Deferred Compensation Plan Tax Treatment In Ohio
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Multi-State
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US-00418BG
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Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a date after which the income is actually earned. A Deferred Compensation Agreement is a contractual agreement in which an employee (or independent contractor) agrees to be paid in a future year for services rendered. Deferred compensation payments generally commence upon termination of employment (e.g., retirement) or death or disability before retirement. These agreements are often geared toward anticipated retirement in order to provide cash payments to the retiree and to defer taxation to a year when the recipient is in a lower bracket. Although the employer's contractual obligation to pay the deferred compensation is typically unsecured, the obligation still constitutes a contractual promise.
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Withdrawals from Ohio deferred compensation plans are treated as regular income for tax purposes, but the timing is flexible. Additionally, the Ohio Department of Taxation provides a fillin worksheet to assist in the calculation of the credit.Contributions and any earnings are tax-deferred (both federal and state income taxes) until money is withdrawn. Withdrawals are taxed at ordinary income levels. File your taxes, make a payment, online services, estimate your tax – Quick Calc, forms and instructions, form mailing addresses, filing due dates. As a public employee you are required to complete and file this form within 45 days of beginning employment. Please fill out the form in blue or black ink. 2.