For taxable year beginning in
2016
Ohio IT 1041
Fiduciary Income Tax
Return Instructions
Rev. 1/17
Department of
hio Taxation
tax. hio.gov
|
For taxable year beginning in
2016
Ohio IT 1041
Fiduciary Income Tax
Return Instructions
Rev. 1/17
Department of
hio Taxation
tax. hio.gov
|
|
IT 1041
Rev. 1/17
Who Must File
2016 Ohio IT 1041 All estates not excluded below, residing in Ohio or earning or
General Instructions receiving income in Ohio, must file an Ohio Fiduciary Income Tax
Return (Ohio IT 1041) for the taxable year.
New Ohio IT K-1
Use the Ohio IT K-1 to report each investor’s or beneficiary’s All trusts not excluded below and that meet any one or more
proportionate or distributive share of the partnership’s, corporation’s, of the following requirements:
estate’s or trust’s Ohio income and credits. Each entity with Ohio
income should prepare a separate Ohio IT K-1 for each investor or • The trust resides in Ohio; OR
qualifying beneficiary to enclose with the investor’s or beneficiary’s
return. • The trust earns or receives Ohio source income (income
apportioned to Ohio or allocated to Ohio); OR
Note: Put tax return in proper numerical order and place all
attachments after the return. • The trust earns or receives lottery winnings, prizes or awards
paid by the Ohio Lottery Commission; OR
All Ohio tax forms and schedules referred to in this instruction
booklet may be obtained from our Web site at tax.ohio.gov. • The trust otherwise has nexus with or in Ohio under the
Constitution of the United States.
Purpose of Form
The fiduciary of a domestic decedent’s estate, trust or bankruptcy Qualified Pre-Income Tax Trusts
estate uses Ohio IT 1041 to report: Trusts that are described in Ohio Revised Code (R.C.) section
5747.01(FF) and that timely and properly made the election
• The income, deductions, gains, losses, etc. of the estate or trust; described in that division are not subject to Ohio income tax. Such
trusts should file pages 1 and 2 of Ohio IT 1041 and complete those
• The income that is either accumulated or held for future distribution pages as follows:
or distributed currently to the beneficiaries;
• Enter on line 1 the trust’s federal taxable income.
• Any income tax liability of the estate or trust; AND
• Enter on line 2 as a negative number the amount shown on line 1.
• Employment taxes on wages paid to household employees.
• To the left of the amount entered on line 2 print “5747.01(FF).”
Income Taxed to the Estate
The income tax imposed on the fiduciary is based upon the • Enter -0- on lines 3, 13 and 17.
estate’s Ohio taxable income. The tax is reduced by the Schedule
B credits, the Schedule C resident credit, the Schedule D • Sign and date the return.
nonresident credit, refundable credits and the allowable Schedule
E business credits. Important: The trust must include with the return a copy of the Ohio
Department of Taxation-issued letter acknowledging that the trust
If the executor and trustee make the Internal Revenue Code is exempt from Ohio income tax.
section 645 election, then for Ohio income tax purposes (i) the
estate must include the income of the trust and (ii) the trust itself Exclusions
is not subject to Ohio’s income tax for the taxable years to which The following types of trusts are excluded from filing Ohio IT 1041
the election applies. As such, when the estate files its Ohio as per R.C. section 5747.02(E):
fiduciary income tax return, the estate cannot “back out” from the
estate’s federal taxable income the trust’s portion of income and • Grantor trusts
deductions.
• Charitable remainder trusts
Income Taxed to the Trust
The income tax imposed on the fiduciary shall apply to the trust’s • Retirement trusts
modified Ohio taxable income. The tax is reduced by the Schedule
I trust credit, refundable credits and the allowable Schedule E • Pre-need funeral trusts
business credits. • Qualified funeral trusts
Most Common Situations for Trusts
• Endowment and perpetual care trusts
• A nonresident trust investing only in savings accounts, certificates • Qualified settlement trusts and funds
of deposit, publicly traded stocks, bonds, commercial paper and/or
mutual funds will not owe any Ohio income tax if the nonresident • Retirement trust funds.
trust has no significant ownership interest in these investments.
The trust need not file Ohio IT 1041. Any other trust or estate is not required to file a 2016 Ohio IT 1041
with the state of Ohio if all of the following apply:
• A resident trust investing only in savings accounts, certificates of
deposit, stocks, bonds, commercial paper and/or mutual funds • The fiduciary’s year 2016 federal form 1041 shows no taxable
will owe Ohio income tax if the trust had federal taxable income income or has a negative taxable income (e.g., simple trusts and
after distributions. The tax on each resident trust will generally most estate tax returns); AND
be based upon the trust’s federal taxable income, plus or minus
the adjustments set forth on Ohio IT 1041. • The estate or trust did not earn or receive any business income
apportioned to Ohio; AND
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IT 1041
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• The estate or trust did not earn or receive any nonbusiness income failure to file timely. The period of underpayment runs from the
allocated to Ohio; AND date the tax was required to be paid to the date on which such
payment is made.
• There are no Ohio adjustments that would result in Ohio taxable
income; AND Interest is allowed and paid upon any overpayment in excess of
one dollar in respect of the tax imposed under R.C. section 5747.02
• If the taxpayer is a trust, no portion of the trust is an electing small from the date of the overpayment until the date of the refund of the
business trust. overpayment, except that if any overpayment is refunded within 90
days after the due date of the annual return or within 90 days after
Tax Rates the return was filed, whichever is later, no interest shall be allowed
The same income brackets and tax rates that apply to the Ohio on such overpayment.
taxable income of individuals apply to the Ohio taxable income of
estates and to the modified Ohio taxable income of trusts. See the During calendar year 2017, interest accrues on underpayments and
tax table on page 12. overpayments at the rate of 4% per annum.
Return Due Date Penalties
For all estates and trusts, file Ohio IT 1041, including Ohio IT K-1(s) If the trust or estate fails to file the Ohio fiduciary income tax return
and federal K-1(s), on or before April 18, 2017. by the due date (or extended federal due date), a failure to timely
file penalty may be charged, which is the greater of $50 per month
Extensions to File up to a maximum of $500, or 5% per month up to a maximum of
If the trust or estate qualifies for and receives a federal extension 50% of the tax.
of time to file, then the trust or estate automatically has the same
extension of time to file the Ohio return unless the Ohio due date is If the trust or estate fails to pay the full amount of tax by the due
after the federal extension due date. The trust or estate must include date of the return, a failure-to-pay penalty may be charged, which
a copy of the federal extension with the Ohio return. If the fiduciary is up to a maximum of double the interest charged.
electronically obtained the federal extension, then, when filing the
Ohio IT 1041, the fiduciary must provide the federal confirmation Interest Penalty on Underpayment of Estimated Tax
number for the extension. The trust or estate will owe an interest penalty if (i) the Ohio tax less
withholding (e.g. Ohio lottery withholdings) and credits is greater
Caution: An extension of time to file does not give the estate or than $500 and (ii) withholdings and refundable credits are less than
trust an extension of time to pay. Make Ohio extension payments both the following:
on the 2016 Ohio IT 1041P.
• 90% of your 2016 Ohio tax; AND
Filing Options
Taxpayers who prepare a return with commercial software or • 100% of your 2015 Ohio tax.
the help of a paid tax preparer may be able to file their federal
and state returns electronically through the federal/state e-file If the trust or estate owes an interest penalty, the fiduciary must
(www.irs.gov/Filing) program overseen by the IRS. To help taxpayers complete Ohio IT/SD 2210 and enter the interest penalty on line
make sure their software is compatible with the e-file program, the 12 of Ohio IT 1041.
Ohio Department of Taxation maintains a list of approved software Preparer’s Signature
vendors (www.tax.ohio.gov/ohio_business/business/electronic_ The Ohio Department of Taxation follows IRS Notice 2004-54,
filing/ApprovedSoftwareDev2016.aspx). which provides for alternative preparer signature procedures
If a taxpayer opts to not file electronically, a paper Ohio IT 1041 is for federal income tax paper returns that paid practitioners
available on our Web site at tax.ohio.gov. prepare on behalf of their clients. Paid preparers can follow
those same procedures with respect to the following Ohio paper
Payment Options returns prepared on behalf of their clients: Ohio school district
If you are electronically filing your Ohio Fiduciary Income Tax Return and individual income tax returns, Ohio withholding tax returns
using an approved software program, follow the payment instruction (employer and pass-through entity) and Ohio corporation franchise
prompts for making payments by electronic check. tax reports. Statutory authority: R.C. sections 5703.262(B) and
5747.08(F).
If you are paper filing your Ohio Fiduciary Income Tax Return or do
not wish to remit through the software program mentioned above, Exception: The paid preparer should print his/her name on the form
payments may be remitted by electronic funds transfer (EFT) if the taxpayer checks “Yes” to the question, “Do you authorize your
through the Ohio Treasurer of State or you may send in a personal preparer to contact us regarding this return?”
check or money order with the IT 1041P payment voucher. For
questions regarding the EFT payment program, contact the Ohio Amended Returns
Treasurer of State’s office at 30 E. Broad St., 9th Floor, Columbus, You may make any change or correction to your already filed return
OH 43215 or call toll-free at 1-877-338-6446. by filing another Fiduciary Income Tax Return, Ohio IT 1041, with
corrected figures and checking the “Amended Return” box. To speed
Note: To remit by EFT, the trust or estate must file by using their up the processing of your amended return:
federal employer identification number (FEIN).
• Include a copy of your original return; AND
Interest on Underpayments and Overpayments
If the trust or estate fails to pay the tax by the due date, interest • Include a copy of any cancelled checks used as payment on the
accrues on the unpaid tax. Interest on tax due is charged in originally filed return.
addition to any penalties that may be incurred for late filing or
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IT 1041
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If the fiduciary amends the federal fiduciary income tax return Testamentary Trust
or if the fiduciary is audited by the IRS, the fiduciary must file an A trust created at the time of his or her death under a will
amended Ohio IT 1041 within 60 days of the final determination of (testamentary). A testamentary trust resides in Ohio if the decedent
the federal change. at the time of death was domiciled in Ohio for Ohio estate tax
purposes (R.C. section 5731).
Caution: The IRS tells us when it makes changes to tax returns. To
avoid penalties, be sure to file the amended fiduciary return within Inter Vivos Irrevocable Trust
60 days of the final determination of the federal change. An inter vivos irrevocable trust resides in Ohio if (i) at least one
“qualifying beneficiary” [R.C. section 5747.01(I)(3)(c)] is domiciled
Assessments in Ohio for all or a portion of the trust’s taxable year and (ii) at any
The tax commissioner may issue an assessment against the estate time the trust received assets from one or more of the following:
or trust for any deficiency within four years after the later of the final
date the return subject to assessment was required to be filed or • An individual who was domiciled in Ohio for income tax purposes
the date the return was filed. However, both the assessment statute at the time he/she transferred assets to the trust; OR
of limitations and the refund statute of limitations may be extended
for an agreed-upon period if both the estate or trust and the tax • An individual who was domiciled in Ohio for income tax purposes
commissioner consent in writing to the extension. at the time the trust document became irrevocable – even if the
individual was not domiciled in Ohio at the time he/she transferred
An amended Ohio IT 1041, which the estate or trust files as the assets to the trust; OR
a result of an adjustment to the federal fiduciary income tax
return, form 1041, is deemed a report subject to assessment. • An estate of an individual who at the time of death was domiciled
However, the amended return does not reopen those facts, in Ohio for estate tax purposes; OR
figures, computations or attachments from a previously filed
return no longer subject to assessment to the extent that those • An insurance company, pension plan or court award on account
facts, figures and computations are not affected, either directly of the death of an individual, and at the time of the individual’s
or indirectly, by the IRS adjustment to the entity’s federal income death either (i) the individual was domiciled in Ohio for estate tax
tax return. purposes or (ii) the owner of the insurance policy was domiciled
in Ohio for income tax purposes.
Estimated Tax Payments for Next Year
The estate or trust must make estimated tax payments on the 2017 Note: The above listing is not all-inclusive. For additional information,
Ohio IT 1041ES for the entity’s taxable year beginning in 2017 if the see R.C. section 5747.01(I)(3)(a),(e) and (f).
2017 Ohio fiduciary annual income tax after nonrefundable credits
is more than $500. An interest penalty may apply to estimated Line Instructions
payments not timely made.
Line 1 – Federal Taxable Income
Due Dates for Estimated Tax Payments Enter the amount from federal form 1041, line 22. This amount is
These estimated payments are due on or before the 15th day of net of the income distribution deduction and should include only the
the fourth, sixth and ninth month after the beginning of the taxable income and gain retained by the estate or trust.
year, and on or before the 15th day of the first month of the following
taxable year. Line 8 – Tax on Ohio Taxable Income (Estates) or Modified
Ohio Taxable Income (Trusts)
Late payments of estimated tax are subject to interest penalties Use the tax table found on page 12 to compute the tax based upon
(see Ohio IT/SD 2210). Ohio IT 1041ES must accompany each the amount on line 3 for estates or line 7 for trusts. This is the same
estimated payment. tax rate used for the individual income tax for the same year.
Specific Instructions Line 10 – Schedules C, D, E and I Credits
Both estates and trusts may be entitled to claim one or more
On page 1 of the return, you must designate whether the entity is nonrefundable business credits listed in Schedule E of Ohio IT 1040,
an estate or a trust. with one exception: Trusts cannot claim the credit for contributions
to candidates for Ohio statewide office or for the General Assembly.
An estate can be a bankruptcy estate, a decedent’s estate or both. To claim the nonrefundable business credit, use Schedule E, which
can be found on our Web site at tax.ohio.gov.
The trust must be designated as:
Multiply the nonrefundable credits from Schedule E by the estate’s
• Simple or complex or trust’s retained percentage of income to calculate the amount of
nonrefundable credits available to the estate or trust.
• Resident ornonresident
Example: A trust retains 75% of the income from the business
• And may also be designated as irrevocable and/or testamentary and distributes 25% of the income to beneficiaries each year. The
trust would be able to claim on Ohio IT 1041 75% of the Schedule
Definitions E nonrefundable credits. The beneficiaries would be able to claim
“Resident” Trust cumulatively on Ohio IT 1040 the remaining 25% of the Schedule
Pursuant to R.C. section 5747.01(I)(3), “resident” is defined for E nonrefundable credits.
purposes of Ohio’s income tax on trusts as a trust that, in whole or Line 12 – Interest Penalty on Underpayment of Estimated Tax
part, resides in this state. If only part of a trust resides in this state, Enter any interest penalty on underpayment of estimated tax as
the trust is a resident only with respect to that part. explained in the general instructions.
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Line 14 – Net Payments
Enter the amount from line 77 of Ohio IT 1041, Net Payment Schedule A – Adjustments to Federal
Worksheet. Taxable Income Net of Related Expenses
Line 15 – Refundable Business Credits Additions
Business Jobs Credit and Ohio Historic Preservation Credit:
If the Ohio Tax Credit Authority of the Ohio Department of The following applies to both
Development granted the trust or estate either or both of these trusts and estates except where noted.
credits, then enter on this line the amount of credit(s) applicable to Line 23 – Federal and/or Non-Ohio State or Local
the trust or estate here. Government Interest and Dividends
A trust has a 50% interest in a business that is entitled to Enter the fiduciary’s share of interest and dividends received from
Example:
a “new jobs credit” of $5,000. The trust may claim $2,500 on line 15. non-Ohio state governments and their local government net of related,
ordinary, necessary and reasonable expenses to the extent the interest
Refundable Pass-Through Entity Credit: If the trust or estate and dividend are not included in federal taxable income and to the
was a direct or indirect investor in a pass-through entity that extent that such amounts have not been distributed to beneficiaries.
filed and paid Ohio tax on Ohio IT 4708 (Composite Income Tax
Return for Certain Investors in a Pass-Through Entity) or on Ohio Also, enter interest and dividend income from obligations issued by the
IT 1140 (Pass-Through Entity and Trust Withholding Tax Return), United States government or its possessions/territories that are exempt
the fiduciary should enter the amount of tax paid on behalf of from Ohio tax by federal law. Examples include: U.S. savings bonds
the trust or estate. Trusts and estates claiming this credit must (Series E, EE, H or I), Treasury notes, bills and bonds, and Sallie Mae.
include Ohio IT K-1s and federal K-1s reflecting the amount Line 24 – Pass-Through Entity and Financial Institutions
of Ohio tax that the pass-through entity paid on behalf of the Taxes Paid
trust or estate. Add the fiduciary’s share of any Ohio IT 1140 or financial institutions
The K-1 should show the amount of the distributive share of taxes – which should be shown on your Ohio IT and federal K-1(s) –
income; the amount of Ohio tax paid; the legal name of the pass- to the extent that those taxes were deducted in arriving at federal
through entity; and the entity’s federal employer identification taxable income.
number. Enter on line 15 the total of the refundable credit. Line 25 – Electing Small Business Trust (ESBT) Income
Generally, estates and trusts cannot “pass through” to beneficiaries Add the distributive share of income from an S corporation if:
any refundable credit.
• such income is not included in the trust’s federal taxable income;
Financial Institutions Tax (FIT) Credit AND
If this taxpayer is responsible for filing and paying the Ohio financial
• such income is not required to be included in any individual’s
institutions tax, the taxpayer is entitled to a refundable credit equal
federal adjusted gross income (Schedule G may apply).
to the proportionate share of the lesser of either the amount of
tax due or the tax paid pursuant to R.C. section 5726.02 by the Line 26 – Losses From the Sale or Disposition of Ohio Public
taxpayer in their taxable year. See R.C. section 5747.65. Obligations
Enter the fiduciary’s share of any loss resulting from the sale or
Losses on Loans Made to the Ohio Venture Capital (OVC)
disposition of Ohio public obligations to the extent that such losses
Program
are deducted in calculating federal taxable income. See R.C.
The purpose of the credit is to provide OVC lenders and investors
sections 5747.01(S)(6) and 5709.76.
some security against losses on their loans to the program. The
credit for losses on loans made to the OVC program are refundable. Line 27 – Recovery of Amount Previously Deducted or
See R.C. sections 150.01 to 150.10, 5747.80 and 5747.98. Excluded from Federal Taxable Income
Enter the fiduciary’s share of any recovery amounts previously
Line 18 – Credit Carryover to 2017
deducted on a prior year’s Ohio trust or estate income tax return to
Enter the portion of your overpayment from line 17 that you want
the extent that the reimbursement is not included in federal taxable
to credit toward next year’s estimated tax liability.
income for 2016.
Line 19 – Refund
Subtract line 18 from line 17. This is the amount you want refunded. Line 28 – Depreciation Adjustment
R.C. sections 5747.01(S)(14) and 5747.01(A)(20) state that, in
Line 20 – Net Amount Due determining Ohio taxable income, a taxpayer that for federal income
If line 16 is less than line 13, then subtract the amount on line 16 tax purposes claims I.R.C. 168(k) bonus depreciation must add back
from the amount on line 13 and enter the result on this line. This is 2/3, 5/6 or 6/6 of that bonus depreciation that the taxpayer claimed
the net amount due. for the taxable year based upon the I.R.C.
Line 21 – Interest and Penalty on Late-Paid and/or Late-Filed These “add-back and subsequent deduction” laws also cover
Return (i) depreciable assets acquired by the taxpayer’s disregarded
Enter any interest and penalty as explained in the general entities and (ii) depreciable assets that are owned by pass-
instructions. through entities in which the taxpayer directly or indirectly
owns at least 5% (see R.C. section5747.01(A)(20)(a)).
Line 22 – Total Amount Due
Remit using any of the payment options as explained in the general In addition, if the taxpayer is an equity investor in a pass-through
instructions. entity that has claimed I.R.C. 168(k) bonus depreciation, and
if, because of the federal passive activity loss limitation rules or
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because of the federal at-risk limitation rules, the taxpayer is unable Line 36 – Interest/Gains from Ohio Public Obligations
to fully deduct a loss passing through from another pass-through Deduct interest income from Ohio public obligations and Ohio
entity to the taxpayer, then to the extent that the taxpayer does not purchase obligations if (i) the interest income was included in federal
recognize the loss, the taxpayer can defer making the “2/3, 5/6 or taxable income and (ii) the fiduciary did not distribute this income
6/6 add-back” until the taxable year or years for which the taxpayer to any beneficiary. See R.C. sections 5747.01(S)(6) and 5709.76.
deducts the pass-through entity loss and receives a federal tax
benefit from the bonus depreciation amount claimed by the other You may also deduct any gains resulting from the sale or disposition
pass-through entity. Of course, the taxpayer cannot begin claiming of Ohio public obligations to the extent (i) the income was included
the related subsequent years deduction until the first taxable year in federal taxable income and (ii) the fiduciary did not distribute
immediately following the taxable year for which the taxpayer makes this income to any beneficiary. See R.C. sections 5747.01(S)(7)
the 2/3, 5/6 or 6/6 add-back. Note: Make the add-back only to the and 5709.76.
extent that the fiduciary did not distribute the related income to the Line 37 – Refund or Reimbursements of a Prior Year
beneficiaries. Deduction
Line 29 – Personal Exemption (Estates Only) and Deduct refunds or reimbursements received for expenses
Miscellaneous Federal Tax Adjustments (Estates and Trusts) deducted as an itemized deduction on a prior year federal
Enter the amount of the personal exemption allowed to the estate income tax return if the fiduciary had to add back the refunds or
pursuant to I.R.C. 642(b). reimbursements on the federal 1041 return. Do not include any
amount shown on line 33.
Miscellaneous Federal Income Tax Adjustments
There are no miscellaneous federal tax adjustments on this return, There are no miscellaneous federal tax adjustments on this return,
however, you must make all other required adjustments for this line. however, you must make all other required adjustments for this line.
Visit the Legislative Updates page on our Web site at tax.ohio.gov. Visit the Legislative Updates page on our Web site at tax.ohio.gov.
Line 30 – Expenses Claimed on Ohio Estate Return (Estates Line 38 – Farm Income (Trusts Only)
Only) Deduct any amount that a trust was required to report as farm
Enter on this line expenses deducted on both the federal fiduciary income on its federal tax return, but only if the assets of the trust
income tax return (federal form 1041) and the Ohio estate tax directly or indirectly include at least 10 acres of land satisfying the
return (Ohio ET 2). However, enter -0- if this return is the estate’s definition of “land devoted exclusively to agricultural use” under R.C.
final return. section 5713.30 regardless of whether the land is valued for the
purposes as such under R.C. sections 5713.30-5713.38.
Deductions
Line 39 – Bonus Depreciation
The following applies to both trusts and estates except where Enter on this line 1/2, 1/5 or 1/6 of the depreciation expense added
noted. Deduct the income items described below only to the back on each of the previous years’ returns (see instructions for
extent that these amounts have not already been deducted or line 28). Important: S corporation shareholders cannot claim this
excluded from federal taxable income. deduction with respect to depreciable property for which the add-
back occurred while the corporation was a C corporation. See R.C.
Line 32 – Federal Interest and Dividends sections 5747.01(A)(21)(a) and 5747.01(S)(14).
Enter interest and dividend income net of related ordinary, necessary
and reasonable expenses, included in federal taxable income, from Line 40 – Repayment of Income Reported in a Prior Year
obligations of the United States government or its possessions/ Enter on this line any amount that was received and included in
territories that are exempt from Ohio tax by law. Examples of federal taxable income in a prior year that was paid back in 2016 if
interest-bearing obligations whose interest is exempt from Ohio (i) the repayment has not otherwise reduced your federal taxable
income tax are Series “E” or Series “H” U.S. Savings Bonds, U.S. income for 2016 or for any other taxable year and (ii) in the year
Treasury notes and bills, and Sallie Maes. the income was received the income did not qualify for either the
resident or nonresident credit.
Line 33 – State and Municipal Income Tax Refunds
Enter the amount of state and/or municipal income tax refunds Line 42 – Net Schedule A Adjustments
included in federal taxable income for the taxable year of this If line 31 is greater than line 41, subtract line 41 from line 31 and
return if the refunds relate to taxes previously claimed as itemized enter the amount on line 42. Also, copy this amount onto line 2 on
deductions on the decedent’s federal income tax return. the front of this return and add this amount to your federal taxable
income.
Line 34 – Losses From an ESBT
Deduct the distributive share of loss from an S corporation if: If line 31 is less than line 41, subtract line 31 from line 41 and
enter the amount on line 42.Shade the box on line 42 to show
• such loss has not been directly or indirectly deducted in computing that it is a negative number. Also, copy this amount onto line 2
the trust estate’s federal taxable income; AND on the front of this return. Shade the box on line 2 to show that
it is a negative number. Subtract this amount from your federal
• such loss is not deducted by any other person. taxable income.
Line 35 – Wage and Salary Expense Not Previously Deducted Note: ESBT income and loss on lines 25 and 34 along with any
Deduct the amount of wage and salary expense not otherwise depreciation adjustment addback or deduction on lines 28 and
deducted for federal income tax purposes because of the federal 29 attributed to the ESBT should be included in Schedule G and
targeted jobs credit or work opportunity credits. apportioned accordingly.
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or indirectly deducted, in computing federal taxable income, any
Schedule B – Estate Credits state income tax paid on that income.
The Schedule B credits correspond to applicable credits found Line 53
on the Ohio individual income tax return (Ohio IT 1040). Divide the amount on line 51 by the amount on line 52 and write
the percentage on this line. Multiply the percentage by the amount
Credit sharing: When calculating credits, the fiduciary cannot of tax on line 8 reduced by any amount shown on line 9 and the
include any amounts that are allocable to a beneficiary. Schedule E credits from line 10, and enter the result on line 53.
Generally these credits are apportioned on the basis of the
income allocable to the estate or trust. Line 54 – Taxes Paid to Other States
Enter the amount of taxes, less all related, nonrefundable credits,
Line 43 – Retirement Income Credit other than withholding, estimated payments and carryforwards from
An estate is entitled to a credit for retirement benefits received for previous years, paid to other states or the District of Columbia.
the benefit of the decedent’s surviving spouse but not distributed. Limitation: Do not include income for which the estate has directly
The amount of the credit is as follows: or indirectly deducted, in computing federal taxable income, any
$500 or less ............................................................................$ 0 state income tax paid on that income.
More than $500 but not more than $1,500 .............................$ 25
More than $1,500 but not more than $3,000 ..........................$ 50 Schedule D – Estate Nonresident Credit
More than $3,000 but not more than $5,000 ..........................$ 80
More than $5,000 but not more than $8,000 ..........................$130 Line 56 – Portion Not Earned in Ohio
More than $8,000 ...................................................................$200 Nonresident estates should enter the portion of Ohio taxable
income on line 3 that is not apportioned or allocated to Ohio
Line 44 – Lump Sum Retirement Credit pursuant to R.C. sections 5747.20 through 5747.231. Use Ohio
An estate may claim this credit for eligible lump sum retirement IT 2023 and include with the Ohio IT 1041.
distributions. See Ohio LS WKS, page 1, which is available on our
Web site at tax.ohio.gov. Line 58 – Nonresident Credit
Divide the amount on line 56 by the amount on line 57. Multiply the
Line 45 – Senior Citizen’s Credit percentage by the amount of tax on line 8 reduced by the amount
An estate may claim this credit if the decedent was 65 years or older shown on line 9 and the Schedule E credits from line 10. This amount
as of the date of death (limit $50 per return). is the estate’s nonresident credit.
Line 46 – Lump Sum Distribution Credit Schedule E – Nonrefundable Business Credits
An estate may claim this credit if the decedent was 65 years or
older as of the date of death. See Ohio LS WKS, page 2, which is To claim the nonrefundable business credit, use Schedule E,
available on our Web site at tax.ohio.gov. which is not contained in this booklet. You may obtain Schedule
E from our Web site at tax.ohio.gov.
Line 47 – Child and Dependent Care Credit
An estate may claim this credit if the decedent qualifies for the Schedule F – Allocated Qualifying Trust Amounts
federal child and dependent care credit. See R.C. section 5747.054. for Trusts Recognizing Gains or Losses from the
Disposition of Closely Held Investments
Line 48 – Ohio Political Contributions Credit
An estate may claim this credit for contributions made to the The qualifying trust amount means capital gains and losses from
campaign committee of a statewide office. the sale, exchange or other disposition of equity or ownership
interest in, or debt obligations of, a closely held qualifying
Line 49 – Ohio Adoption Credit (Limit $10,000) investee to the extent included in the trust’s Ohio taxable income,
An estate may claim this credit if the descendant adopted a minor but only (i) if the location of the physical assets of the investee is
child (under 18 years of age) during the taxable year. The amount available to the trust and (ii) the investment in the investee is (or
of the credit for each minor child legally adopted by the taxpayer was) a closely held investment. See R.C. section 5747.01(BB)
shall equal the greater of the following: (2) and 5747.011.
1. $1,500 (one-thousand five-hundred dollars);
If the location of the qualifying investee’s assets is not available
2. The amount of expenses incurred by the taxpayer and the to the trust, then there is no qualifying trust amount. Generally,
taxpayer’s spouse to legally adopt the child, not to exceed the location of the physical assets of a closely held corporation (the
$10,000 (ten-thousand dollars). For the purposes of this division, qualifying investee) is available to the trust. The portion of the trust’s
expenses incurred to legally adopt a child include expenses Ohio taxable income represented by the qualifying trust amount will
described in R.C. section 3107.055, division (C). be allocated to Ohio by multiplying the capital gains and losses by
the Ohio percentage as described below.
Schedule C – Estate Ohio Resident Credit
The Ohio percentage is a fraction whose numerator is the net book
Line 51 – Portion Taxed by Another State value of the physical qualifying investee’s assets in Ohio. The
Resident estates should enter the portion of Ohio taxable income denominator of the Ohio percentage is the net book value of the
(line 3) that was subjected to tax in another state or in the District qualifying investee’s physical assets everywhere. This method of
of Columbia, plus or minus any related adjustments in Schedule A. allocating gains and losses to Ohio is similar to the method used for
Limitation: Do not include income for which the estate has directly corporation franchise tax purposes with respect to allocating gains
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and losses from the sale or other disposition of intangible property • Patents and copyright royalties used by the payor in Ohio;
that may produce dividend income.
• Ohio Lottery Commission winnings and gains and/or losses from
Special Notes: the sale or transfer of such winnings.
(1) If the qualifying investee is a member of a qualifying
controlled group, as defined in R.C. section 5733.04(M), then Schedule I – Tax Credit for Resident Trusts
special rules apply for purposes of calculating the Ohio ratio.
See R.C. section 5747.01(BB)(5). Line 68 – Portion Taxed by Another State
Enter the amount of the resident trust’s allocated nonbusiness
(2) A gain or loss will be a “qualifying trust amount” only if the income (line 62) subjected to tax by another state or in the District
investment in the qualifying investee constitutes a closely held of Columbia.
investment. Most gains and losses will not be qualifying trusts
amounts. See R.C. sections 5747.01(BB)(2) and 5747.011. Example: The Pat Smith Trust, a resident trust, has no qualifying
trust amount and no business income. The resident trust had
(3) If qualifying trust amount capital gains/losses were recognized modified Ohio taxable income of $75,000 from dividends. The
on account of the sale, exchange or other disposition of more than tax shown on line 8 on the Ohio IT 1041 is $3,158. Another state
one investment, then the fiduciary must make a separate calculation imposed on the trust an income tax of $1,100 based upon taxable
for each gain/loss. income of $25,000, which the trust reported to that state. The trustee
Line 59 – Trust’s Portion of Capital Gains/Losses would calculate the resident tax credit as follows:
Recognized Line 68 $25,000
Enter the trust’s portion of capital gains/losses from the sales, Line 69 $3,158
exchange or other disposition of equity or ownership interest in, Line 70 $75,000
or debt obligations of, a closely held qualifying investee to the Line 71 .0421
extent included in Ohio taxable income (line 3)ifthe location of the Line 72 $1,053
physical assets of a closely held qualifying investee is available. Line 73 $1,100
If the investee is not closely held or if the location of the physical Line 74 $1,053
assets of the closely held investor is not available, then enter -0-.
See R.C. section 5747.01(BB)(5). Apportionment Factors
Line 60 – Ohio Percentage of Closely Held Investee’s Ohio Revised Code (R.C.) Section 5747.013(B)
Physical Assets
Divide the book value of the physical assets of the closely held Note: When calculating the Ohio income tax, a trust that has invested
qualifying investee in Ohio by the book value of the physical assets in a pass-through entity must apply the “aggregate” (conduit) theory
of the closely held investee located everywhere and enter the of taxation. That is, the character of all income and deductions (and
percentage derived on line 57. adjustments to income and deductions) realized by an S corporation
or a partnership or a limited liability company (treated as a partnership
Schedule G – Apportioned Income for Trusts for federal income tax purposes) in which the trust has invested retains
that character for purposes of the withholding tax and the entity tax
Line 62 – Business Income and Qualifying Investment when recognized by the qualifying pass-through entity. Furthermore,
Income the trust must include in its apportionment ratio its proportionate share
Enter the trust’s portion of Ohio taxable income (line 3) not included of each lower-tiered pass-through entity’s property, payroll and sales.
on line 56 to the extent such income is either of the following: See R.C. section 5747.231.
• Business income/loss (see R.C. section 5747.01(B)); OR If the apportioned income from business income/losses and from
qualifying investment income was received from more than one entity
• Qualifying investment income (see R.C. section 5747.012). whose businesses are not unitary with each other, then the trust
must make a separate apportionment calculation for each business.
Schedule H – Allocated Nonbusiness Income
for Trusts Property Factor (Line 75)
The property factor is a fraction whose numerator is the average value
Line 65 – Allocation of Income for Resident Trusts of the trust’s includible real and tangible personal property owned or
Resident trusts must enter the trust’s Ohio taxable income (line 3) rented, and used in the trade or business in Ohio during the taxable
not reported on lines 56 or 59. year, and the denominator of which is the average value of all the
Line 66 – Allocation of Income for Nonresident Trusts trust’s includible real and tangible personal property owned or rented,
Nonresident trusts must enter the following types of nonbusiness and used in the trade or business everywhere during such year.
income to the extent included in the trust’s Ohio taxable income Property owned is valued at its original cost average value.
(line 3) and not reported on line 56 or 59: Average value is determined by adding the cost values at the
• Capital gains or losses from the sale, exchange or transfer of beginning and at the end of the taxable year and dividing the
Ohio real property and/or Ohio-based tangible personal property; total by two. The tax commissioner may require the use of
monthly values during the taxable year if such values more
• Rents and royalties from Ohio real property and/or tangible reasonably reflect the average value of the entity’s property.
personal property used in Ohio; In determining average value, exclude from “Within Ohio” and from
“Total Everywhere” the following:
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• Construction in progress. taxable year. Compensation is paid in Ohio if any of the following
apply:
• The original cost of property within Ohio with respect to which
the state of Ohio has issued an air pollution, noise pollution or • The recipient’s service is performed entirely within Ohio; OR
an industrial water pollution control certificate. See division (B)
(1) of R.C. section 5747.013. • The recipient’s service is performed both within and outside
Ohio, but the service performed outside Ohio is incidental to the
• The original cost of real property and tangible property (and in the recipient’s service within Ohio; OR
case of property that the trust is renting from others, eight times
the net annual rental rate), which is used exclusively during the • Some of the recipient’s service is performed within Ohio and
taxable year for qualified research as defined in division (A)(2) either the recipient’s base of operations, or if there is no base of
of R.C. section 5747.13. operations, the place from which the recipient’s service is directed
or controlled is within Ohio, or the base of operations or the place
• Property that the trust owns but leases to a lessee to be used in from which the service is directed or controlled is not in any state
the lessee’s trade or business. in which some part of the service is performed, but the recipient’s
residence is in Ohio.
Line 75a – Property Owned – Within Ohio
Enter the average value of the real property and tangible personal Compensation is paid in Ohio to any employee of a common or
property, including leasehold improvements, owned and used in the contract motor carrier corporation who performs his regularly assigned
trade or business in Ohio during the taxable year. duties on a motor vehicle in more than one state in the same ratio
by which the mileage traveled by such employee within Ohio bears
Line 75a – Property Owned – Total Everywhere to the total mileage traveled by such employee everywhere during
Enter the average value of all the real property and tangible personal the taxable year. The statutorily required mileage ratio applies only
property, including leasehold improvements, owned and used in the to contract or common carriers. Thus, outside approval by the tax
trade or business everywhere during the taxable year. commissioner, a manufacturer or merchant who operates its own fleet
of delivery trucks may not situs driver payroll based upon the ratio of
Line 75b – Property Rented miles traveled in Ohio to miles traveled everywhere. See Cooper Tire
Enter the value of the real property and tangible personal property and Rubber Co. v. Limbach (1994), 70 Ohio St. 3d 347.
rented and used in the trade or business in Ohio and everywhere
during the taxable year and not excluded above. Property rented is Line 76 – Payroll Total – Everywhere
valued at eight times the annual rental rate (annual rental expense Enter the total amount of the compensation paid everywhere during
less subrental receipts). the taxable year.
Line 75c – Property Total – Within Ohio and Total Everywhere Line 76– Payroll Ratio
Add lines 72a and 72b for Within Ohio and Total Everywhere. Enter the ratio of payroll Within Ohio to Total Everywhere by dividing
the amount Within Ohio by the Total Everywhere amount.
Line 75c – Property Ratio
Enter the ratio of property Within Ohio to Total Everywhere Line 76 – Weighted Payroll Ratio
by dividing the amount Within Ohio by the Total Everywhere Multiply the payroll ratio on line 73 by the payroll factor weighting
amount. of 20% or adjusted weight if any other ratio is missing.
Line 75c – Weighted Property Ratio Sales Factor (Line 77)
Multiply the property ratio on line 72c by the property factor weighting
of 20% or adjusted weight if any other ratio is missing. The sales factor is a fraction whose numerator is composed of
the trust’s total sales in Ohio during the taxable year and whose
Payroll Factor (Line 76) denominator is the sum of the trust’s total sales everywhere during
The payroll factor is a fraction, the numerator of which is the total the taxable year.
compensation paid in Ohio during the taxable year by the trust, and Exclude the following receipts from both the numerator and the
the denominator of which is the total compensation paid both within denominator of the sales factor even if the receipts arise from
and outside Ohio during the taxable year by the trust. As used below, transactions, activities and sources in the regular course of a trade
the term “compensation” means any form of remuneration paid to or business:
an employee for personal services. Do not include in Within Ohio
or in Total Everywhere the following: • Interest or similar amounts received for the use of, or for the
forbearance of the use of, money.
• Guaranteed payments made to partners.
• Dividends.
• Compensation paid in Ohio to employees who are primarily
engaged in qualified research. • Receipts and any related gains and losses from the sale or other
disposal of capital assets or of assets described in I.R.C. 1231.
• Compensation that an S corporation, in which the trust has an
equity interest, paid to any shareholder if the shareholder directly • Receipts from (a) an at-least-80%-owned public utility other than
or indirectly owned at least 20% of the S corporation at any time an electric company, combined electric company, or telephone
during the year. R.C. section 5733.40(A)(7). company, (b) an at-least-80%-owned insurance company or (c)
an at-least-25%-owned financial institution.
Line 76 – Payroll Within Ohio
Enter the total amount of the compensation paid in Ohio during the
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Line 77 – Sales Within Ohio or other obligations (for example, time expended in negotiating
Enter the total of gross receipts from sales, not otherwise excludable the contract) is excluded from the computation.
from the numerator and the denominator of the sales factor, to the
extent the includible gross receipts are from sales in Ohio. Sales The term “income-producing activity” means, with respect to each
in Ohio include the following: separate item of income, the transaction and activity directly
engaged in by the taxpayer in the regular course of its trade
• Receipts from sales of tangible personal property inventory, less or business for the purpose of obtaining gains or profits. Such
returns and allowances, received by the purchaser in Ohio. In activity does not include transactions and activities performed on
the case of delivery of tangible personal property by common behalf of the taxpayer, such as those conducted on its behalf by
carrier or by other means of transportation, the place at which an independent contractor.
such property is ultimately received after all transportation has
been completed is considered as the place at which such property The term “cost of performance” means direct costs determined in a
is received by the purchaser. Direct delivery in Ohio, other than manner consistent with generally accepted accounting principles
for purposes of transportation, to a person or firm designated by and in accordance with accepted conditions or practices in the
a purchaser constitutes delivery to the purchaser in Ohio, and taxpayer’s trade or business. For purposes of this term receipts
direct delivery outside Ohio to a person or firm designated by a from rental property are sitused to this state if the property (i) is
purchaser does not constitute delivery to the purchaser in Ohio, used entirely in this state or (ii) is used more in this state than in
regardless of where title passes or other conditions of sale. any other state.
Customer pick-up sales are situsable to the final destination after Line 77 – Sales Total – Everywhere
all transportation (including customer transportation) has been Enter the total of such includible gross receipts, less returns and
completed. See Dupps Co. v. Lindley (1980), 62 Ohio St. 2d 305. allowances, from sales everywhere.
Revenue from servicing, processing or modifying tangible Line 77 – Sales Ratio
personal property is sitused to the destination state as a sale Enter the ratio of sales Within Ohio to Total Everywhere by dividing
of tangible personal property (rather than sitused as service the amount Within Ohio by the Total Everywhere amount.
revenue). See Custom Deco, Inc. v. Limbach, BTA Case No. Line 77 – Weighted Sales Ratio
86-C-1024, June 2, 1989. Multiply the sales ratio on line 74 by the sales factor weighting of
60% or adjusted weight if any other ratio is missing.
• Receipts from sales of real property inventory in Ohio.
Net Payment Worksheet
• Receipt from sales, other than sales of inventory, if:
Line 79a – Enter the sum of the estimated payments remitted for
The income-producing activity is performed entirely within Ohio; OR tax year 2016.
The income-producing activity is performed both within and Line 79b – Enter the amount of the 2015 overpayment that was
outside Ohio and a greater proportion of the income-producing credited to the 2016 tax liability (line 18 of the 2015 Ohio IT 1041).
activity is performed within Ohio than in any other state, based on
cost of performance. If the income-producing activity involves the Line 79c – Enter the sum of all withholdings received on federal
performance of personal services both within and outside Ohio, form 1099. Include all federal 1099 forms to the back of the return.
the services performed in each state will constitute a separate
income-producing activity. In such case the gross receipts for the Line 79d – Enter the sum of all withholdings received on federal
performance of services attributable to Ohio shall be measured forms W-2 and W-2G. Include all federal W-2 and W-2G forms with
by the ratio that the time spent in performing such services in the return.
Ohio bears to the total time spent in performing such services
everywhere. Time spent in performing services includes the Line 79e – For amended returns only – Enter the amount of any
amount of time expended in the performance of a contract or refunds previously claimed, even if not yet received, for tax year
other obligations that gives rise to such gross receipts. Personal 2016.
service not directly connected with the performance of the contract
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Matching Expense and Loss Amounts
and Distribution Deductions Against Income and Gain
The fiduciary should directly match against items of income and Matching of Directly Related Expenses and Losses
gain (and against excluded income and gain, if any) those expenses
and losses that are directly related to the items of income or gain. Rental Activity
With respect to those expenses and distributions which the fiduciary
Rents $ 530,000
cannot directly match to items of income and gain, the department
Less: Depreciation expense - 100,000
recommends the fiduciary proportionately assign those expenses
Real estate taxes and payroll expenses - 25,000
and distributions. Generally, the basis for assigning expenses,
Attorney fees - 5,000
losses and distributions will be the relative profit for each activity.
Tentative apportionable profit from rental
Example #1 (this example illustrates the assigning of direct dis - activities (business income) $ 400,000
tributions):
Portfolio Income
The trust document directs that the fiduciary distribute to Lee,
a beneficiary, 75% of the yearly profit from rental activities. The Dividends, interest and net capital gains $ 301,000
rental activity profit constitutes business income. For the year the Less: Investment advisor fees - 1,000
rental profit was $100,000, there was no other income and the only Tentative profit from “portfolio” income
distributions was $75,000 to Lee. (nonbusiness income) $ 300,000
The fiduciary must reduce the trust’s rental profit by the distribution Matching of Nondirectly Related Expenses
deduction attributable to the rental profit (in this example, 75% of and Losses and Distribution Deduction Not
the rental activity profit). So the amount to be shown on Schedule Directly Related to Specific Items of Income and Gain
G, line 59, will be $25,000.
In this example the total of such expenses, losses and distributions
Example#2 (this example illustrates the assigning of (i) direct ex- is $70,000: fiduciary fees of $10,000 and distribution deduction of
penses, losses and distributions and (ii) indirect expenses, losses $60,000.
and distributions):
Portion of $70,000 assigned to the rental activity:
Gross rent $530,000
Dividend income 200,000 $400,000 X $70,000 = $ 40,000
Interest Income 41,000 $400,000 + $300,000
Net capital gain (stocks and bonds) 60,000
Rental property depreciation expense - 100,000 Portion of $70,000 assigned to the portfolio income:
Rental property real estate taxes and related
payroll expenses - 25,000 $300,000 X $70,000 = $ 30,000
Attorney fees (lease preparation) - 5,000 $400,000 + $300,000
Investment advisor fees (stocks & bonds) - 1,000
Fiduciary fees (based upon profit) - 10,000 Amount of apportionable business income to be
Distribution deduction (discretionary) - 60,000 reported on Schedule G, line 59:
Taxable income per federal form 1041 $ 630,000
$400,000 - $40,000 = $ 360,000
Other information: (i) the rental profit constitutes business income,
(ii) for purposes of this example, all other income and gain constitute Amount of allocable nonbusiness income to be
nonbusiness income, (iii) there are no “Schedule A” Ohio adjust - reported on Schedule H, line 62:
ments (so Ohio taxable income is the same as taxable income $300,000 - $30,000 = $ 270,000
per federal form 1041), and (iv) there are no items of closely held
investee gains (losses) and no items of qualifying investment income Ohio taxable income $ 630,000
(see Schedules F and G, respectively).
Federal Privacy Act Notice
Because we require you to provide us with a Social Security number, the Federal Privacy Act
of 1974 requires us to inform you that providing us your Social Security number is mandatory.
Ohio Revised Code sections 5703.05, 5703.057 and 5747.08 authorize us to request this
information. We need your Social Security number in order to administer this tax.
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Ohio Income Tax Table
To be used for calculating the tax for line 8 for the taxable year beginning in 2016.
Amount on Line 3 2016 Ohio Tax (to Line 8)
(Estates) or Line 7 (Trusts)
$0 - $5,250 0.495% of Ohio taxable Income
$ 5,250 - $ 10,500 $25.99 plus 0.990% of the amount in excess of $5,250
$ 10,500 - $ 15,800 $77.97 plus 1.980% of the amount in excess of $10,500
$ 15,800 - $ 21,100 $182.91 plus 2.476% of the amount in excess of $15,800
$ 21,100 - $ 42,100 $314.14 plus 2.969% of the amount in excess of $21,100
$ 42,100 - $ 84,200 $937.63 plus 3.465% of the amount in excess of $42,100
$ 84,200 - $105,300 $2,396.40 plus 3.960% of the amount in excess of $84,200
$105,300 - $210,600 $3,231.96 plus 4.597% of the amount in excess of $105,300
More than $210,600 $8,072.60 plus 4.997% of the amount in excess of $210,600
For other taxable years, see our Web site at tax.ohio.gov.
Important Notice
If at the date of death the decedent was domiciled in a school district imposing a school district income tax on estates and if the fidu-
ciary of the estate is required to file Ohio IT 1041, then the fiduciary of the estate must also file for that taxable year a School District
Estate Income Tax Return, Ohio SD 100E.
For assistance and/or forms, see our Web site at tax.ohio.gov or contact the Ohio School District Income Tax Office, P.O. Box 182389,
Columbus, OH 43218-2389.
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Taxpayer Assistance
By Internet Ohio Department of Taxation For the deaf, hearing-impaired or
Web Site – tax.ohio.gov speech-impaired who use TTY or
TDD only: Contact the Ohio Relay
E-mail Us Instructions Service at 7-1-1 or 1-800-750-0750
Frequently Asked Questions Refund Status and give the communication assistant
Information Releases Tax Forms the Ohio Department of Taxation phone
number that you wish to contact.
Volunteer Income Tax Assistance
By Phone Toll-Free Telephone Numbers Program (VITA) and Tax Counseling
for the Elderly (TCE): These programs
Toll-Free 24-Hour Refund Hotline 1-800-282-1784
help older, disabled, low-income and
Toll-Free Tax Questions 1-800-282-1780 non-English-speaking people fill in their
state and federal returns. For locations
in your area, call the IRS at 1-800-829-
1040.
Written Ohio Department of Taxation
Taxpayer Services Mailing Address
Ohio Department of Taxation
Taxpayer Services Division
P.O. Box 182382
Columbus, OH 43218-2382
Walk-in Ohio Department of Taxation
Taxpayer Service Center
Taxpayer Service Center Hours
Office hours: 8 a.m. – 5 p.m.
Monday through Friday
4485 Northland Ridge Blvd., 1st Floor
Columbus, OH 43229-6596
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