Get 2010 Ohio Schedule E Nonrefundable Business Credits

If your business is not incorporated, you may need to file a tax return and pay the self-employment tax if your net income is $400 or more. Self-employment tax is the equivalent of the FICA payroll taxes (Medicare and Social Security) that you would normally share with your employer if you worked for someone else.

Ohio does not have a corporate income tax but does levy a gross receipts tax.

A nonrefundable tax credit is a reduction in the amount of income taxes that a taxpayer owes. It can reduce the amount owed to zero, but no further. In other words, the taxpayer forfeits any credit that exceeds the total amount of taxes owed.

Ohio taxes income from business sources and nonbusiness sources differently on its individual income tax return (the Ohio IT 1040). The first $250,000 of business income earned by taxpayers filing “Single” or “Married filing jointly,” and included in federal adjusted gross income, is 100% deductible.

There is no corporate income tax in Ohio, but all businesses making over $150,000 in gross receipts will have to pay CAT. If you own a pass-through entity—an S corporation, LLC, partnership, or sole proprietorship—your share of your business's net income will be taxed at your individual tax rate.

Ohio calls this a commercial activity tax (CAT) and it's assessed against almost all businesses in Ohio having gross receipts in excess of $150,000.00. Any business that is above that threshold must file a commercial activity tax return and pay a tax.

At the state level, Ohio LLCs will be subject to company and individual income taxes, and may also have additional Ohio business taxes such as sales tax. The good news is Ohio LLCs do not have Ohio compliance reports like most states, so Ohio business owners do save money and paperwork there.

In general, government pensions and retirement income are taxed in Ohio, but there are some exceptions. Social Security, some railroad retirement and military benefits are not taxed. Also, Ohio does not tax nonresidents' retirement income.

The individual income tax brackets have been modified so that individuals with Ohio taxable nonbusiness income of $25,000 or less are not subject to income tax. Addition- ally, Ohio taxable nonbusiness income in excess of $110,650 is taxed at 3.99%.