“Ohio Income Tax Withholding on Farm Wages”
by: Robert D. Fleming District Specialist, Farm Management Department of Agricultural, Environmental & Development Economics Ohio State University Extension April, 2003
Objective
The objectives of Ohio income tax withholding are to collect income tax revenues on a current basis, to reduce the need for employees to file and pay estimated taxes, and to reduce the amount of tax owed by taxpayers at income tax filing time.
Coverage
The Ohio State Income Tax law does not require, but does permit, withholding for state income tax (or School District) from farm employee earnings. In contrast, withholding is mandatory for most nonfarm employers. See Federal Income Tax Withholding on Farm Wages (Fleming, 2003) for more details. Agr. labor is defined in Division G of Section 3121 Title 26, United States Code. Remember, exclusion from withholding does not exempt the earner from tax liability.
Employer Provisions
Application for Withholding A farm employee wishing to have his or her employer withhold state income tax should make the request in writing and furnish the employer with a completed "Withholding Exemption Certificate" (IT-4). If the employer then agrees to withhold taxes, the employer must file form IT-1, "Combined Application For Registration as an Ohio Withholding Agent" with the Ohio Department of Taxation. Withholding tables are available for daily, weekly, monthly and other employee pay schedules. Withholding Account Number The Ohio Department of Taxation assigns an Ohio withholding account number after registration by the employer. All forms and correspondence must show this account number. The information for registration includes: name, trade name (if any), address and county, federal employer identification number, type of business, and filing requirement. The registration application must be filed within 15 days of deciding to withhold or starting a new business with employees. Deposits of Withholding Tax Employers will receive a coupon book containing the necessary forms. Employers subject to withholding must make quarterly, or monthly payments on Form IT-501 coupon to the Ohio Department of Taxation with remittance made payable to the Treasurer of State of Ohio in the amounts required to be withheld.
EFT (Electronic Funds Transfer) – An employer whose actual or required payments (excluding school district income tax) during the twelve (12) month period ending June 30 of the preceding calendar year exceeded $84,000.00 must remit by EFT instead of filing Form IT-501, within three (3) banking days from the end of the partial weekly period in which an employer had payroll. Ohio Annual Report All farm employers must furnish employees for whom tax was withheld a report of compensation paid during the calendar year and the amount deducted and withheld as tax. The employer must provide two copies of the report on or before January 31. Employers may use Ohio Form IT-2 or federal optional Form W-2 ("combined W-2"). All farm employers withholding Ohio income tax must also furnish the Ohio Department of Taxation with the following: Before January 31 - Annual reconciliation of monthly or quarterly payments of tax withheld (Ohio Form IT-941), an employer who remits through EFT must submit Form IT-942 no later than the last day of month after end of calendar quarter. Records Every employer required to withhold Ohio income tax is required to maintain a current, accurate record of all persons from whom tax is collected. Records must include: 1) amounts and dates of all compensation paid subject to withholding. 2) names, addresses, school district of residence, principal county of employment (non-resident) and Social Security numbers of all employees receiving such compensation. 3) period of employment, including periods during which compensation is paid while absent due to sickness or injury. 4) amount of compensation paid by pay period. 5) copies of annual returns filed with the Ohio Department of Taxation for at least four years. Employers may obtain instructions for withholding, forms, tables and other information from the Ohio Department of Taxation web-site or District offices.
Employee Provisions
Income Tax Filing Every Ohio resident and part-year resident is subject to the Ohio income tax; so is every non-resident who directly as a sole proprietor, or through a partnership, S corporation or a limited liability company earns or receives income from Ohio sources. There are some people who do not have to file an Ohio income tax return. You do have to file an Ohio return for 2002 if you . . . . . . . . • Have completed Schedule A (on the back of the Ohio Form IT-1040). • Had Ohio tax withheld.
• • • • •
Are due an Ohio income tax refund. Are single, under age 65, AND your Federal Adjusted Gross Income is $4,099 or more. Are single, age 65, or over, AND your Federal Adjusted Gross Income is $8,499 or more. Are married, filing jointly, under age 65, AND your Federal Adjusted Gross Income is $7,699 or more. Are married, filing jointly, age 65 or over, AND your Federal Adjusted Gross Income is $11,049 or more.
You do not have to file an Ohio return for 2002 if . . . . . . . . • Your only source of income is retirement income which is eligible for the Retirement Income Credit AND the credit is the same or larger than your tax before credits (line 6). • You are eligible for the SENIOR CITIZEN CREDIT AND your tax before credits (line 6) is $50 or less. • Your exemption amount on line 4 is the same as or more than your Ohio adjusted gross income (line 3). Ohio Estimated Income Tax Declaration You must pay estimated tax if your 2002 tax after withholding will be more than $500. If you are required to pay estimated tax, file a 2003 Ohio Estimated Income Tax Return (Form IT-1040ES). You can get this form from one of the District Offices or call toll free 1-800-282-1782. CAUTION: 2001 estimated tax payments are due on April 16, 2001, June 15, 2001, September 17, 2001 and January 15, 2002. If you don’t want to make estimated payments, you may increase the amount of state tax your employer withholds from your wages so that your 2003 tax after withholding is less than $500. File a revised Form IT-4 (Employee Withholding Exemption Certificate) with your employer.
Responsible Agency – Ohio Department of Taxation
(http://www.state.oh.us/tax/global_taxpayer_service_centers.html)
Taxpayer Service Centers Akron Taxpayer Service Center Akron Government Center, 161 S. High Street, Suite 501, Akron, OH 44308-1600 Fax Machine (330) 643-1470 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Cincinnati Taxpayer Service Center 900 Dalton Avenue at W. 8th Street, Cincinnati, OH 45203-1171 Fax Machine (513) 852-3320 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Cleveland Taxpayer Service Center Cleveland State Office Tower, 615 W. Superior Avenue, 5th floor, Cleveland, OH 44113-1891 Fax Machine (216) 787-3710 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750
Columbus Taxpayer Service Center 30 E. Broad Street, 20th Floor, Columbus, OH 43215 Fax Machine (614) 752-9032 800 Freeway Drive North, Columbus, OH 43229 Fax Machine (614) 387-1993 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Dayton Taxpayer Service Center 15 E. Fourth Street, 5th floor, Dayton, OH 45402-2162 Fax Machine (937) 285-6342 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Toledo Taxpayer Service Center One Government Center, Suite 1400, Toledo, OH 43604-2232 Fax Machine (419) 245-2833 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Youngstown Taxpayer Service Center 242 Federal Plaza West, Suite 402, Youngstown, OH 44503-1294 Fax Machine (330) 797-9260 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Zanesville Taxpayer Service Center 601 Underwood Street, Zanesville, OH 43701-3786 Fax Machine (740) 455-6613 Individuals (800) 282-1780 Businesses (888) 405-4039 Ohio Relay for the Hearing Impaired (800) 750-0750 Taxation Phone Numbers Toll Free Numbers Forms Request Tax Fraud Hot Line Individuals Individual Income Taxpayer Services Individual Refund Hot Line Individual Income Tax Billings Individual Income Tax Assessments Estate Tax (800) 282-1782 (800) 757-6091 (800) 282-1780 (800) 282-1784 (888) 405-4091 (888) 297-2911 (800) 977-7711
Businesses Corporate Franchise, Employer & School District Withholding, and Sales & Use Tax Tax Registration (888) 405-4089 Taxpayer Assistance (888) 405-4039 Business Tax Billings (888) 297-3540 Business Tax Assessments (888) 297-7150 Personal Property Tax (888) 644-6778 Ohio Relay for the Hearing Impaired (800) 750-0750
TAX COMMISSIONER’S OFFICE 30 E. Broad Street, 22nd Floor Columbus, Ohio 43215 Fax Machine (614) 466-6401 Taxpayer Service Center Administration 800 Freeway Drive North, Columbus, OH 43229 Fax Machine (614) 387-1851 Keith Farrell, Administrator (614) 995-0729
Internet Resources
Ohio Department of Taxation website: http://www.state.oh.us/tax/ Taxpayer Service Centers website: http://www.state.oh.us/tax/global_taxpayer_service_centers.html http://www.state.oh.us/tax/global_contact_us.html
References
"Ohio Employer Withholding Tax (General Guidelines)," WH-1, State of Ohio, Department of Taxation, February, 2001. “Ohio’s Taxes, A Brief Summary of Major State and Local Taxes in Ohio”, Tax Analysis Division, Ohio Department of Taxation, 1999. Ohio Revised Code, Title [57] LVII, Taxation, Chapters 5747 and 5748.
2003RDF/cle/StateTaxWH-FarmWages2003a.doc (4-16-03)