General Information for the Ohio IT 1040
Who Must File an Ohio Income Tax Return?
Every Ohio resident and every part-year resident is
subject to the Ohio income tax. Every nonresident
having Ohio-sourced income must also le. Examples
of Ohio-sourced income include the following:
● Wages or other compensation earned in Ohio (see
"Exception" below);
● Ohio lottery, casino, and/or sports gaming winnings;
● Income or gain from Ohio property;
● Income or gain from a sole proprietorship doing
business in Ohio;
● Income or gain from a pass-through entity doing
business in Ohio.
Exception: A full-year nonresident living in Indiana,
Kentucky, Michigan, Pennsylvania, or West Virginia
does not have to le if the nonresident's only Ohio-
sourced income is wages.
Example: Charley lives in Kentucky but commutes to
Cincinnati every day to her job. Charley's wages are
not taxable in Ohio even though they are earned here.
You do not have to le an Ohio income tax return if:
● Your Ohio adjusted gross income (Ohio IT 1040, line
3) is less than or equal to $0;
● The total of your senior citizen credit, lump sum dis-
tribution credit, and joint ling 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; OR
● Your exemption amount (Ohio IT 1040, line 4) is the
same as or more than your Ohio adjusted gross in-
come (Ohio IT 1040, line 3).
However, even if you meet one of these exceptions, if
you have a school district income tax liability (SD 100,
line 26 or 38), you are required to le the Ohio IT 1040.
Note: If your federal adjusted gross income is
greater than $28,450, the Department recommends
that you file an Ohio IT 1040 or IT 10, even if you
do not owe any tax, to avoid delinquency billings.
Ohio IT 10: Certain taxpayers can le Ohio form IT 10
instead of the Ohio IT 1040. The four types of taxpayers
described on form IT 10 are eligible to le the form if:
2023 Ohio IT 1040
12
Royalty Income: Hannah works full-time from
her home writing children’s books. Hannah has an
agreement with a publisher that pays her a royalty
for each copy of her book that is sold. Hannah is in
the trade or business of writing books. Therefore, her
royalty income is business income.
Mineral Rights Income: Cynthia allows a company
to extract minerals from her residential property. She
receives income based on the company's usage of her
land. Since Cynthia is not engaged in a related trade or
business, it is not business income.
Pass-Through Income: Ellen owns 15% of a pass-
through entity. She reports $50,000 of ordinary
income, $10,000 of bonus depreciation, and $60,000
of guaranteed payments on federal Schedule E. Since
Ellen owns less than 20% of the entity, the guaranteed
payments are nonbusiness income. Thus, her net
business income from federal Schedule E is $40,000
(her ordinary income less bonus depreciation).
Guaranteed Payments: Stan owns 25% of a pass-
through entity. He reports a $60,000 guaranteed
payment on federal Schedule E. Because he owns at
least 20% of the entity, the guaranteed payment is
business income.
Wages/Compensation: Jim owns 80% of an S
corporation. Jim receives $200,000 of wages from the
S corporation, which are reported on a W-2. Because
he owns at least 20% of the corporation, the wages are
reclassied as business income.
Trust Income: Brett sets up a trust, with himself as
the beneciary, that invests in multiple pass-through
entities. Operating income from these entities is
distributed to the trust, which further distributes the
income to Brett. Since the income was business income
to the entities, it retains its character as business
income as it passes through to the trust and to Brett.
Trust Income: David sets up a trust, with himself as the
beneciary, to hold his personal investments. Although
David uses a trust, the usage of a trust does not create
a trade or business. Therefore, the investment income
is nonbusiness income to both the trust and to David.