State of Ohio Tax Deductions – Military Provisions

Akron CPA Firm - Veterans Day Tax Blog

Independence Hall was the location where both the Deceleration of Independence and the U.S. Constitution were adopted.

According to the 2012 U.S. Census, the State of Ohio had a total of 61,785 individuals serving as military personnel; representing approximately 2.4% of the total U.S. Military.  On this Veterans Day, Levin, Swedler & Company would like to extend our heartfelt thanks to all who have served our great country.  We are honored to have the opportunity to operate in this great state and country and take pride in providing valued services to all of our clients.

The goal of this blog is to continue to raise awareness of the special provisions the State of Ohio currently offers current and retired military personnel and their families.

  • Deduction for Military Stationed Outside Ohio – While all Ohio residents, including those serving in the military, are subject to the Ohio individual income tax and school district tax, if they reside within a school district that levies the tax; military servicemembers who are stationed outside Ohio are eligible to receive a deduction for military pay received for active duty service while stationed outside the state, if the military pay is included in federal adjusted gross income.  Those eligible must still file both an Ohio individual, and if applicable, school district income tax return to qualify for the deduction.  Under the November 2009 amendment to the Servicemembers Civil Relief Act, please note that an Ohio resident who accompanies his/her military servicemember spouse to a duty station in another state remains subject to Ohio income tax and school district income tax.  This deduction applies to taxable years beginning on and after January 1st, 2007.  See the State of Ohio website for examples of military pay and allowances that do and do not qualify for this deduction.
  • Nonresident Military Servicemembers and Spouses – If you are a military nonresident stationed in Ohio, you may not have to file an Ohio income tax return if you have no Ohio income other than your military compensation.
  • Nonresident Military Servicemember’s Spouses – An amendment to the Servicemembers Civil Relief Act, effective Nov. 11, 2009 for tax years beginning Jan. 1, 2009 and later, extends the principle of domicile applied to servicemembers to the spouses of servicemembers.  While nonresident servicemembers and their spouses may be exempt from Ohio State Income Tax, it’s important to check whether they may be liable for income tax in their state of residency.  If you are nonresident military spouse who claimed Ohio exemption and had Ohio Income tax withheld under the 2009 Amendment to the Servicemembers Civil Relief Act, an Ohio Income Tax return should be filed and a refund should be claimed.
  • Ohio Veterans Bonus – Applies to any Ohio resident veteran of an armed military service who served on active duty for purposes other than training between August 1990 and March 1991 or anytime since October 7, 2001.  Visit the Ohio Veterans Bonus Program website for the eligibility tool and online application.  Revenue Ruling 68-158, 1968-1 C.B 47 concluded that “bonuses” that a state paid to, or on behalf of qualified veterans who served in the United States Armed Forces during certain wars are not includible in the gross income of the recipients for federal tax purposes.  The State of Ohio also took action to exempt the bonuses from Ohio income tax by signing into law House Bill 48 in April, 2010.  Bonuses are also exempt from School district income tax.  Veterans who served in other areas are eligible for $50 for each month of active duty service, up to a maximum of $500.  Family members of service members who lost their lives in these conflicts are eligible for a benefit of $5,000 plus the benefit the deceased veteran would have received up to a maximum of $1,500. Families of missing or prisoner of war service members may be eligible for a bonus of $5,000.

Click here for a list of FAQs related to Ohio – Military Individual Income Tax.

Make sure to take some time to thank a Veteran on Veterans Day, 2012.

Written by: Matthew Migal

Levin, Swedler & Company - CPAs


About akroncpa

Levin Swedler Kennedy is an Akron, Ohio CPA Firm, offering business and not-for-profit consulting, financial statement preparation, tax preparation & planning, QuickBooks & Peachtree support, auditing, and business valuations since 1986.
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