The “Ohio Economic Dashboard” is indicating some positive numbers in job creation, wages, job retention, the housing market and new business.  Based on the latest update in mid-January, here are some highlights:

Job Creation is Up
Ohio ranks ninth in the nation in job creation, up from 47th four years ago.
Ohioans created nearly 160,000 new private sector jobs from January 2011-November 2013. January 2007-November 2009: 47th in the nation, January 2011-October 13: ninth in the nation.
Source: U.S. Bureau of Labor Statistics

Wages Are Up
Since January 2011, Ohio incomes are growing twice as fast as the national rate.
Weekly Wages, January 2011-November 2013 Ohio: +9.3 percent
US: +4.5 percent
Source: U.S. Bureau of Labor Statistics

Labor Market Grows
The number of Ohioans with a job or looking for one has increased over the past 12 months, reflecting increased strength and confidence in Ohio’s economy. This contrasts with the national level, where the size of the labor force decreased during the same period.
Source: U.S. Bureau of Labor Statistics

Job Retention is Up
More Ohioans are staying on the job – initial claims for unemployment in 2013 were the lowest since 2000; down 8 percent from last year, and down 24 percent from 2010.
January 2013-December 2013: 587,340 initial unemployment claims
January 2012-December 2012: 638,021
January 2010-December 2010: 768,594
Source: Ohio Department of Jobs & Family Services

Housing Market Is Strong
Ohio’s housing market is reflecting our state’s strengthening economy and is experiencing its 29th straight month of year-over-year growth—an all-time record—and home values are up more than 5 percent in 2013.
January 2013-November 2013: $142,295 average home price
January 2012-November 2012: $135,258 average home price
Source: Ohio Association of Realtors

New Businesses Are Being Created
In 2013, 89,735 businesses were created in Ohio, the most in state history, surpassing the old record set in 2012.
January 2013-December 2013: 89,735 new businesses
Source: Ohio Secretary of State 

Beginning in 2013, a new Medicare tax may apply to your dividend and interest income. Under the Affordable Health Care Act, taxpayers with modified adjusted gross income (MAGI) over $200,000 per year ($250,000 for joint filers and $125,000 for married filing separately) may owe a new Medicare contribution tax, also referred to as the “net investment income tax” (NIIT). The tax equals 3.8 percent of the lesser of your net investment income or the amount by which your MAGI exceeds the threshold.

Only individuals with some amount of net investment income and MAGI above the applicable threshold amount will be subject to the 3.8 percent NIIT. For example, if a married couple has $200,000 of wage income and $100,000 of interest and dividend income (i.e., MAGI totaling $300,000), the 3.8 percent NIIT applies to the $50,000 that is over the $250,000 MAGI threshold.

Trusts and estates may also be hit with the 3.8 percent NIIT. But for them, the tax applies to the lesser of their undistributed net investment income or AGI in excess of the threshold for the top trust federal income tax bracket. For 2013, that threshold is only $11,950, so many trusts and estates will likely be affected.

The components of net investment income generally include gross income from interest, dividends, royalties and rents; gross income from a trade or business involving passive activities; and net gain from the disposition of property (other than property held in a trade or business in which the owner materially participates). All of these components are reduced by any allocable deductions.

The rules on what is or isn’t included in net investment incomer are somewhat complex, so consult your Whalen tax adviser for additional information.

Finally, many of the strategies that can help you save or defer income tax on your investments can also help you avoid or defer NIIT liability. Because the threshold for the NIIT is based on MAGI, strategies that reduce your MAGI, such as making retirement plan contributions, can also help you avoid or reduce NIIT.

Please contact your tax adviser to discuss the 3.8 percent NIIT or any other tax compliance or planning issue.

The state has renewed the popular Ohio Incumbent Workforce Training Voucher Program that provides funds to reimburse eligible employers for certain training costs for their employees.

A total of $27 million in grants will be awarded on a first-come, first-served basis. Applications for the grant program will be accepted for review on September 30, beginning at 10 a.m.  A pre-application became available on September 5. If you wish to take advantage of this program, I encourage you to visit the website as soon as possible to review the program’s guidelines for this new round of funding.

Last year in the first year of the program all available funds were accounted for on the first day of the application period so it is crucial that clients who seek funding be ready to apply on September 30.

The program provides training dollars to Ohio’s incumbent workforce through a unique public-private partnership with Ohiomeansjob.com. The program’s goal is to help employers retain and grow their existing Ohio workforce and create a statewide workforce that can meet the present and future demands in an ever-changing economy.

The program is not a tax credit. It is designed to offset a portion of an employer’s costs to upgrade the skills of its incumbent workforce and provides reimbursement to eligible employers for specific training costs accrued during skill-upgrade training. Eligible employers must demonstrate that by receiving funding assistance their business will not only obtain a skilled workforce but will improve their company processes and competitiveness.

The program will reimburse employers for the cost of the training up to $4,000 per employee and/or up to $250,000 per company per fiscal year once the employer has paid the full cost of the training. The employer’s contribution must come from private sources and must not include any previously acquired public funds. The match does not include wages.

As a result of the information about last year’s program in our Insight newsletter, a local company applied for funding and received nearly $40,000 in training reimbursement costs. You may similarly benefit from this program, but you must be ready to apply when the application period begins on September 30.

Let us know if we can be of assistance in helping you with the application process.

Since 2007, the Ohio homestead exemption has reduced property taxes for homeowners 65 or older, regardless of their income, and for permanently and totally disabled homeowners. The average savings per homeowner has been estimated to be about $400 per year, although the tax break varies based on local community tax rates.

But the state legislature changed the eligibility requirements through provisions in the budget bill passed at the end of June. In 2014 the Ohio homestead exemption will have an income limit of $30,000.

This means that Ohio seniors who owned and occupied their home as their primary residence as of January 1, 2013, and are 65, or turn 65 by December 31, 2013, should file a homestead exemption application for 2013 or the prior year (2012) with their county auditor.

Auditors in Franklin, Fairfield and Hocking counties have extended the application-filing deadline to December 31. The Licking County Auditor will accept application until mid-December. The auditors in Delaware, Fayette, Knox, Madison, Perry, Pickaway and Union counties are not deviating from the statutory filing deadlines for 2013 – after the first Monday in January and no later than the first Monday in June.

Individuals who were 65 in 2013 and would have qualified for the homestead exemption but did not file can still file a late application next year under the guidelines for tax year 2013 of the former statute. Clients should contact their county auditor to determine any changes in the application deadline for 2013.

The exemption, which takes the form of a credit on property tax bills, allows qualifying homeowners to exempt $25,000 of the market value of their homes from all local property taxes. For example, an eligible owner of a home with a market value of $100,000 will be billed as if the home were valued at $75,000. A homeowner and his/her spouse are entitled to claim a reduction on one property only.

Existing homestead recipients will continue to receive the credit without being subject to the income test and do not have to resubmit an application.

Clients continue to have a high level of satisfaction with the services and staff of Whalen & Company, based on the results of a survey administered during tax season.

The questionnaire covered general and specific areas related to staff’s delivery of services. This is the third consecutive year that the firm sought feedback from clients about its performance. Business clients were also surveyed about their views.

Nearly all respondents –- 96 percent –-indicated they were extremely satisfied or satisfied with the services the firm has provided them.

Asked to rate the value of the firm’s services compared to the cost of these services, 90 percent gave excellent or good ratings. Ninety-one percent of the respondents indicated they would absolutely or probably recommend the firm to someone they know.

The survey asked clients to assess 12 factors related to quality service standards and staff members’ expertise. At least 90 percent of the respondents indicated that staff demonstrated these quality indicators when working with them.

The areas with the highest level of satisfaction were:

• I have confidence that the work performed is done right. (97 percent)
• Staff members consistently meet my expectations. (97 percent)
• When communicating, staff members are thoughtful and considerate. (97 percent)
• I respect and trust the staff members I work with. (96 percent)
• Staff members have a positive, can-do attitude. (96 percent)
• Staff members complete work on an agreed-upon schedule. (96 percent)
• When discussing my needs, staff members listen and understand. (96 percent)
• Staff members are accessible when I need them. (96 percent)

Areas that received a high level of satisfaction, but were rated lower than others, were:

• Staff members take an interest in me personally (91 percent)
• The firm keeps me informed about changes that may affect my tax situation and planning (90 percent);
• Staff members discuss my tax situation and goals. (89 percent).

Twenty percent of the firm’s tax clients participated in the survey. Clients were given the opportunity to complete a printed survey or to respond online. Unless they chose to identify themselves, the respondents were unknown and their responses are confidential.

Fifty percent of this year’s survey respondents have been clients of the firm for more than 11 years; 15 percent, 7 to 10 years; 18 percent, 4 to 6 years; 9 percent, 1 to 3 years; 3 percent, less than a year.

Our firm’s survey is another way we gain feedback from clients. We use these results to understand what we are doing well and to focus on areas where we can improve our service levels.

We are pleased with the positive feedback we received this year. Our goal is to provide Five-Star service to all of our clients.