I split time in OH and SC. All of work is in OH and OH taxes come out of my check, but my primary residence is in SC. I have no income in SC. What state taxes do I pay?

[Bsch4477]

See other replies. 

[AG-SC]

Thanks for the reply, but how do I know if the income was taxable by SC? All of my earnings were in Ohio, and I have a residence there.

[Bsch4477]

See replies above. 

[Opus 17]

Sorry, I believe that answer is wrong.  @TomD8 is a good expert on multi-state issues.

In general, you must file a state tax return in the state where your permanent residence is located, that reports and pays tax on all your world-wide income, regardless of where it was earned or paid. 

If you physically work or live in another state, you owe state income tax where you work, but only for income that is considered "sourced" to that state.  If you physically live or work in OH, you file a non-resident return to the state of Ohio that only reports income earned while physically working in the state.  That means, for example, that your wages are reported on an Ohio non-resident return AND a SC resident return, but bank interest, dividends, investment income, etc. is only reported on your SC return.

SC will also give you a credit to offset taxes you paid to OH for the same income, which reduces the effect of double-taxation.

Maybe SC has a different definition of in-state income, but I doubt it. 

[TomD8 · Accepted solution]

@Opus 17 is correct.  If SC is your primary residence (your domicile in tax terminology), then ALL your income is taxable by SC, regardless of where you earn it.  The fact that your employer failed to withhold SC taxes from your pay does not relieve you from your SC tax obligation.

Other states with an income tax can tax you as a non-resident on income "sourced" to that state, such as earnings from work you perform within that state's borders.

Therefore at tax time you must file both a non-resident Ohio tax return reporting all the income you earned in Ohio, and a resident SC tax return reporting all your income, including that from Ohio.

You'll be able to claim an "other state credit" on your SC return for the taxes you pay to OH on the income taxed by both states.  The credit prevents double taxation, which is prohibited by federal law.

With TurboTax, you should complete the non-resident state tax return before the home state tax return.  The program will then calculate and apply the credit for you.  

[Opus 17]

@AG-SC 

The thing about the state credit is that it can't be more than your state tax would have been on the same income.  For example, Ohio's tax rate appears to be about 3% and SC is 6.4%.  Suppose your wages are $100,000 and other income is $10,000.  Ohio would tax you $3000 on your wages.  SC will tax you $7000 on your wages and other income.  SC will give you a credit of $3000 for the Ohio tax on your wages, so your total taxes to both states will be $7000.  SC will not give you a credit of $6400 (the tax on the wages in SC).  

Note that many cities in Ohio charge city taxes that are not included in Turbotax.  You would have to file a return manually from the city web site.  However, I don't know what the residency requirements are.  You might not owe city tax if your permanent residence is in SC.  But on the other hand, you might owe city tax if you have a "place of abode" that you live in more than half the year, even if it is not your permanent residence.  (A place of abode is a place where you live full time or could live full time, such as a mobile home or apartment or rented house, but not including a trailer, a camp site, or a hotel.). @Hal_Al may be able to tell you more about Ohio city taxes.   

[Hal_Al]

For your situation (not a resident of an Ohio city*), you do not need to be concerned with city income tax, if you are a W-2 employee.  If you work in the city limits of a city with an income tax, your employer is required to withhold the correct amount and remit it to the city.  You cannot (normally) get any of that refunded and you do not need to file a city return. 

Longer explanation. 

Some Ohio Cities have an income tax. Any Ohio city, with an income tax, is allowed to have withholding taken out of your pay while you worked in that city. Your employer is required to do that withholding. You can't get a refund unless it was improperly withheld, i.e. you didn't actually work there for all or part of the time that your employer was withholding.  If you live in a city with an income tax, you are subject to that city's tax as well. The city you live in* will usually allow a credit or partial credit for the withheld tax you paid to the work location city.

235 cities and 331 villages in Ohio have an income tax, including Columbus, Toledo, Cincinnati, and Cleveland.  Ohio law requires a flat rate that cannot exceed 1%, unless it is approved by the voters.  Ohio local income tax rates range from 0.5% to 3% in Parma Heights. Cities only taxed earned income (wages or self-employment), although some also include rental income.

There are 2 state wide agencies that help Ohio Cities collect City Income taxes. One is CCA (Central Collection Agency) and the other, larger one, is RITA (Regional Income Tax Agency). There is a pull down list of cities, in Turbo Tax(TT), for both City Tax Forms (CCA) & RITA. TurboTax can only do RITA & CCA cities.  But many  Ohio cities use neither agency. These cities design their own forms and require you to use them.  You can get paper copies from the individual city. Most are available at the city’s web site. Many cities will prepare the tax return for you, but you have to go to city hall in person. Some may have on line filing (try the city web site). Although they won't usually admit it, some will even accept CCA forms. So you could try filling out a CCA form on TurboTax and mailing it to your city. But, I actually find it easier to fill out a city return by hand or at the city, CCA or RITA web site, than to use TT. Things don't happen automatically and you need to know what you’re doing. The actual  city forms are easier to follow than the TT interview.

TT cannot e-file an Ohio City or RITA return. It must be printed and mailed.

*Since you have a permanent residence somewhere else (South Carolina), any housing you stay in while in Ohio does not count as being a resident of that city, for municipal income tax purposes. 

Ohio also has School District Income Tax (SDIT).  Only residents of a School District (SD) pay that tax. Working in the limits of an SD with a tax does not subject you to SDIT.  If your employer mistakenly withholds SDIT (unlikely), you can file an SD tax return for a refund.