Ohio Withholding laws & compensation compliance analysis

Ohio Withholding: What you need to know

Ohio law requires employers to withhold state income taxes from the all wages of residents and wages for services performed in Ohio of certain nonresidents. Withholding is not required for employees who are residents of Indiana, Kentucky, Michigan, Pennsylvania, or West Virginia.
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Ohio has conformed its income tax statutes to the Internal Revenue Code. Thus, compensation that is subject to federal withholding is also subject to state withholding. Ohio, however, extends the tax exemption for health coverage of nondependent adult children to age 28 for state tax purpose (OH Code Sec. 5701.11).
Exclusions. Payments for some services, including the following, are exempt from withholding:
• Agricultural labor
• Domestic service in a private home or in a local sorority or fraternity
• News carriers under the age of 18 delivering to consumers
• Services performed by employees who earn less than $300 in a calendar quarter and are not regularly employed
Contributions to a “cafeteria” plan or a deferred compensation plan are exempt from withholding.
In addition to the state income tax, some Ohio cities, towns, smaller communities, and school districts impose their own income tax on the wages of residents and nonresidents.
Registration. All employers maintaining an office or transacting business in Ohio and required to withhold federal income tax must register by completing and filing Form IT 1, Application for Registration as a Withholding Agent, with the Ohio Department of Taxation. An Ohio withholding account number will be assigned to new withholding agents after registration. All forms and correspondence must reflect this account number. Employers ...

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