Yes, and you must include it on your resident tax return as well. Many states have what is called 'reciprocity'. In your situation it would apply to Ohio, however it applies to wages, not self employment. Since your income is self employment, or business income, then the net profit is taxed to Ohio and West Virginia. This allows you to use the credit for taxes paid to another state on your resident return for the tax you pay to the nonresident state where the income is also being taxed.
Per Ohio: Do not include any Ohio sourced business income for reciprocity. OH Instructions Form 1040-OH page 20.
Once your federal return is complete follow the instructions below.
State Returns - Assumes both states require income tax returns to be filed: Prepare the nonresident state first.
- Report the sale in the state where the property resides.
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
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