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State and Local Taxes Newsletter

State and Local Tax Update – December 2016

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Major “Due Date” Changes for 2016 Tax Returns

Legislation enacted in 2015 changed the tax return filing dates for corporate, partnership and certain other returns filed for tax years beginning after December 31, 2015.

Federal partnership returns (Form 1065) are now due on March 15 for calendar year filers and the 15th day of the third month after the close of the tax year for fiscal year taxpayers.  In the past, partnership returns were due on April 15 or the 15th day of the fourth month after the close of the tax year.

Federal corporation returns (Form 1120) are due on April 15 for calendar year filers.  For fiscal year filers, the returns are due on the 15th day of the fourth month after the close of the tax year. However, there is an exception for corporations with a fiscal year ending June 30.  For these corporations, the new due date will not apply until year 2026. In the past, C corporation returns were due on March 15 or the 15th day of the third month after the close of the tax year.

Many states have made corresponding changes to the income tax return due dates in order to conform to the federal provisions.  Depending on the type of entity and the year end, these changes will affect taxpayers differently.  Please review your return filing due dates in order to gather and submit your information timely as well as avoid late payment penalties.


Indiana County Income Tax Credit Allowed

All Indiana residents who are subject to a county income tax, and are also required to pay income taxes to a locality outside Indiana, are allowed a credit against their Indiana county tax liability.

Sufficient documentation includes withholding statements or other evidence of tax payment if no return is required to be filed with a locality outside Indiana. If the taxpayer is required to file a return with a locality in another state, a copy of the return must be submitted with the claim for credit.

The allowable credit is equal to the lesser of:

  • The amount of income tax actually paid to a locality in another state;
  • The amount of adjusted gross income taxed by the locality outside of the state of Indiana multiplied by the county rate to which the taxpayer is subject; or
  • The amount of county tax due on the Indiana return.

Ohio Income Tax: New Pass-Through Entity Form IT K-1

The Ohio Department of Taxation has issued a new form, Ohio IT K-1, to aid practitioners and taxpayers track income, adjustments, credits and apportionment through multi-tiered pass-through entity ownership chains. The Ohio IT K-1 will also provide information needed by the taxpayer to compute the Ohio Business Income Deduction and the nonresident credit.  Pass-through entities are required to complete form Ohio IT K-1 for each of its investors. Taxpayers filing the IT 1040 (individual investors), IT 4708 (pass-through entity investors), or IT 1041 (fiduciary investors) should include form Ohio IT K-1.

Ohio also issued guidance regarding the choice of a pass-through entity to file a “Composite” return (IT 4708) or a “Withholding” return (IT 1140).  If you do business in Ohio, please see your Somerset tax advisor to discuss which method will give you the lowest tax liability.

See your Somerset advisor for any questions regarding these updates, or get in touch with us at info@somersetcpas.com.