City Taxes... (Lexington, Louisville, Shively: sales, insurance, how much)

[miabellarose]

I'm new to this city and state. I got my first full paycheck yesterday and when I was looking at the paycheck stub, I realized that city taxes were taken out. This city tax is new to me and I was wondering what this is; is this something that can be refunded on next year's tax like federal and state taxes? I live in the Lyndon area and work in Shively...so both Louisville and Shively taxes were taken out. Is this correct? If there's a link that would give me more information, I would appreciate it. Thanks.

[tomocox]

Originally Posted by miabellarose

I'm new to this city and state. I got my first full paycheck yesterday and when I was looking at the paycheck stub, I realized that city taxes were taken out. This city tax is new to me and I was wondering what this is; is this something that can be refunded on next year's tax like federal and state taxes? I live in the Lyndon area and work in Shively...so both Louisville and Shively taxes were taken out. Is this correct? If there's a link that would give me more information, I would appreciate it. Thanks.

Welcome to the world of "occupational taxes" Yes, the dual tax rates are correct, but they are balanced so no one pays more or less anywhere in Jefferson County, just depends upon which taxing body gets what share.

[miabellarose]

Thanks for the reply...but is the occupational tax something that I can get back on next year's return? Because the occupational tax or how much is being taken out seems really high to me.

[johnsonkk]

I don't think you can itemize or "get back" any of the city taxes like you mention. They are completely independent of the state and fed taxes and both of those don't give you any breaks for your city tax(es). I only thought you got taxed on where you worked vs. ALSO where you live. The local tax is computed at 2 or 2 and half percent so whatever your paycheck shows is what is taxed - regardless of how many deductions, exemptions, houses you own, dogs, cats, cars, etc.

However, you can get exemptions (or the money returned to you) for those days you do not physically work in the city. Meaning that you if you are in Seattle for a week at a conference, you can get that week's of taxes (the "where you work" taxes) refunded back to you. Of course this means you will have to start itemizing every single day you work in Louisville and those days you don't.

Louisville and Lexington are both in the top-10 cities for highest city payroll taxes. A high occupancy tax (or called a 'worker tax') could jeopardize future businesses from moving here vs. moving into an adjacent county where their workers get an immediate (virtual) raise of 2% by just their location of the building. They could remove the city taxes and just raise our sales tax another 3% but city government seems to like the way things are now. A sales tax would be shared by all vs. just those that work. http://www.louisvilleky.gov/yourtaxd...work/where.htm

[honesty1022]

I am also filing here for the first time.

Now when I lived in Michigan and worked in the city of Detroit, I had to actually file a City of Detroit Tax Return. However, I cannot find any such form for Louisville. Do I NOT file a tax return for just the city? Do I just file the KY State return?

Thank you in advance.

[tomocox]

Originally Posted by honesty1022

I am also filing here for the first time.

Now when I lived in Michigan and worked in the city of Detroit, I had to actually file a City of Detroit Tax Return. However, I cannot find any such form for Louisville. Do I NOT file a tax return for just the city? Do I just file the KY State return?

Thank you in advance.

No, the Louisville tax is not an income tax, but more like a sales tax. These taxes are a deduction to be placed on your federal income tax return if you itemize rather than taking the standard deduction.

[johnsonkk]

Here is a good link that can answer a lot of the 'occupational tax' questions. FAQ - Help/Resources - LouisvilleKy.gov

and another:
Jefferson County - Taxes and Incentives

[Abbott05]

What is the Shively , ky municipal tax for automobile insurance rate. My policy is charging 11 1/2%. Is this right? That's nearly double the state tax.thanks

[jpdata]

If your employer withholds the local tax, you don't have to file a local return.
If your employer does not withhold, you have to file a local return and pay it all.

You can get a partial refund if you work outside of Louisville. Keep track of any days spent traveling, etc.

If you want to not pay it, work outside of Louisville.

If you work in Louisville but do not live in Louisville, you will still have to pay, but you will pay 1.45% instead of 2.2% because they remove the school board portion of the tax.

Also, if you itemize deductions on your state and federal returns:
- You can deduct local taxes paid on your state return, and
- You can deduct local and state taxes paid on your federal return.

It goes to a general fund, the school board, and the transportation authority.

It is a stupid tax, but it is not uncommon. However, some major cities do not have them, which makes Louisville look a little full of itself.

[eok]

One advantage of local taxes on work is that fewer people will want to work where the taxes are highest, and therefore the jobs available there have fewer applicants competing to get those jobs. So you can get a better job easier, by simply applying for more jobs. If you want a promotion, and your boss won't give you one, you can apply to other companies, who might have a shortage of higher level employees, because qualified people who might have wanted those jobs might prefer jobs in other cities. The more qualified they are, the easier it is for them to get whatever job they want, wherever they want. So the tax gives an advantage to those who are a little less qualified, but want a chance to get more experience at higher level work and improve their qualifications by that experience. Then, once you become more experienced and more qualified, you can move to a city with a better tax structure, if you want to.