U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Ohio > Cincinnati
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 07-21-2015, 01:33 PM
 
Location: OH
120 posts, read 189,435 times
Reputation: 45

Advertisements

So, I've never lived in a city with municipality income tax and I want to be sure I'm straight on what needs to happen. As background, we're moving to Reading. Husband will work in Pleasant Grove. Paid by the military, so only basic pay is taxed and then we have a housing allowance that is supposed to be tax free. We rent, so no property tax, just looking at income tax.

1. Federal and State, withholdings for income and payroll taxes from paycheck like always.
2. Reading City Income Tax, filed direct with the city, no withholdings in advance? Or do we somehow include the city in the W-4 paperwork?
3. Anything else?

Of course, this year we'll have to deal with being partial year residents of North Carolina, too. The military gives us the option to stay NC residents for purposes of income tax, but it looked like the state rate in Ohio is quite a bit lower than NC (under 4% vs close to 7%), so we're planning on declaring ourselves residents of Ohio since we hope to stay for a 30 year career.

I think this year I'll be getting an accountant, but I usually do our taxes myself, so I'm pretty familiar with the process, just not with municipality-level taxation, which we don't have in NC, UT, OR, or any other state I've happened to do taxes in.

Thanks as always!
Reply With Quote Quick reply to this message

 
Old 07-21-2015, 10:49 PM
 
13,714 posts, read 22,843,488 times
Reputation: 18526
The city income taxes work like this, generally. If you work in a city, you are assessed a city tax on the earnings you receive in that city. In general, those taxes range from 1-2.5% and are withheld from your paycheck. In most cases, you probably will not need to file a city return although generally, I will complete one to make sure that the tax was properly calculated by the employer.

You also may be liable for city income tax for the city you live in. Some do give you credit for all or a portion of the amount that you have paid to the other municipalities. HOWEVER, not all do. I lived in an Ohio city where you got a 25% credit only. In most cases, the employer DOES NOT withhold this and you are liable for paying estimated taxes to your city.

One way to avoid the double taxation is to live in the city that you work. Another is to live in an unincorporated area that has no income tax. Many business owners that I know live and operate their business in Anderson to avoid the local income taxes completely.

I very strongly advise hiring a CPA to complete your taxes for the first two years. First, most partial year returns where you file in two states can be quite tricky in and of themselves. Also, the local taxes add a complexity to the situation.

For the record, I am an inactive and retired CPA. I had different jobs all over Northern Ohio where I would get multiple W-2 forms each year and had to file local returns in dozens of communities. It was not particularly difficult to file multiple returns but it is one of the major headaches of living (and operating businesses) in the State of Ohio.

By the way, the top marginal rates in NC are now 5.75% for 2015 and Ohio's is 5.40%.
Reply With Quote Quick reply to this message
 
Old 07-22-2015, 04:06 AM
 
Location: Covington, KY
1,879 posts, read 2,123,049 times
Reputation: 590
Quote:
Originally Posted by jlawrence01 View Post
The city income taxes work like this, generally. If you work in a city, you are assessed a city tax on the earnings you receive in that city. In general, those taxes range from 1-2.5% and are withheld from your paycheck. In most cases, you probably will not need to file a city return although generally, I will complete one to make sure that the tax was properly calculated by the employer.

You also may be liable for city income tax for the city you live in. Some do give you credit for all or a portion of the amount that you have paid to the other municipalities. HOWEVER, not all do. I lived in an Ohio city where you got a 25% credit only. In most cases, the employer DOES NOT withhold this and you are liable for paying estimated taxes to your city.

One way to avoid the double taxation is to live in the city that you work. Another is to live in an unincorporated area that has no income tax. Many business owners that I know live and operate their business in Anderson to avoid the local income taxes completely.

I very strongly advise hiring a CPA to complete your taxes for the first two years. First, most partial year returns where you file in two states can be quite tricky in and of themselves. Also, the local taxes add a complexity to the situation.

For the record, I am an inactive and retired CPA. I had different jobs all over Northern Ohio where I would get multiple W-2 forms each year and had to file local returns in dozens of communities. It was not particularly difficult to file multiple returns but it is one of the major headaches of living (and operating businesses) in the State of Ohio.

By the way, the top marginal rates in NC are now 5.75% for 2015 and Ohio's is 5.40%.
Thank you for a clear, concise explanation good for anyone.
Reply With Quote Quick reply to this message
 
Old 07-22-2015, 08:17 AM
 
Location: OH
120 posts, read 189,435 times
Reputation: 45
Yes, thank you!! That was perfect. I'll look into whether or not Reading has a credit for tax to PR and look at estimated payments. And yes, it sounds like we're definitely headed toward a CPA, at least for this year.
Reply With Quote Quick reply to this message
 
Old 07-22-2015, 10:34 AM
 
13,714 posts, read 22,843,488 times
Reputation: 18526
Quote:
Originally Posted by mlkmnsgrl View Post
Yes, thank you!! That was perfect. I'll look into whether or not Reading has a credit for tax to PR and look at estimated payments. And yes, it sounds like we're definitely headed toward a CPA, at least for this year.

Since I have NOT lived in Ohio since 2000, your post forced me to go back to the Ohio Department of Revenue website. If it makes you feel better, the Ohio top marginal rate has dropped approximately 2% and the brackets have also increased quite a bit.

One of the MAJOR reasons I relocated to Illinois was that my marginal tax rates (state and local) in 1999 and 2000 was 10.5%; in Illinois at THAT time, it was 3.0%.
Reply With Quote Quick reply to this message
 
Old 07-24-2015, 04:56 PM
 
Location: Chicago area
8,197 posts, read 12,424,090 times
Reputation: 14774
Illinois rapes you with the property and sales tax instead and expect more and more taxes as the excrement hits the fan with pensions.
Reply With Quote Quick reply to this message
 
Old 07-24-2015, 09:40 PM
 
13,714 posts, read 22,843,488 times
Reputation: 18526
Quote:
Originally Posted by MSchemist80 View Post
Illinois rapes you with the property and sales tax instead and expect more and more taxes as the excrement hits the fan with pensions.
My property taxes in Lakewood, OH were identical to those in Chicagoland.
Reply With Quote Quick reply to this message
 
Old 07-25-2015, 04:42 PM
 
Location: Chicago area
8,197 posts, read 12,424,090 times
Reputation: 14774
Quote:
Originally Posted by jlawrence01 View Post
My property taxes in Lakewood, OH were identical to those in Chicagoland.
I find that hard to believe most places around Chicago-land have property taxes exceeding 2% of the market value of the home some approaching 3%. Of course the county is often quite generous with the home's value (ridiculously overestimating).
Reply With Quote Quick reply to this message
 
Old 07-25-2015, 07:58 PM
 
13,714 posts, read 22,843,488 times
Reputation: 18526
Quote:
Originally Posted by MSchemist80 View Post
I find that hard to believe most places around Chicago-land have property taxes exceeding 2% of the market value of the home some approaching 3%. Of course the county is often quite generous with the home's value (ridiculously overestimating).
So do a lot of the homes in suburban Cleveland and Cincinnati.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Ohio > Cincinnati
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top