I paid $2417 onmy WV non-resident state tax return for 2018. But Ohio only gave me credit for $1199 onmy 2018 resident return. Why didn't Ohio give methe full credit?

[Hal_Al · Accepted solution]

It is not unusual to only get a partial credit, if the WV tax rate is lower than the OH rate. Look at the Ohio Schedule of Credits. Are the amounts on lines 28-32 correct? Note that your credit is the lesser of line 30 (the ratio of your WV income to you total income) or line 31 (the actual tax paid to WV. 

This system allows Ohio to apply their highest tax rate, based on your total income, while only taxing your Ohio income.

That said, the calculation may not be right, for you. OH & WV are "reciprocal" states.  What is your situation? Are you an OH resident who worked in WV? If so, did you work for W-2 wages or as a self employed person? Were you a part year resident of both states? If so, where did you move from and to?  Something Else, e.g. you rental income from WV?

[OhioIBM]

This WV income is oil and gas income.  It is not W2 income.  so I must report this income twice, on the WV return, and the Ohio return?  The Ohio return provides a credit for WV tax paid, but if Ohio's tax rate is greater, I pay the Ohio tax rate even though the income was not earned in Ohio?

[Hal_Al]

Yes, you must report the income of both returns and pay the higher OH rate, since you are an OH resident. Residents pay tax on all their income, regardless of where earned. That's not just OHio, it works that way everywhere.

[OhioIBM]

Additionally, if I must report the WV income on my Ohio return, does it qualify for the Ohio Business Income Deduction?  The Ohio FAQs are not clear fi the income is considered passive income for a sole proprietor, or if it is considered a royalty and does not qualify.  Turbo Tax clearly states the income does qualify, which could conflict with Ohio's definition.

[OhioIBM]

Unfortunately, nowhere is there any specific documented example of how an Ohio resident enters state tax data for WV earned oil and gas royalty

[Hal_Al]

I don't know for sure, either.  My feeling is only royalty income and does not qualify for  the deduction