New Ohio Residency Test

An individual is presumed to be domiciled outside of Ohio for income tax purposes if he/she:

• Has no more than 182 “contact periods” in Ohio (which need not be consecutive) and
• Has at least one residence outside Ohio during the entire taxable year and
• Has filed a statement with the Ohio Tax Commissioner on or before April 15 following the close of the taxable year verifying that (i) he/she was not domiciled in Ohio during the entire taxable year, (ii) he/she had a residence outside Ohio during the entire taxable year and (iii) the location of each residence was located outside of Ohio.   

 Even if an individual has extended the time to file their tax return there is no corresponding extension of time to file the statement. 

A “contact period” is defined as being overnight from an individual’s residence outside Ohio and while overnight spending at least a portion of each of two consecutive days in Ohio. 

The old law required no more than 120 “contact periods” so with the enactment of the new law an individual can spend more time in Ohio without becoming an Ohio resident for income tax purposes.    With the enactment of this new law, Ohio is encouraging taxpayers who have left Ohio to come back to Ohio and spend more time (and money) here. 

An individual is presumed to be domiciled in Ohio if he/she has at least 183 contact periods in Ohio for the entire taxable year.  An individual can rebut this presumption with the Ohio Tax Commissioner by presenting clear and convincing evidence (the highest level of evidence) to the contrary. 

Since the taxpayer bears the burden of proof in verifying the number of their contact periods in Ohio, an individual should maintain detailed records of physical presence outside of Ohio supported by objective evidence such as credit card charges, personal diaries or expense reports for business travel; mail forwarding; evidence of use of club facilities; utility shut-off or disconnect statements; airline or other travel vouchers; bank account transactions, in order to verify the days spent outside of Ohio. 

In addition, there are a number of other steps an individual must take to change their domicile:

• Transfer securities and bank accounts to new state
• File federal income tax returns using new address and file with the new IRS office, for instance, Florida residents file in Atlanta, Georgia
• Register automobiles in new state and obtain a driver’s license in the new state
• Join social, religious and professional organizations in new state
• Register to vote in new state
• Maintain a residence in new state
• Transact business in new state
• Spend as much time in new state as possible

The more steps an individual takes the greater evidence there is that he/she is domiciled in the new state.  Despite taking the above steps, however, an individual must still limit their “contact periods” in the State of Ohio.

If you have any questions, please call Karen L. Greco at 216.736.7214 or email Karen at klg@kjk.com.