Ohio Nonresident Credit

[carrie313]

My husband and I live in PA but because he is a student, he still maintains OH residency. In years past, the individual who did our taxes was able to get us the nonresident credit (for OH). However, I cannot figure out how to make that happen. When I view our 2020 return, line 26 only has one income and line 27 is both. For the past two years, both line 26 and 27 have been the same. How do I make sure they are the same?? 

[LenaH]

Some clarification is needed here to correctly answer your question:

1. Where do you earn your income? The nonresident credit for out of state taxes paid would not exist for wages paid in PA since Ohio and Pennsylvania have a reciprocity agreement. 
2. Does your husband attend school in Ohio and is technically a Ohio resident? Per the State of Ohio, an individual who is attending college out of state does not intend to abandon their domicile and permanently reside at the location of their college. Thus, students attending college out of state generally are residents of their home state. However, if you obtained a driver’s license, obtained in-state tuition, and/or registered to vote in the state where you attend college, then you have likely abandoned your domicile in your home state.
3. Do you intend to stay in PA? 
4. What state tax forms were filed last year? 

[carrie313]

1. I earned all of my income in PA. 

2. My husband still carries an OH drivers license but attends school in PA. He is also a graduate student and his graduate student stipend is the income that he earned.

3. We have not decided where we will end up, it will depend on jobs.

4. We filed both PA and OH forms for 2019 and 2018. We were told that his income could not be taxed by PA since it is a student stipend. And we could not be taxed by OH because it was earned in PA.

[LenaH · Accepted solution]

You should continue to file a Pennsylvania resident return. However, if your employer mistakenly withheld Ohio state tax, then you would need to file a non-resident return with Ohio as well. Otherwise, you did not mention any other reason to file a nonresident Ohio return. 

Pennsylvania and Ohio are in a reciprocal agreement. This means that all salaries,

wages, tips, and commissions earned in Ohio by an Pennsylvania resident must be reported as if they were earned in Pennsylvania. 

Under a reciprocal agreement, you cannot take credit on one state return for taxes paid to another. Rather, you would get a refund from Ohio and pay tax to Pennsylvania. This does not qualify for the Ohio Nonresident Credit. 

@carrie313