Don’t Forget to Consider the Ohio Business Income Deduction

Cathy Robinson, CPA

Principal

robinson@hwco.com

 

Beginning in 2015, Ohio has increased the benefit to taxpayers for the Ohio Business Deduction.  A business will receive up to 75% deduction on their first $250,000 of business income. This means up to $187,500 of business income will go untaxed by the state of Ohio no matter where it was earned.  The calculation removes the apportionment calculation that was part of the original deduction.  The remainder of the business greater than $250,000 will be taxed at the graduated rate of up to 3%.  The new deduction applies to both pass - through entities and proprietors alike.  The taxpayer should be careful though and take a closer look at what exactly constitutes business income.  Business income includes monies received in the ordinary course of a trade or business operation.

 

The deduction gets even better in 2016 when individuals can deduct 100% of their business income from their personal Ohio income tax.

 

Please remember to consider this tax deduction when preparing your return, and as always when in doubt, consult your advisor.

 

Check your Mailbox - Another IRS Data Breach

 

 

 

Cathy Robinson, CPA

Principal

robinson@hwco.com

 

Last month, the IRS stopped identity thieves from attempting to generate E-file PINS for stolen Social Security Numbers.  The PINS are used to efile a tax return.  There were 101,000 Social Security Numbers affected.  The IRS will be contacting the taxpayers to tell them of the breach, and tax return identity theft markers will be placed on their accounts.  There was no personal taxpayer data compromised or disclosed.  The breach was not related to the shutdown of efiling last week. 

 

Remember, the IRS will only contact you by mail.  They will not contact you by telephone or email.  If you need clarification of the correspondence, do not hesitate to consult your CPA.

 

 

Ohio Tax Budget - The Impact on Your Wallet

Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com
 

Chances are you pay income taxes to the state that you reside in. For individual taxpayers and businesses in the state of Ohio, there's good news. 


On June 30^th, 2015, Governor John Kasich signed into law, the Biennial Budget Bill. So how exactly does this bill affect you?

 

If you are just an individual taxpayer, the bill reduces the personal income tax rates 6.3 percent for all tax brackets. This means the new top marginal bracket for individuals is 4.997 percent.

 

Attention shoppers: if you're a fan of shopping, you will be happy to know the state sales tax rate was not increased. It still remains at the current rate of 5.75 percent.

 

If you own an S Corporation, partnership, limited liability or a sole proprietorship in Ohio, there's even better news for you.  For fiscal year 2015, you will be able to deduct 75 percent of your Ohio apportioned business income up to $250,000. Also beginning in 2015, the excess business income will be subject to a three percent flat tax. The tax will be effective for 2015 and going forward. 

 

As a business owner, you should also be aware there are two tax credits that may now be able to save your company taxes since the law has changed the calculation. These credits are the Jobs Creation Tax Credit and the Jobs Retention Tax Credit.

 

For those who file the CAT tax, there's good news for you as well since the CAT tax rate was not increased due to the law.

 

If you have any questions in regards to the bill and how it will affect you, contact your accounting professional.