Ohio Tax military credit

timbiehle · ‎February 24, 2020

I am an Ohio permanent resident, and active-duty stationed in Texas.

On the Ohio IT 1040, I checked that I am a Full-Time Resident of Ohio.

I entered my W2 military pay on Schedule A, Line 26 which is for 'Military pay received by Ohio residents while stationed outside Ohio'.

I am getting an error message that says:

"Schedule A, Line 26: Military pay received by Ohio residents should be blank. You indicated that you are a Nonresident of Ohio. You cannot claim the Military deduction that is allowed for a full-time Ohio resident."

Is this an programming error in TurboTax or am I doing something wrong?

Please advise what I need to do.

timbiehle · ‎February 26, 2020

This issue is definitely a Turbo-Tax programming error within the Ohio part of the TurboTax Premium program.

The problem occurs when filing jointly and the primary person (the member of the Military) is an Ohio Resident stationed outside of Ohio, but the spouse is a resident of another state.

In our case, I am an Ohio Resident stationed in Texas and my spouse is a Texas resident.

Ohio does not tax military pay received by Ohio residents while stationed outside Ohio.

Apparently TurboTax is erroneously overriding my status to Non-Resident (my spouse's status), and consequently disallows deducting my Texas earnings from Ohio Income.

This even occurs if the spouse had no earnings. I tested this by temporarily deleting her W2's.

The error disappears if I change the spouse status to be an Ohio resident. I tested this.

I will be submitting my Ohio return via US Mail, and thereby by-passing the TurboTax error message. This will enable our Ohio Taxes to be ZERO for our joint return. ZERO tax for me since I am Military stationed outside Ohio, and ZERO tax for my spouse because she is a Texas resident and her Texas earnings are not taxable by Ohio (and also ZERO in Texas since Texas doesn't have a state income tax.)

!!! I called the Ohio Tax division today and they confirmed that I am handling this correctly, and that the TurboTax error message is erroneous.

REQUEST: Could one of you please escalate this TurboTax programming issue to the attention to your technical experts so that it can be corrected and a TurboTax update issued. I need to avoid my fellow military members from encountering this TurboTax issue and wasting hours trying to figure this out and potentially paying Taxes that is not their liability.

View solution in original post

Hal_Al · ‎February 24, 2020

Try this: Go back to the personal info section and indicated that you were a full year resident of Ohio. Do not say you lived in any other state or earned income in any other state.

DawnC · ‎February 24, 2020

Check that in the personal info section, you have indicated your resident state as OH. Texas should be your mailing address only. Then go back through the state section and make sure you are starting out with an OH resident return.

It sounds like your personal information is not correct on the Federal return, and because of that, TurboTax is generating the wrong form for OH. To verify this, click on My Info in the left side menu and after entering your Texas address, mark the Military box and choose OH as your resident state. This should fix your state return. The first question in the state return should verify the type of return (resident vs. non-resident) you are filing there.

And thank you for your service!

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DawnC · ‎February 24, 2020

Your My Info section should look like this -

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JCWestbrook99 · ‎February 24, 2020

I am having the same issue as the OP. Under "My Info" I clicked I am a member of the Armed Forces. In section 2 of the "My Info" page, it asks for the state of residency and I clicked Ohio. A few windows forward, it asks me where I was stationed and that is US territory from Jan 2019-June 2019 and NC from June 2019 to current. It asks for my current mailing address and I have put our NC mailing address and a family member's mailing address in OH. Neither of them have fixed the error. On the state tax section I am claiming full residency. It asks to confirm the Ohio mailing address but my mailing address is in NC. It takes me to "Here's the Income Ohio handles differently" "Military stationed outside of Ohio" and it shows my earning for 2019. I don't have any other deductions or credits so I press "Done with Income". I click "Done with credits and taxes" because they don't apply. I bypass another page that doesn't apply to me. I get to the page where I click 'Let's Check it over". It comes back with "We have found one item on your Ohio return where we will need you to review your entry". I click "Fix Return". The next window shows this error:

Schedule A: Line 26 Military pay received by OH residents should be blank. You indicated that you are a Nonresident of Ohio. You cannot claim the Military deduction that is allowed for a full-year Ohio resident. You can take the "Compensation earned by nonresident military servicemembers" deduction. You may need to return to the Income Interview Topic to correct.

I zero out the amount on Line 26 and I watch my Ohio return amount go down by $2300. I should be receiving all the state return money back, not partial. So, I try to find the Income Interview Topic. I end up going to the Ohio Return Income section. There's nothing on there pertaining to military.

I start my Ohio return all over again and click "Go over Ohio again."

Residency Status: Yes

County: Franklin

School District: Grandview Hts

Confirm Oh address: lists NC mailing address (I've tried it with the OH address and it still didn't work)

Military Stationed Outside of Ohio....entered dollar amount

Click done with Income

I click through the other categories that don't apply and it comes up with the same error for Schedule A: Line 26.

Please tell me this a bug that is being worked out?

timbiehle · ‎February 24, 2020

Yep, that is the same problem I have.

DaveF1006 · ‎February 24, 2020

Try this. if Ohio is your HOR, Home of Record state then go to MY INFO and answer these military questions

I am a member or former member of the U.S. Armed Forces (active, reserve or National Guard).

Yes

No

Thank you for your service.

2. Tell us the state(s) you lived in

State of residence (on December 31, 2019) Learn more
Indicate OHIO Even though you did not live in Ohio, Ohio is your still your official state of residence.

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timbiehle · ‎February 24, 2020

Dawn, I did everything you suggested, and am still getting the error message.

By the way, I am filing a joint return but my spouse is a Full-Time resident of Texas and employed there.

Ohio tax code says I shouldn't pay Ohio state income tax on wages earned while stationed in another state.

If I don't enter my military pay (that was earned in Texas) on the Ohio Schedule A Line 38, then it doesn't reduce my taxable Ohio wages by the amount earned in Texas, and TurboTax wants me to pay Ohio a bundle. That is wrong.

And, if I show my spouse as a Ohio resident, then TurboTax says we need to pay Ohio tax on her earnings. Wrong again.

It sure look to me that TurboTax has a programming issue and that I shouldn't be receiving the error message.

I will be calling the Ohio State Tax Department tomorrow to see if they can shed some light on this.

DMarkM1 · ‎February 25, 2020

it appears since you and your spouse have different resident states and are filing jointly then the OH forms do not recognize this situation. if one of you is non-resident and you are filing jointly then only the non-resident deductions/credits are available to you.

Did you have anything withheld from your military pay by OH?

Did you have any other income that you are reporting to OH?

If no, to both questions, change your resident state to TX since you live there. TX has no state income tax and only file your federal joint return.

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timbiehle · ‎February 26, 2020