This week Ohio passed legislation creating a bright-line residency test effective for tax years beginning on or after January 1, 2018. This is much awaited guidance for all individuals who have a home or spend a significant time in Ohio, yet consider themselves a resident of another state. H.B. 292 provides updated guidelines clarifying when an individual qualifies as an Ohio resident versus a non-resident, and extending the non-residency affidavit deadline.

Residency Requirements

Under H.B. 292, an individual is presumed NOT to be a resident of Ohio for each tax year in which all five of the following requirements are met:

1. Have fewer than 213 "contact periods" in Ohio, which do not need to be consecutive (The definition of a contact period remains unchanged and is defined as one in which a taxpayer leaves his residence in another state and spends some portion of time, however minimal, over two consecutive days in Ohio.
2. Must have at least one residence (abode) outside of Ohio for the entire year for which no depreciation deduction has been claimed,
3. Does not hold a valid Ohio driver’s license or other state identification at any time during the taxable year, 
4. Did not receive a reduction in real property taxes based on Ohio residency (e.g., homestead exemption) during the taxable year, and
5. If enrolled in a state institution or higher education, tuition did not factor in Ohio residency or a residence located in the state.

Ohio's new residency rules generally don’t apply to any taxable year in which the taxpayer permanently moves in or out of Ohio. In this case, part-year resident allocations continue to apply.

For a taxpayer who has a home in Ohio for any portion of the year, and DOES NOT meet the new criteria for non-residency, the taxpayer will be presumed a resident of Ohio for the entire year unless evidence is provided to the contrary.

Any individual directly challenged by the Ohio tax commissioner on number of contact periods must provide a preponderance of evidence to prove they did not exceed more than 212 contact periods within the year.

Filing Non-Ohio Resident Affidavit

Once all five criteria are deemed to be met, an individual must file Ohio Form IT DA (Affidavit for Non-Ohio Residency) or other form prescribed by the tax commissioner. This form may be filed on or before the 15th day of the 10th month after the tax year. If an individual dies before filing the Ohio non-residency affidavit for the tax year, the personal representative of the estate can file the form by the latter of the filing deadline, or 60 days following the date of the taxpayer’s death.

Opportunity

A taxpayer who meets the five non-residency criteria and timely files the non-residency affidavit for the taxable year will be considered an Ohio non-resident. Ohio may only challenge the presumption of non-residency when:

•  Any statement(s) included on the non-residency affidavit are false, including if the taxpayer's representation regarding the five requirements previously mentioned is determined to be false, or
• The taxpayer fails to file the necessary form.

However, even a taxpayer who does not meet all five tests may still show through corroborating evidence that he qualifies as an Ohio non-resident. It is imperative that taxpayers properly document their travels, Ohio contact periods and other evidence supporting residency status.

If you previously changed your residence from Ohio or are considering moving your residence from Ohio, please contact a member of your service team, or contact Karen Raghanti at kraghanti@cohencpa.com.