Ohio State Tax Non Resident Rental property owner

[Seidelus]

My wife owns a property in Ohio that she rents out.  I have the figure for the rental income she gets from the monthly rental payments.  

When I do the Ohio State taxes it automatically inputs our entire federal income as being taxable in Ohio.

Only the portion she gets from the rental property is what is "made" in Ohio.

We both live in Texas and have for a long time.  Should I still have to report my entire federal income to Ohio?

If not TurboTax is not allowing me to edit that.

[Hal_Al]

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. While in the state section of TurboTax, go to "Forms" then "Form ITNRC p2 PY/NR Income Allocation". This should show you a breakdown of what Income TT is letting Ohio Tax you on. If this doesn't agree with what you think it should be, you'll have to recheck your input screens. In particular check the W-2 screens. Ohio should only tax the amounts that you show in box 16 when you show OH in box 15. Make sure that your non-Ohio wages show TX in box 15 of your w-2 screen, with the TX amount in box 16. For other (non- wage) income, TT will ask you, item by item, in the state section, how much is Ohio or non-Ohio income. Do not enter anything in the box titled “Ohio Compensation”. That box is only for full year residents of reciprocal (neighboring) states. 

[Seidelus]

Thank You for the response!  We did not get a W-2 from anywhere in Ohio so I'm not sure putting anything in boxes 15 and 16 would help.  Her rental property does not qualify as a business or QBI since we did not make a trip to Ohio in the past year and did not spend much time talking with the tenant.  If I add items to lines 15 and 16 it would also require me to file my return by mail as that is what is required when the employer ID number is blank which in this case it would be. 

I wanted to add that the forms I need to look at ended up being form 1 ITNRC pt1 instead of form 2 ITNRC pt2.  Where it states Non-Business Rent and Royalty income, would I put the Gross or Net?

Thoughts?

[Hal_Al · Accepted solution]

Q.  We did not get a W-2 from anywhere in Ohio so I'm not sure putting anything in boxes 15 and 16 would help?

A. It definitely helps.  You need to show that your W-2 income is not Ohio source income. You do this by putting TX in box 15 (W-2 screen) and the box 1 amount in box 16. Use the federal EIN for the state ID.

Q. Her rental property does not qualify as a business or QBI?

A. The rules for Ohio are different than federal. Rental does not qualify for the federal QBI deduction, but it does qualify for the OH BID.

Q. Would I put the Gross or Net?

A. Net, from federal schedule E.

Q. If I add items to lines 15 and 16 it would also require me to file my return by mail as that is what is required when the employer ID number is blank which in this case it would be. 

A. Use the federal EIN for the state ID.  

I 

[Seidelus]

Thank You so much for the advice and the help.  Made things so much easier!