Florida LLC Being Made to Pay Ohio Taxes

[JerT]

We moved to Florida in June 2019 from Ohio and started an LLC in Florida. We also had an LLC in Ohio which we dissolved. I have completed our taxes in TurboTax Home & Business 2019 but it seems that TurboTax wants to treat our Florida LLC taxes as income on our Ohio State return. I have entered start dates for the Florida LLC and understand that income under the Ohio LLC would be taxable, but would the Florida LLC have to also pay taxes in Ohio? We moved on June 25, 2019. Each LLC has their own 1099. I am not thinking the Florida LLC income should be included in the Ohio return but I can't figure out any way to split it out.

[ColeenD3]

I am just going to brainstorm. 

• Did you file two separate Schedules C?
• Did you indicate the correct addresses on each if you did?
• You can try to delete the FL Sch C and then once you are sure it is removed from OH, redo it.

[JerT]

Thanks for the reply. Here are my answers to each.

• Did you file two separate Schedules C?
  • Yes, each LLC has a separate Sch C. Actually since the Florida LLC is owned by both my wife and myself, TurboTax forced me to enter each of us as a separate Sch C and split income and expenses between each of us.
• Did you indicate the correct addresses on each if you did?
  • Yes, the address on each Sch C correctly matches the registration of the LLC.
• You can try to delete the FL Sch C and then once you are sure it is removed from OH, redo it.
  • Not sure what you mean here. Only enter the Ohio Sch C then prepare our Ohio return then go back and enter the Florida LLC Sch Cs and finish preparing our federal return?

[ColeenD3]

Not sure what you mean here. Only enter the Ohio Sch C then prepare our Ohio return then go back and enter the Florida LLC Sch Cs and finish preparing our federal return?

Yes, that is what I meant.

[Hal_Al]

It only appears that Ohio is taxing your Florida income.  Ohio does a convoluted tax calculation for non-residents/part year residents. It calculates tax on total income, then it calculates a non resident/part year resident credit, which it subtracts from the tax it calculated on the total income. The credit is calculated as your non-Ohio income divided by Total adjusted Income multiplied by the total tax. TurboTax (TT)   does this by allocating your income as either Ohio or non-Ohio. W-2 income will be allocated by the state name abbreviation shown in box 15 of your W-2*. TT will ask you, item by item, in the state section, how much of your other income is Ohio or non-Ohio income. Ohio has a nonresident credit allocation form, IT NRC, to allow  you to review the details.

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

*Make sure that your non-Ohio wages show FL (Other state postal abbreviation)  in box 15 of your W-2 screen, with the FL amount in box 16.

Since FL does not have an income tax, boxes 15-17 may be blank on your actual W-2. At the W-2 screen, in TT, enter FL in box 15. Put the box 1 amount in box 16 and  0 in box 17.

[Hal_Al]

Ohio also has a Business Income Deduction (BID).  100% of your Schedule C income is deductible, up to $250,000. 

[JerT]

Perhaps that is what is happening. I took some of the prior advice and noticed no change in our Ohio tax refund amount. So I suspect I won't worry about trying to split out the FL business income. It won't be an issue next year since we will be full year Florida residents.