OH State withholding

[globug666]

I live in WA and have been working for a few years for a company based out of OH.  They continue to withhold OH taxes even though I am not a resident there and never physically worked there.  Do I have to pay taxes to the state of OH on those wages?  I am a nonresident of OH.

[Hal_Al]

Q. Do I have to pay taxes to the state of OH on those wages?

A.  No. 

Your employer is doing it wrong.  You should ask them to stop doing that. 

You should file a 2022 nonresident Ohio return, for a refund. You should also file 2019, 2020, and 2021 Ohio returns for refunds. You have until 4-15-23 to file a 2019 return and still get a refund.

Check box 19 of your W-2. If city or school district income tax was mistakenly withheld, you are entitled to a refund of that too.  Contact the city, for instructions, as a special form is usually required.

[SharonD007]

No, you do not have to pay taxes in Ohio, but you must file a non-resident tax return to get a refund. Once you complete your federal tax return, move to the state section where you will see the non-resident tax return for Ohio and the resident tax return for Washington. Make sure that you prepare your non-resident tax return first for Ohio. You should get a refund of the taxes withheld from your paycheck. When you complete your resident tax return for Washington, you may owe if your employer did not withhold taxes for Washington.

Please review the TurboTax Help article How do I file a nonresident state return? for additional information.  You can also review Employer Withholding #8 on the Ohio Department of Taxation website which outlines employer’s responsibilities regarding withholding for employees who live and work in another state.  You can also complete Ohio Form IT 4 Employee's Withholding Exemption Certificate (check you are exempt from Ohio withholding under R.C. 5747.06(A)(1) through (6)) and provide to your Payroll Department so they will stop withholding taxes from your paycheck.

[globug666]

So OH isn't a state that has convenience rules like NY and PA?  I was told it did.

[Hal_Al]

Ohio does not have the convenience of the employer rule. That's New York, Pennsylvania, Nebraska, Delaware and Arkansas. 

During Covid (but not currently), Ohio allowed cities (but not the state) to collect (via employer withholding) tax on remote workers.  That may be the cause of the confusion. 

[globug666]

That doesn't make sense I have OH listed as the state wages if I enter OH and non resident it still makes those wages taxable. I suspect because it is listed as OH in the state box.  The state of WA has no taxes.  I am confused,  It is taxing the wages all to OH and no refund.

[Hal_Al]

@globug666said "I have OH listed as the state wages if I enter OH and non resident it still makes those wages taxable. I suspect because it is listed as OH in the state box. "

Yes. that's what's happening.  You need to use a workaround in TurboTax to get you your refund. At the w-2 screen split the boxes 15-20 W-2 info into 2 lines. On the 1st line leave OH in box 15 but make box 16 blank; leave the OH withholding in box 17. On the 2nd line put your home state abbreviation (WA)in box 15 and the state wages amount in box 16; leave box 17 blank..

Be further advised, 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 WA (Other state postal abbreviation)  in box 15 of your W-2 screen, with the WA amount in box 16.

[globug666]

I read what you had described on the OH page regarding employees who reside in another state and do not physically work in OH(I have never worked in nor physically present in OH, I work 100% from my home in WA)

5 What is an Ohio employer’s responsibility to withhold Ohio income tax for an employee who lives and works in another state?

Employers are not required to withhold Ohio income tax for an employee who lives and works in another state, even if the work is performed for an Ohio company. The employer should consult the laws and rules of the employee’s resident state related to withholding income tax for that state. See R.C. 5747.06.

When I go to R.C.5747.06 it says nothing about employees working in another state and not physically present in OH.  I do to want any issues with the state. It says they must collect taxes.

hen I review the IT-4 instructions again there is nothing one there that says I can be exempt under R.C. 5747.06(A) (1) through(6).

I want to be sure I am doing the correct things.

Can you advise?  My employer is insistent they withhold taxes.

[Hal_Al]

Q. I want to be sure I am doing the correct things. Can you advise?

You could try asking that question directly to ODT (Ohio dept. of Taxation).

https://tax.ohio.gov/help-center/email-us

Please let us know what you're told. 

You say this has been going on for several years.  Did you file OH returns in the past? I earlier suggested you file back year returns for refunds. If you previously filed, you'll need to file amended returns instead.