Gas royalties and RITA

[Cobainian]

I live in OH but own gas wells in WV that I inherited. I have been paying a ton of money on this to RITA and it just doesn’t seem right to me? I file WV taxes as well as OH and pay taxes on my royalties that way, but when I file with RITA I end up owing them a ton of money too. Is this correct? It doesn’t seem right to me that I’d be essentially paying double taxes on the money I make from the wells. 

[DashonnonH]

Hello @Cobainian  

In general, the taxpayer will pay taxes where the money is earned; And must pay taxes where we live (resident state). But there is help. These agencies do not wish to double tax. So you may claim a credit for taxes paid to any state that is not your resident state. The credit will be applied directly to your resident state. This will reduce how much taxes you then have to pay to your resident state. 

RITA, is a method that some Ohio municipalities use to collect taxes. RITA has no authority to levy taxes, and is not responsible for the rates that a municipality set.  Rita are your local taxes and must be paid as well. If you pay you should only pay Rita for your municipality in OH. 

If you pay RITA in WV as well, then you can apply for credit for taxes paid to WV. The credit will be applied to your OH Local taxes. 

Regards, 

Dashonnon

[DashonnonH]

@Cobainian  RITA only collects the LOCAL taxes for your municipality. 

[Opus 17]

You owe income tax in the state where your permanent residence is located (Ohio) on all your world-wide income, including income produced in other states.

You owe state income tax in West Virginia only on WV-source income (the gas wells).  You should be filing a WV non-resident income tax return that only taxes the gas well income.  Then, you claim a credit on your Ohio tax return for the tax you paid to WV, which will partially or completely offset the WV income tax you paid.

RITA is your Ohio city taxes.  Not every Ohio city that levies an income tax is part of RITA, but many are.  Unfortunately, you owe income tax to your Ohio city of permanent residence on all your world-wide income, no matter where it was earned.  That's how you pay for city services and so on where you live.