Ohio Subtractions From Income
Federal Interest and Dividends Adjustment
Enter interest and dividend income included in your Federal AGI from obligations issued by the United States Government or its possessions/territories that are exempt from Ohio tax by law, such as US Savings bonds (Series E, EE, H, or I), Treasury notes, bills and bonds and Sallie Maes.
Examples of interest income that are not deductible:
- Interest paid by the IRS on an IRS income tax refund
- Interest income from Fannie Maes or Ginnie Maes
Disability and Survivor Benefits
You may deduct the following:
- Benefits from an employee’s disability plan paid as a result of permanent physical or mental disability. Note that the disability must be (or presumed to be) permanent. Disability means a permanent physical or mental impairment that makes you unable to work for pay in the jobs for which you are qualified by training and experience.
- Survivorship benefits paid from qualified survivorship plan as the result of the death of a covered employee.
You may not deduct the following:
- Payments that otherwise qualify as retirement or pension benefits. Upon reaching your plan's minimum retirement age, the disability benefits received under that plan become retirement or pension benefits and are no longer deductible as disability or survivorship. If you are uncertain of the minimum retirement age under your plan, please contact your plan administrator for this information.
- Temporary wage continuation plans.
- Payments for temporary illnesses or injuries (for example, sick pay provided by an employer or third party).
- Pension payments that another individual was receiving but he/she died and you are now receiving these payments (pension continuation benefits). These amounts are not deductible survivorship benefits.
Social Security and Other Benefits
Deduct the following benefits only to the extent that they are included in your federal adjusted gross income:
- Social Security Benefits
- Tier I and Tier II railroad retirement benefits
- Supplemental railroad retirement benefits
- Dual railroad retirement benefits
- Railroad disability
Interest or Gain from Sales of OH Public Obligations
Deduct interest income earned from Ohio public obligations and Ohio purchase obligations if the interest income was included in your Federal AGI. You may also deduct any gains resulting from the sale or disposition of Ohio public obligations to the extent that the gain was included in your Federal AGI.
Deduct income from providing public services under a contract through an Ohio state project (including highway services) if the income was included in your federal adjusted gross income. You can also deduct income from a certain transfer agreement or an enterprise transferred under that agreement if the income was included in your federal adjusted gross income.
Contributions to College Advantage 529 Savings Plan or Purchases of Tuition Credits
You may deduct purchases of tuition units and contributions to the Ohio Tuition Trust Authority’s CollegeAdvantage 529 Savings Plan, up to $2,000 per beneficiary per year if these amounts do not qualify as a deduction on page 1 of IRS form 1040. Qualifying purchases exceeding the $2,000 limitation may be deducted on future years’ returns, subject to the annual $2,000-per-beneficiary limitation. Married taxpayers may deduct up to a maximum of $2,000 per beneficiary whether their filing status is married filing jointly or married filing separately.
Medical Savings Account for Eligible Expenses
You may be able to deduct the amount of funds you deposited into a medical savings account. If filing a joint return, your spouse may also be able to deduct his/her funds deposited into his/her medical savings account. For 2013 the maximum amount of deposited funds you may be able to deduct is $4,506. If filing a joint return, each spouse can deduct up to $4,507 of funds deposited into his/her account for a maximum joint deduction of $9,012. Any investment income or interest earned on the funds deposited into a medical savings account is also deductible if the income or interest is included in your Federal AGI. Note: You must reduce the amount of this deduction by any amount that you claimed on line 25 of your IRS form 1040.
Military Pay for Ohio Residents While Stationed Outside of Ohio
Ohio Revised Code section 5747.01(A)(24) provides that for taxable years beginning on and after January 1, 2007 an Ohio resident service member can deduct active duty military pay and allowances that are included in Federal AGI if those amounts are received for active duty service while the service member is stationed outside Ohio. Do not deduct any other types of income such as civilian wages, interest, dividends and capital gains.
The term "stationed" refers to an Ohio resident service member’s permanent duty station. Periods of training in which a service member, either individually or as part of a unit, departs from his/her permanent place of duty and then return following the completion of the training is not included in the definition of "stationed".
Military pay and allowances for Ohio resident service members who are stationed inside Ohio will continue to be subject to Ohio Individual income tax. These amounts will also be subject to school district income tax if the service member was domiciled in a taxing school district – even if the service member did not reside in the district at any time during the taxable year.
Income from Neighboring States OR Nonresident Military
Because of reciprocity agreements that Ohio has with the border states of Indiana, Kentucky, West Virginia, Michigan and Pennsylvania, you do not have to file an Ohio income tax return is the following two conditions apply:
- You were a full-year resident of one of these states; AND
- Your only source of income within Ohio was from wages, salaries, tips, or other employee compensation.
If Ohio Income tax was withheld on this income but you meet the two conditions set forth above, you can file an Ohio income tax return to get a full refund. Enter the amount of income from your W-2 box 1 earned in Ohio.
Exceptions: Nonresidents and part-year residents must enter 0 on line 36 if either of the following circumstances applies:
- You were a part-year resident of Ohio or you had additional sources of income from Ohio or do not meet the two conditions mentioned above. If so, you must file an Ohio State income tax return and claim the nonresident/part-year resident credit on Schedule D; OR
- The reciprocal agreements do not apply. These agreements do not apply to you if you own directly or indirectly at least 20% of a pass-through entity having nexus in Ohio.
Nonresident Military Personnel and Their Spouses
The Servicemembers Civil Relief Act of 2003, as amended in 2009, is a federal law that provides that a state cannot consider a servicemember or his/her spouse to be a resident or a nonresident simply because he/she is present in the state - or absent from the state - due to military orders of the servicemember. Additionally, the 2009 amendment to the act provides that the wage and salary income of the nonresident spouse of a servicemember is exempt from the income tax of the state in which the servicemember and spouse are stationed and living, provided that the servicemember and spouse are residents of the same state. This provision does not apply to taxable years prior to 2009.
Military Retirement Income and Military Injury Relief Fund
Taxpayers who retired from service in the active or reserve components of the US Army, Navy, Air Force, Marine Corps, Coast Guard or National Guard can deduct their military retirement income to the extent that income is not otherwise deducted or excluded in computing federal or Ohio AGI.
Taxpayers who served in the military and receive a federal civil service retirement pension are also eligible for a limited deduction if any portion of their federal retirement pay is based on credit for their military service. These retirees can deduct only the amount of their federal retirement pay that is attributable to their military service.
If you are eligible for this limited deduction, refer to your federal civil service retirement benefit handbook to determine the number of years of your military service. Divide the number of years of military service by the total number of years of combined military service and civilian employment with the US Government. Take this fraction and multiply it by the amount of your federal civil service pension you have included on line 1 of this return. The resulting number is the amount of your federal civil service pension that you can deduct.
Qualified Organ Donor Expenses and Contributions to Individual Development Accounts
Deduct up to $10,000 of qualified organ donation expenses you incurred during the taxable year. If your filing status is married filing jointly, each of you can deduct on this line up to $10,000 of qualified organ donation expenses you each incurred during the taxable year. "Qualified organ donation expenses" means unreimbursed travel and lodging expenses that you incur in connection with your donation, to another human being, of your human liver, pancreas, kidney, intestine, lung or any portion of your human bone marrow.
Note: You can claim this deduction only once for all taxable years. If you claim the deduction for this year, you cannot claim this deduction in any subsequent year. If your filing status is married filing jointly and if you and your spouse both claim the deduction for this year, both you and your spouse cannot claim this deduction in any subsequent year. However, if your filing status is married filing jointly but only one spouse claims this deduction for this year, the other spouse can claim the deduction in a subsequent year, regardless of your spouse’s filing status in that subsequent year.
You can also deduct matching contributions that you made to another person's Individual Development Account when the account has been established by a county department of human services.
Federal Targeted Jobs Tax Credit Adjustment
Deduct the amount of employer wage and salary expenses that you did not deduct for Federal Income Tax purposes because you instead claimed the federal targeted jobs tax credit or work opportunity tax credits.
Refunds of Prior Year Federal Itemized Deductions
Deduct refunds or reimbursements of expenses you originally deducted on a prior year IRS income tax return if the following conditions are met:
- The refund or reimbursement was included in your Federal AGI on your current IRS income tax return, form 1040, line 21; AND
- The expense for which you were refunded or reimbursed was deducted as an itemized deduction on Schedule A of a prior year IRS income tax return.
Repayment of Income Reported In a Prior Year
Enter the amount of income that you paid back in a subsequent year if that amount meets the following three requirements:
- For Federal income tax purposes you claimed either (i) an itemized deduction on Schedule A of your current IRS income tax return for the amount repaid OR (ii) a tax credit based upon the amount repaid; AND
- You do not deduct this amount on any other line on your Ohio tax return for this year or any other year; AND
- In the year you received the income, the income did not qualify for either the resident or nonresident/part year resident credits on Schedules C or D on your Ohio income tax return.
Depreciation Expense Adjustment
Deduct 1/5th of the IRS Code sections 168(k) and 179 depreciation adjustments you added back on each of your last five years’ Ohio income tax returns. You can take this deduction even if you no longer directly or indirectly own the asset.
Portion of Certain College Grants Used To Pay Room and Board
Deduct the federally taxable portion of a federal Pell Grant and/or Ohio College Opportunity Grant used to pay room and board.
You qualify for this deduction if you, your spouse or your dependent was a student enrolled in a post-secondary educational institution, used a portion of a Pell Grant and/or an Ohio College Opportunity Grant to pay room and board expenses, and this portion was included in your federal adjusted gross income. The room and board, including meal plans, must have been furnished at the facilities of the educational institution for which the grant was awarded.
See the worksheet on the Ohio website by clicking here.
Ohio National Guard Reimbursement and Benefits
Deduct on line 28 the following amounts, but only if (i) these amounts are in your federal adjusted gross income (Ohio IT 1040, line 1) and (ii) you have not already deducted these amounts elsewhere on Ohio Schedule A:
- Receipt of Ohio Adjutant General authorized Ohio National Guard reimbursement for group life insurance premiums paid; AND
- Receipt of Ohio Adjutant General authorized payment of death benefits received as a beneficiary of an active duty member of the Ohio National Guard who died while performing active duty.
Individual Development Accounts
You can deduct matching contributions that you made to another person's Individual Development Account when the account has been established by a county department of human services. For further information, contact your local county department of human services.
Income Earned By Military Nonresidents
The Servicemembers Civil Relief Act of 2003 , as amended in 2009, is a federal law that provides that a state cannot consider a servicemember or his/her spouse to be a resident or a nonresident simply because he/she is present in the state – or absent from the state – due to military orders of the servicemember. Additionally, the 2009 amendment to the act provides that the wage and salary income of the nonresident spouse of a servicemember is exempt from the income tax of the state in which the servicemember and spouse are stationed and living, provided that the servicemember and spouse are residents of the same state. This provision does not apply to taxable years prior to 2009. Military payroll authorities will generally withhold income tax for the state of legal residence shown on the servicemember's federal DD 2058. A servicemember who had state income tax withheld in error should have the military payroll authorities correct the state of legal residence shown on his/her federal DD 2058. A servicemember's nonresident spouse who had Ohio income tax withheld and who claims exemption under the 2009 amendment to the Servicemembers Civil Relief Act of 2003 should fie an Ohio income tax return claiming a refund.
Military Injury Relief Fund
Enter on this line military injury relief fund amounts that you reported on Ohio IT 1040, line 1 (pulled from federal adjusted gross income). If not included in federal adjusted gross income, then you cannot enter here, those military injury relief fund amounts you received on account of physical injuries or psychological injuries, such as post-traumatic stress disorder, if those injuries are a direct result of military action in Operation Iraqi Freedom or Operation Enduring Freedom. But you must include on Ohio IT 1040, line 1 (pulled from federal adjusted gross income) and Ohio Schedule A, line 27 (Military Injury Relief Fund - Subtractions from Income) any other military injury relief fund amounts you received.
Miscellaneous Federal Deductions
For information about miscellaneous federal tax adjustments, see the Ohio Web site by clicking here.