Q&A of the Week July 29, 2020

If you live in Kentucky and work as an employee in Ohio, you pay taxes to Kentucky and nothing to Ohio. 

If you live in Kentucky and own a business in Ohio, you pay taxes to Ohio on the Ohio profit. Kentucky will give you a credit for taxes paid to another state. On the Kentucky tax form, you will calculate the taxes you would owe as though the profit was originally taxed to Kentucky. The credit for the Ohio taxes paid on the actual profit reduces the actual Kentucky tax liability.  

If you are set up as a Pass-through Entity (S Corporation or Partnership), when your company files its own tax return, the company itself is not responsible for the tax obligation to Ohio. The income will pass through to you as the owner.  

You are personally liable for your share of the taxes on the business profit.