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Deborah D Smith, Administrator

Personal & School District Income Tax. Deborah D Smith, Administrator. 2009 1040 Draft. Line 4 - Personal/dependency exemption amount $1,550 Medical Savings Account – maximum contribution deduction per taxpayer is $4,197 by Dec.31, 2009

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Deborah D Smith, Administrator

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  1. Personal & School District Income Tax Deborah D Smith, Administrator

  2. 2009 1040 Draft • Line 4 - Personal/dependency exemption amount $1,550 • Medical Savings Account – maximum contribution deduction per taxpayer is $4,197 by Dec.31, 2009 • Moved line 17 – Interest Penalty on Underpayment of Estimated tax (now 28) • Line 29 – NEW Interest/Penalty Late-Filed/Late-Paid returns • Line 21d – Motion Picture Investment credit (more to follow)

  3. 2009 1040EZ Draft • Lines 4 - $1550 exemption • Moved line 13 – Interest Penalty on Underpayment of Estimated tax (now 21) • Line 22 – NEW Interest/Penalty Late-Filed/Late-Paid returns

  4. 2009 SD100 Draft • Tax type • Earned Income verbiage • Line 1, not A & B • Moved line 7 – Interest Penalty on Underpayment of Estimated tax (now 16) • Line 17 - NEW Interest/Penalty Late-Filed/Late-Paid returns

  5. PIT Updates NOL 5 Year Carry-back • House Bill 1, 128th General Assembly - Conformity to IRC; ARRA IRC 72(b)(1)(H): five-year effective October 16, 2008 • SB155 - introduced on July 13, 2009 - defer refund dates • If refunds are issued and SB 155 (or any subsequent bill passed prior to December 31, 2009) becomes law, ODT would be required to bill for the amount refunded.

  6. PIT Updates • Amended Electronic Payment Options • ePayments • Credit Card online & IVR • Masking SS#’s on Notices • Billings & Assessments

  7. PIT Updates (cont’d) • 2010 Interest Rate 4% • “Where’s My Refund” requirements • SSN, Birthdate & Tax type • 1040 & SD Booklet population • eMailer verbiage & population

  8. Recently-Enacted Budget Bill Amendments to Various Tax Credits

  9. Motion Picture Credit • Newly Enacted - Income Tax and Corporate Franchise Tax Refundable Credit • If budgeted or actual motion picture production expenses exceed $300,000, then a credit equal to (i) 35% of wages paid to Ohio resident employees and (ii) 25% of all other production costs, excluding wages paid to nonresidents, purchased and consumed in Ohio. • Must file an application with the Ohio Dept. of Development • More information: www.discoverohiofilm.com

  10. Changes to the “Job Creation Tax Credit” • Amendments to ORC section 122.17 shift the credit base from personal and school district withholdings from new, full-time employees to a base consisting of incremental increases in all employees’ growth in withholding for the year as compared to the previous year. • Must file an application with the Ohio Dept. of Development

  11. Changes to the “Job Retention Tax Credit” • Amendments to ORC section 122.171 are similar to the amendments to the “Job Creation Tax Credit” provisions. • Required investment at the site is reduced from $200 million ($100 million if average wage is greater than 400% of federal minimum wage) to either $50 million if the taxpayer is a manufacturer or $20 million if the taxpayer engages in corporate administrative functions at the site.

  12. Changes to the “Job Retention Tax Credit” (cont’d) • Employee threshold has been lowered from 1,000 full-time employees to 500 full-time employees • This credit, which used to apply only against the CFT, the state income tax, and the CAT, now applies against the insurance premiums taxes.

  13. Changes to the “Historic Preservation Tax Credit” • Effective January 1, 2010 taxpayers organized as pass-through entities may allocate this credit in any manner the pass-through entity chooses • Previously allocated credit based upon each equity investor’s share of the pass-through entity’s profits. • Must file an application with the Ohio Dept. of Development

  14. School District Updates • Earned Income tax districts – nonfiling myth • Updated: Taxpayers residing in earned income school districts must file Ohio form SD 100 even if none of their income is subject to the tax. • SD Delinquency program

  15. School District Updates/Additions

  16. School District Updates/Additions

  17. School District Updates/Additions

  18. Personal Income Tax Mandate Ohio Mandating Initiative • House Bill 562 passed and signed by the Governor on June 24, 2008 • 5747.082 ORC section • Minimal estimated savings on mandating Personal Income Tax is projected to be approximately $1.4 million.

  19. Personal Income Tax Mandate Key Mandate Provisions • Effective for taxable year 2009 • Tax Professionals who prepare more than 75 returns • Unless you prepared less than 25 returns in the previous year • Mandate is on Personal Income Tax returns.

  20. Personal Income Tax Mandate Key Mandate Provisions • Does not include School District Income Tax returns • Electronic payment is not part of the Personal Income Tax mandate • Only on original returns, not amended returns

  21. Personal Income Tax Mandate

  22. Personal Income Tax Mandate How Ohio Compares to Other States • Mandate states average 75-80% paperless filings. • Ohio paperless filings in 2008 totaled 62% for PIT and 55% for SDIT.

  23. Ohio e-file Mandate Getting Started • Step 1: Register for e-services at WWW.IRS.GOV

  24. Ohio e-file Mandate Do I have to Register with Ohio If you are registered and approved by the IRS to participate in the e-file program You are automatically registered and approved to e-file in Ohio.

  25. Ohio e-file Mandate Approved Software Companies

  26. Ohio e-file Mandate Approved Software Companies

  27. Ohio e-file Mandate Approved Software Companies

  28. Ohio e-file MandateOpt Out Request

  29. Ohio e-file MandateTaxpayer Waiver Request

  30. Personal Income Tax Mandate Penalty Provisions • Provides a $50.00 penalty for each return starting with return number 76. • ODT intends to work with tax professionals to make conversion as painless as possible.

  31. Personal Income Tax Mandate Penalty Phase In • Year One-2009 taxable year, 2010 calendar year • ODT to evaluate Preparer totals and communicate to Preparer.

  32. Personal Income Tax Mandate Penalty Phase In • Year Two-2011 calendar year • ODT to initiate Preparer Billing letters allowing preparer to pay prior to Assessment • ODT will offer reduced penalty amounts in year two. Amount yet to be determined

  33. Personal Income Tax Mandate Penalty Phase In • Year Three-2012 calendar year • ODT to fully implement penalty • Preparer will receive Billing letter prior to Assessment.

  34. Ohio e-file New to Ohio e-file this Year • Accept Resident, nonresident and part-year School District returns • Only 1 school district return per taxpayer • You will receive an acknowledgement for your e-filed school district return

  35. Ohio e-file Modernized e-file • What is modernized e-file • Accept Resident, nonresident and part-year resident returns • Will accept multiple school district returns • You will receive an acknowledgement for your e-filed school district return

  36. Ohio e-file Modernized e-file • Returns will be rejected • Software problems • Invalid school districts • MFJ but no Spouse information • Ohio line 1 doesn’t match FAGI • Practitioner corrections • Routing Number is invalid • Not the same bank account number you used last year

  37. Personal & School District Income Tax Questions? Deborah D Smith Deborah_d_smith@tax.state.oh.us 614-466-4592

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