ohio during the taxable year (i.e. the individual was not a “part-year resident”),
  2. By May 30 of the immediately succeeding calendar year the individual files the affidavit of non-Ohio domicile,
  3. In the affidavit, the individual verifies that s/he was not domiciled in Ohio pursuant to generally accepted common law notions of domicile,
  4. In the affidavit, the individual verifies at least one abode outside Ohio during the entire taxable year,
  5. The affidavit does not contain any false statements.

This is a major win for individuals who have established residency in other states but still want to travel into Ohio to visit relatives.

The Cunningham case, however, exposes some of the pitfalls of owning property in multiple states while claiming to be a non-resident of Ohio.  Although Mr. Cunningham filed an affidavit on non-Ohio domicile for the tax year in question, he also applied for the homestead exemption related to his home in Cincinnati, thereby declaring that the home was his primary residence.  The affidavit of non-Ohio domicile form is normally thought to entitle the individual to the irrebuttable presumption of non-residency; however, the court in this case concluded that the Tax Commissioner may look to outside factors to determine whether the taxpayer made a false statement on the affidavit.

Contact us if you have questions about Ohio residency and its impact on your business and visit our State and Local Tax services page to learn about the services that the Schneider Downs Tax Advisors offer.

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