Help with Ohio return

[Jan S]

A long time client of mine retired from Ford (in Michigan) and moved to Ohio on 9/1/07 with his wife. I have read the Ohio instructions and I show that he will owe $806 on his retirement income. Can you tell me if this is correct?

His only Ohio income is $18,682 in Ford pension.

Here are the Ohio figures.

Federal AGI = $167,252 (the client emptied his 401k of $101,000 in addition to his wages). The Michigan portion is $148,750.
Personal exemption=$2,900
Line 6 Tax=$7,907
Retirement credit=$200
Line 8 tax=$7,707
Exemption credit=$40
Line 10=$7,667
Line 11=$383
Line 12=$7,284
Line 13=$6,478 148,750/167,252 x 7,284
Line 14=$806

Michigan doesn't tax pensions. I guess that Ohio does. When I redid his Ohio return showing only the $18,682 of pension money, he only owes $12. Am I missing something?

Thanks for your help.

Jan

[David1980]

I'm curious how it works out that his only Ohio income was the Ford pension.

Did he live in Ohio part of the year? Or is this a non-resident of Ohio? (Was the pension amounts from ford received while living in Ohio or while living outside of Ohio?)

moved to Ohio on 9/1/07

Guess it helps if I read it all....

Yes, that sounds right. The reason it's giving more tax than the $12 when you figure it with pension alone is he's in a much higher tax bracket with all the income. With $167k of total income for the year he'll pay a much higher percentage of income tax to Ohio than if his total income from the year was $19k from all sources. (Ohio also prorates the exemptions/deductions based on percentage of Ohio income to total income so those reductions to taxable income are smaller. That is, they give the full amount but then calculate tax "as if" resident and multiply tax by percentage of income from Ohio sources effectively giving them only a percentage of the exemption/deductions.)

So they're taxing the same amount of taxable income in Ohio, but at higher rate.

[S T]

Also

Curious,

What income did he receive while an Ohio Resident. Can you break that down for us?

Particulary the retirement since Michigan did not tax retirement. I think you have to pro-rate, the retirement income amount times # of months - receipt of retirement in Ohio.

What other income did t/p receive after becoming a resident of Ohio?

Sandy

[Jan S]

He retired from Ford in August 2007. When he moved to Ohio in September his only income was the retirement money. He didn't receive any retirement money while a resident of Michigan. Total Ohio income=pension=$18,682.

I'm guessing that it doesn't make a difference that his pension is coming from work he performed in Michigan.

He is now a resident of Ohio. He is not planning on coming back to MI. After reviewing the Ohio tax brackets I realize that they use a graduated system. Michigan has a flat tax.

[Peachie]

Wouldn't he be considered

<<<<<He retired from Ford in August 2007. When he moved to Ohio in September his only income was the retirement money. He didn't receive any retirement money while a resident of Michigan. Total Ohio income=pension=$18,682.

I'm guessing that it doesn't make a difference that his pension is coming from work he performed in Michigan.

He is now a resident of Ohio. He is not planning on coming back to MI. After reviewing the Ohio tax brackets I realize that they use a graduated system. Michigan has a flat tax>>>

A partyear resident of OH for tax purposes with only the income he received while an OH resident being taxed? Does your software prorate the amounts? I would think he only owes taxes on the $18,862 income after deducts he's entitled to. He was only a resident 1/4 of the year--seems taxing his pension at 100% is steep. Do I read the facts correctly?

Peachie

[MRTAX4EA]

David1980 Is Correct

A P/Y resident of OH is taxed at the highest rate considering the total taxable income for the year.

If the T/P is over 65 there is an additional $50 credit.