I live in TX, but have less than $500 taxable income in Ohio where there is a state income tax. It does OH tax on all my income! Anyone know how this can work?

[Hal_Al]

What is the source of your Ohio income?  That is, why do you think it's taxable there?

[Critter · Accepted solution]

If you correctly file a non resident OH return and only allocate the OH income to OH then only the OH income will be taxed in OH. 

[Hal_Al]

It only appears that Ohio is taxing all your 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. Make sure that your non-Ohio wages show TX (Other state postal abbreviation)  in box 15 of your W-2 screen, with the TX amount in box 16. Since TX does not have an income tax, boxes 15-17 may be blank on your actual W-2. But at the W-2 screen, in TT, fill in those boxes.

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

Ohio has a nonresident credit allocation form.. IT NRC

http://www.tax.ohio.gov/portals/0/forms/ohio_individual/individual/2017/PIT_ITNRC.pdf (