Kevin Kroskey lives in Bath Township and has been a southwest Florida snowbird since 2014. Kevin has written “The Ohioan’s Guide To Snowbirding in Florida.” To obtain a free copy, visit truewealthdesign.com/contact.
For many Ohioan’s snowbirding in Florida, the avoidance of Ohio state income tax is a key opportunity to capitalize upon. This article describes important do’s and don’ts to realize this tax benefit.
Domicile
An Ohio resident must pay Ohio income tax on worldwide income less credits for taxes paid in other jurisdictions. A nonresident only pays Ohio income tax on income earned or received in Ohio. Under Ohio law, an individual is a “resident” for Ohio income tax purposes if he or she is “domiciled” in Ohio. So, what constitutes domicile?
Your domicile is your home in the state you consider your permanent place of residence. If you aren’t living there right now, then it’s the place to which you intend to return and make your home indefinitely. You can have more than one residence, but only one domicile.
Domicile and intent are subjective. Through court cases, items such as days spent at your residence(s), voter registration, driver license registration, or the address you put on your tax returns were items used to support the intent of your domicile.
Thankfully, Ohio has made the subjective more objective.
Contact Period
It is often incorrectly stated that if someone lives outside of Ohio for six months, then they are a nonresident for income tax purposes. This was never correct, and exactness matters here.
In 2015, Ohio Governor John Kasich signed legislation that increased the number of contact periods in Ohio from 182 to 212. A “contact period” is essentially an overnight stay in Ohio.
Suppose you flew into CAK in the morning and visited your grandchildren for the day. After dinner, you drove to Pittsburgh and stayed overnight with your other child. Even though you were in Ohio, you had no contact period with Ohio.
If you go over the allotted contact periods, you are presumed to be domiciled in Ohio. However, you may rebut this assumption with clear and convincing evidence to the contrary, which is difficult to prove.
In 2018, the commonly known “Snowbirding Law” was again amended to create an “irrebuttable presumption” of non-Ohio domicile. Having no more than 212 contact periods still applies along with other conditions.
Other Requirements
The following requirements must be met for a taxpayer to avoid being an Ohio resident for income tax purposes:
- Have no more than 212 contact periods in Ohio
- Have at least one abode outside of Ohio where depreciation is not claimed (under section IRC 167)
- Did not hold a valid Ohio driver’s license
- Did not receive the Ohio homestead property tax exemption
- Did not receive Ohio resident tuition benefits for higher education
- Timely and accurately file Ohio form IT NRS (Nonresident Statement)
Item 2 “depreciation not claimed” means that you have a primary residence outside of Ohio. You generally cannot depreciate your primary residence.
Item 4 “Ohio homestead” is property tax savings that average about $500 per year for those that can claim it. Your Ohio adjusted gross income, however, can be no more than $32,800 in 2019, so qualifying is limited and generally not available to snowbirds who can afford two homes.
In summary, due to recent legislation, snowbirds now have much greater clarity in avoiding payment of Ohio income taxes. Winters in Florida and summers in Ohio, along with no state income taxes is idyllic for many.
Yet, careful planning must be done in the transition year prior to being able to have an irrebuttable presumption to avoid Ohio taxes. Additional items are required to be done in Florida to avail yourself of homestead benefits there.
While these domicile details are important, broader implications for your overall financial and tax planning will be ongoing and of greater importance.
