On June 14, 2018, Ohio Governor John Kasich signed legislation that amends the Ohio income tax residency test (commonly referred to as the “Snowbird Law”), which is effective for tax years beginning on or after January 1, 2018.
Under the current law, a taxpayer may stay overnight in Ohio up to 212 times (7 months) per tax year before he or she is presumed to be an Ohio resident. In order to create an irrebuttable presumption that the taxpayer is not an Ohio resident, he or she must also timely file Ohio Tax Form IT DA-NM verifying that during the entire taxable year the individual was not domiciled in Ohio and had at least one home outside of Ohio.
Accordingly, if a taxpayer stays overnight within Ohio 213 times or more per tax year, he or she is presumed to be an Ohio resident. In these instances, the taxpayer may still attempt to rebut this presumption, but he or she can only do so with clear and convincing evidence to the contrary (a very high standard, difficult to prove).
In addition to conditions imposed by the current law, the new legislation adds that the following requirements be met for a taxpayer to avoid being an Ohio resident for income tax purposes:
- The individual has an out-of-state residency for which the individual did not claim a depreciation deduction under IRC 167 on the individual’s federal income tax return;
- The individual does not hold a valid Ohio driver’s license or identification card;
- The individual did not receive a reduction for in-state owner-occupied dwellings (homestead exemptions), including a reduction in taxes on manufactured of mobile homes; and
- An individual’s high-education tuition rate is not based on the individual’s Ohio residence.
Taxpayers will now need to make the additional above-referenced declarations on Form IT-DA, Affidavit of Non-Ohio Residency/Domicile, which will be filed with the Ohio Department of Taxation. The presumption that the individual was not domiciled in Ohio is irrebuttable unless the individual or a personal representative falsely files or fails to timely file this statement.
Individuals who split their time between Ohio and other states (i.e. Florida) now have much greater flexibility in avoiding payment of Ohio income taxes based on his or her residency. People with deep ties to Ohio now can spend upwards of seven (7) months visiting family, friends or otherwise enjoying the Buckeye State. Snowbirds can now completely avoid both the Ohio winters and the Florida summers all while reaping the income tax benefits of avoiding being an Ohio resident. If you are thinking about changing your residency, please contact our office to discuss how best to implement your plan to ensure that you take the necessary steps to establish your residency outside of Ohio.