Allocating income to Ohio as a nonresident

[uschles]

Hello,

I provided consulting services to a company in Ohio. I received 1099-NEC income. I live in New Jersey. I looked online and saw that I needed to file state taxes in Ohio. However, one of the questions is "Enter the portion of the following income that was allocable to Ohio"? I'm not sure whether it should be $0 (since I live in NJ and never even been to Ohio) or the full amount I received from Ohio.

Would be grateful for any help.

Thanks

[uschles]

Hello.. hoping someone would know the answer to this.

[DianeW777]

It depends.  Based on your information and the Ohio (OH) filing requirements it would seem you do not need to file an OH return. If you business is not physically located in OH, then you are not required to file the OH tax return.

Every Ohio resident and every part-year resident is subject to the Ohio income tax. Every nonresident having Ohio-sourced income must also file. 

Examples of Ohio-sourced income include, but are not limited to:

• Wages earned in Ohio;
• Ohio lottery winnings;
• Ohio casino gaming winnings;
• Ohio Sports Gaming Winnings;
• Income or gain from Ohio property;
• Income or gain from a sole proprietorship doing business in Ohio (business is not physically located inside of OH); AND
• Income or gain from a pass-through entity doing business in Ohio.

@uschles 

[uschles]

Thanks for the response!
So it sounds like

• Because I'm getting some income from Ohio, despite being a nonresident, I still need to file Ohio tax return.
• However, because I'm physically not in Ohio (and never travelled there for this work), then the income should be attributed to my state, New Jersey.

Am I correct?

[DianeW777]

No, you do not need to file the Ohio (OH) tax return because your business is not situated inside of OH.  The fact that you have customers from OH does not mean you have OH source income.

@uschles 

[uschles]

Thank you, this makes sense.

[uschles]

Wait - in the above details you shared it says

"Income or gain from a sole proprietorship doing business in Ohio (business is not physically located inside of OH); AND"

While my work is not in Ohio, I have gotten paid by a company that is based in Ohio. Does this not mean that the income is Ohio based? I'm really confused.

Thanks again

[DianeW777]

No, it does not mean your work is Ohio based.  

In other words, if your business is not physically located inside the borders of OH, and you were not physically present in OH while you performed your work as a sole proprietor, consultant independent contractor, you are not required to file a return in OH. 

A permanent remote worker will file their personal income taxes in their state of residence, whether they are a W-2 employee or a 1099-NEC independent contractor.

@uschles 

[uschles]

Thank you! I understand.

I do have one technical questions: I've already gotten the Ohio module for TurboTax. How do I not use it then?

[LeticiaF1]

If you are using TurboTax Online:

1. Sign in and open a section of your return.
2. From the menu, select State and then select Continue on the Let's get your state taxes done right screen.
3. On the Status of your state returns screen, select Start Over next to your state, then answer Yes.
4. If you've already paid your TurboTax state fees you can't delete your state return, but you can Start Over, and simply choose to not file the return when you get to the end of the return.  

If you are using TurboTax Desktop:

1. With your return open in TurboTax, switch to Forms Mode by selecting the Forms icon.
2. From the File menu, choose Remove State Return. (This won't delete your state program, just the state tax return).
3. Select the return you want to delete and select Remove. Choose Yes to confirm.

@uschles 

.

[uschles]

Thank you!