OhioIRS Tax Liaison Forum

1
Ohio/IRS Tax LiaisonForum

• Update Ohio State and School District Income
  Taxes July 27, 2006

2

3
Update Ohio State and School District
Income Taxes

• QUESTIONS?

4

Update Ohio State and
School District Income Taxes

• Filing Statistics

5

Update Ohio State and
School District Income Taxes

• Approximately 3 million taxpayers have
  electronically filed the year 2005 Ohio income
  tax return

6

Update Ohio State and
School District Income Taxes

• Approximately 3 million taxpayers have
  electronically filed the year 2005 Ohio income
  tax return (11 increase over last year).

7

Update Ohio State and
School District Income Taxes

• Approximately 3 million taxpayers have
  electronically filed the year 2005 Ohio income
  tax return (11 increase over last year).
• 5,288,888 total Ohio income tax returns
  (electronic and paper) filed as of July 26, 2006.
  

8

Update Ohio State and
School District Income Taxes

• Approximately 3 million taxpayers have
  electronically filed the year 2005 Ohio income
  tax return (11 increase over last year).
• 5,288,888 total Ohio income tax returns
  (electronic and paper) filed as of July 26, 2006.
  So, about 60 have filed electronically.

9

Update Ohio State and
School District Income Taxes

• For taxable year 2004 __ of the taxpayers
  paid 82 of the Ohio income tax.

10

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.

11

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• For that year these taxpayers had federal AGI
  of _____ or more.

12

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• For that year these taxpayers had federal AGI
  of 50,000 or more.

13

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• For that year these taxpayers had federal AGI
  of 50,000 or more.
• Total 2004 tax was ___ billion

14

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• For that year these taxpayers had federal AGI
  of 50,000 or more.
• Total 2004 tax was 8.8 billion

15

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• For that year these taxpayers had federal AGI
  of 50,000 or more.
• Total 2004 tax was 8.8 billion so, these 30
  paid in 7.2 billion (82 of 8.8 billion).

16

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• The remaining 70 had federal adjusted gross
  income of less than 50,000 with an average
  federal AGI of ______.

17

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• The remaining 70 had federal adjusted gross
  income of less than 50,000 with an average
  federal AGI of 21,888.

18

Update Ohio State and
School District Income Taxes

• For taxable year 2004 30 of the taxpayers
  paid 82 of the Ohio income tax.
• The remaining 70 had federal adjusted gross
  income of less than 50,000 with an average
  federal AGI of 21,888.Note that MFS filers
  and college student filers skew downwards the
  21,888 average.

19

Update Ohio State and
School District Income Taxes

• Progressive income taxation

20

Update Ohio State and
School District Income Taxes

• Progressive income taxationIf income doubles
  from 10,000 to 20,000, Ohio income tax
  increases four-fold (from 102 to 408).

21

Update Ohio State and
School District Income Taxes

• Progressive income taxationIf income doubles
  from 10,000 to 20,000, Ohio income tax
  increases four-fold (from 102 to 408).
• If income doubles from 20,000 to 40,000,
  Ohio income tax increases three-fold (from 408
  to 1,225).

22

Update Ohio State and
School District Income Taxes

• Progressive income taxationIf income doubles
  from 10,000 to 20,000, Ohio income tax
  increases four-fold (from 102 to 408).
• If income doubles from 20,000 to 40,000,
  Ohio income tax increases three-fold (from 408
  to 1,225).
• If income doubles from 100,000 to 200,000,
  Ohio income tax increases 2.5 times (from 4,219
  to 10,539).

23

Update Ohio State and
School District Income Taxes

• (End of discussion of statistics)

24

Update Ohio State and
School District Income Taxes

• Ohio resident tax credit and division (B)(4)
  of Ohio Revised Code section 5747.05

25

Update Ohio State and
School District Income Taxes

• Ohio resident tax credit and division (B)(4)
  of Ohio Revised Code section 5747.05 (effective
  June, 2005 and amended March, 2006)

26

Update Ohio State and
School District Income Taxes

• Ohio resident tax credit and division (B)(4)
  of Ohio Revised Code section 5747.05 (effective
  June, 2005 and amended March, 2006)
• No credit shall be allowed under division (B)
  of this section for income tax paid or accrued to
  another state or to the district of Columbia if

27

Update Ohio State and
School District Income Taxes

• Ohio resident tax credit and division (B)(4)
  of Ohio Revised Code section 5747.05 (effective
  June, 2005 and amended March, 2006)
• No credit shall be allowed under division (B)
  of this section for income tax paid or accrued to
  another state or to the district of Columbia if
  the taxpayer, when computing federal adjusted
  gross income, has directly or indirectly deducted
  or was required to directly or indirectly deduct,
  the amount of that income tax.

28

Update Ohio State and
School District Income Taxes

• Ohio resident tax credit and division (B)(4)
  of Ohio Revised Code section 5747.05 (effective
  June, 2005 and amended March, 2006)
  and
• March, 2006 information release.

29

30

Update Ohio State and
School District Income Taxes

• Year 2006 Return Changes

31

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesDependency
  exemption 1,400.

32

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesDependency
  exemption 1,400.MSA amount ___.

33

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesTax rates

34

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesTax rates
  another 4.2 reduction from year 2004 rates

35

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesTax rates
  another 4.2 reduction from year 2004 rates (so,
  total reduction of 8.4).

36

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesCredit if line
  5 -- Ohio taxable income -- is no more than
  10,000

37

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesCredit if line
  5 -- Ohio taxable income -- is no more than
  10,000 102 (year 2005 107).

38

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesTuition expense
  deduction no longer available.

39

Update Ohio State and
School District Income Taxes

• Year 2006 Return Changes Deduction
  available for certain Ohio National Guard
  benefits

40

Update Ohio State and
School District Income Taxes

• Year 2006 Return Changes Deduction
  available for certain Ohio National Guard
  benefitsReceipt of Ohio Adjutant General-
  authorized reimbursement for certain group life
  insurance premiums paid, and

41

Update Ohio State and
School District Income Taxes

• Year 2006 Return Changes Deduction
  available for certain Ohio National Guard
  benefitsReceipt of Ohio Adjutant General-
  authorized payment of death benefits received as
  a beneficiary of an active duty member of the ONG
  while performing active duty.

42

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns not just ODT form IT 1040.

43

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ

44

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ, SD-100,

45

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ, SD-100,
• SD 100E,

46

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ, SD-100,
• SD 100E, IT 4708,

47

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ, SD-100,
• SD 100E, IT 4708, IT 1140,

48

Update Ohio State and
School District Income Taxes

• Year 2006 Return ChangesThe taxpayer
  must compute interest penalty on all income tax
  returns IT 1040EZ, SD-100,
• SD 100E, IT 4708, IT 1140, and IT 1041.

49

Update Ohio State and
School District Income Taxes

• Year 2006 SDIT Changes

50

Update Ohio State and
School District Income Taxes

• Year 2006 SDIT Changes
• Circleville SDIT is levied only on IRS
  Schedule SE income and wages.

51

Update Ohio State and
School District Income Taxes

• Year 2006 SDIT Changes
• Circleville SDIT is levied only on IRS
  Schedule SE income and wages.
• So, no Circleville SDIT on rental income,
  retirement benefits, lottery winnings, IRS
  Schedule B income, capital gains, etc.

52

Update Ohio State and
School District Income Taxes

• Year 2006 SDIT Changes
• Circleville SDIT is levied only on IRS
  Schedule SE income and wages with no
  deductions.

53

Update Ohio State and
School District Income Taxes

• Year 2006 SDIT Changes
• Circleville SDIT is levied only on IRS
  Schedule SE income and wages with no
  deductions.
• So, no deduction for alimony paid, IRS
  Schedule SE tax paid, IRA Keogh contributions,
  capital losses, etc.

54

Update Ohio State and
School District Income Taxes

• Year 2007 SDIT Possible
  Changes
• August, 06 ballot four school districts have
  on the ballot the traditional base income tax
  issue.

55

Update Ohio State and
School District Income Taxes

• Year 2007 SDIT Possible
  Changes
• November, 06 ballot at least two school
  districts have on the ballot the alternative
  base income tax issue.

56
Update Ohio State and School District
Income Taxes

• QUESTIONS?