An employee withholding exemption certificate is the official form that an employer is supposed to use for federal or state income tax withholding purposes. Federal withholding requires employers and employees in the United States to use a standard form; however, state requirements vary. The state of Ohio has multiple exemption certificates. Employers and employees in Ohio are supposed to use the form that corresponds to the situation.
Resident and nonresident employees working in Ohio are typically subject to state income tax. Employees who live in a school district that has enacted school district tax are subject to school district tax. Employers in Ohio must give new hires an IT 4 form, or Employee’s Withholding Exemption Certificate, to complete. The employee puts her withholding conditions on the form, such as exemption for herself, spouse and dependents, and the school district that she resides in. The employer uses the employee’s IT 4 and the state tax-withholding tables to figure out state income tax, and if applicable, school district tax.
Ohio has a tax reciprocity agreement with Michigan, Indiana, Kentucky, West Virginia and Pennsylvania. This means that employees who live in any one of those states but work in Ohio are not subject to Ohio income tax; these employees are subject to income tax in their home state. Employees subject to the reciprocity agreement must complete an IT 4NR form, or Employee’s Statement of Residency in a Reciprocity State, and submit it to their employer so she knows not to withhold Ohio income tax.
IT 4 MIL
An Ohio resident military member stationed outside Ohio can claim exemption from Ohio income tax and school district tax for military pay and allowances he receives for active-duty service. To claim exemption, he must complete an IT 4 MIL form, or Military Employee Exemption From Withholding, and give it to his finance officer. The exemption does not apply to earnings he receives while on nonactive-duty status or while stationed in Ohio.
The Federal Military Spouses Residency Relief Act says that the earnings of the civilian spouse of a military member is exempt from state income tax if the service member and her spouse live in the same state and if their resident state is different from where the service member receives her orders. Therefore, a civilian spouse is not subject to Ohio income tax if her and her spouse’s resident state is not Ohio. To claim this exemption, she completes an IT MIL-SP form, or Exemption from Withholding – Military Spouse Employee, and submits it to her employer.
Employees in Ohio are subject to federal income tax withholding. The employee completes a W-4 form, or Employee’s Withholding Allowance Certificate, and submits it to his employer. The employer uses the form and the IRS Circular E tax-withholding tables to figure out the amount of federal income tax to withhold from the employee’s paychecks. The employee can claim exempt from federal income tax withholding on his W-4.