Ohio Personal Income Tax: Nonresident Nexus Safe Harbor for Mobile Workforce Updated

The Ohio Department of Taxation recently expanded the personal income tax safe harbor for nonresidents temporarily working in Ohio. Information Release PIT 2001-01, Personal Income Tax Nexus Standards, at Sections IV.O and IV.P (Rev. Jan. 10, 2014). Now, a nonresident will not owe Ohio personal income tax if he or she works 20 days or less in Ohio and earns less than $10,000 of gross income while in Ohio in a calendar year. The previous thresholds were seven days and $2,500 of gross income. See Individual Income Tax – Information Release IT 2014-01 (Jan. 10, 2014). This also benefits employers who temporarily send employees into Ohio, as the employer is not required to withhold Ohio income tax from its employees’ wages who meet the safe harbor.

The expanded safe harbor is consistent with nationwide efforts to ease employer withholding tax compliance burdens, including the Multistate Tax Commission’s Model Mobile Workforce Statute. Federal legislation has been introduced which would provide uniform guidance as to when a nonresident employee temporarily present in the state may be subject to the state’s income tax, although similar legislation has been introduced previously without passage. See Himes Sponsors Legislation to Bring Tax Fairness to People Who Work in Two States (Feb. 13, 2014).