Do I need to report interest income in nonresident state?

[ctsai_2000]

I already reported all bank interests as income in federal and resident state returns.

[ChristinaS · Accepted solution]

Not usually. Most (if not all states) consider interest and other investment/ unearned income to be allocable to your resident state. However, there could be an exception if the interest is related to a business which operates in your nonresident state.

If you are asked to allocate income to the nonresident state, do not allocate the interest unless there is something special about the interest. If there is, you will need to inform us of the state and situation in further detail so we can pass along targeted guidance.

[daniel-j-morton]

Thanks, can you pls clarify what you mean by "However, there could be an exception if the interest is related to a business which operates in your nonresident state." Presumably all investment earned is related to an entity conducting business. I have received a notice from the California Francise Tax Board saying I have California sourced income (I am not California resident). This means then that as an investor I could pay taxes in the state making the dividend/interest payment, then in my resident state then at the federal level? pls advise. thanks.

[matt-hickman]

hi

[jbahnke]

not recent state is ohio resident state is michigan, only income attributable to Ohio is lottery winnings of $3000 that is reported on W2-G

[MonikaK1]

If I understand correctly, you are a Michigan resident, and you received lottery winnings from Ohio that were reported on Form W-2G. You may need to file an Ohio tax return. See this Ohio Department of Taxation webpage for more information.

Every Ohio resident and every part-year resident is subject to the Ohio income tax. Every nonresident having Ohio-sourced income must also file. Examples of Ohio-sourced income include, but are not limited to:

• Wages earned in Ohio;
• Ohio lottery winnings;
• Ohio casino gaming winnings;
• Ohio Sports Gaming Winnings;
• Income or gain from Ohio property;
• Income or gain from a sole proprietorship doing business in Ohio; AND
• Income or gain from a pass-through entity doing business in Ohio.

You do not have to file an Ohio income tax return if ...

• Your Ohio adjusted gross income (line 3) is less than or equal to $0.
• The total of your senior citizen credit, lump sum distribution credit and joint filing credit (Ohio Schedule of Credits, lines 4, 5 and 12) is equal to or exceeds your income tax liability (Ohio IT 1040, line 8c) and you are not liable for school district income tax.
• Your exemption amount (Ohio IT 1040, line 4) is the same as or more than your Ohio adjusted gross income (line 3) and you have no amounts on your Schedule of Adjustments.

However, even if you meet one of these exceptions, if you have a school district income tax liability (SD 100, line 2), you are required to file the Ohio IT 1040.

NOTE: If your federal adjusted gross income is greater than $28,450, the Department of Taxation recommends that you file an Ohio IT 1040 or IT 10, even if you do not owe any tax, to avoid delinquency billings.

@jbahnke