City of Cincinnati

1. City of Cincinnati Income Tax Division www.cincinnati-oh.gov/citytax

3. Differing Local Tax Rates

4. Alternate Tax What if my employer chooses not to withhold the alternate tax for me? Make estimated payments to your city of residence in order to satisfy your local tax obligation. Estimated payments are due on April 15, and the last day of July, and October of the current year, and January of the following year. You will also need to file an individual tax return on April 15 of the year following the year your wages are earned to report your final tax liability for that year. Your final liability is reduced by your estimated payments and the local taxes already withheld up to 2.1% of gross (qualifying) wages. You pay any remaining tax with your return. If your estimated payments and credits exceed your final tax liability, you may request a refund or carry the credit forward to your next year’s liability.

5. Refunds When can I expect my refund? The city has 90 days from the later of the date your taxes were due or the date the refund request is received to review your request. If you have sent all of the required information to substantiate your request, a refund check will be mailed to you.

6. Tax Obligations My residence mailing address is Silverton, yet I actually reside within the city of Cincinnati and work in an unincorporated area or township that has no local tax. Do I have a local tax obligation and, if so, to which city(cities)? In the event you work in an unincorporated area or township that has no local tax, the tax obligation is to your city of residence, in this case, Cincinnati. The United States Postal Service assigns mailing addresses. Your mailing address does not always fall within the city limits within which you actually reside. To determine the city in which a certain address is located, please either refer to the street guides listed on our website or call our office Monday through Friday between the hours of 8:00 am and 4:30 pm at (513) 352-2546.

7. Determining Where Tax is Owed How do I determine where my local tax is owed? Local tax is due first to the city in which the income was actually earned. You may also have an obligation to your city of residence.   For example: Assume that you work in a city that has a 1% local tax rate and you reside in a city that has a 2.1% tax rate. If the city where you live allows a 100% credit for the local tax paid to the city where you work, your local tax obligation is 1% to the city where you are employed and 1.1% to the city where you reside. Cincinnati allows a credit of up to 2.1% for local taxes paid to other municipalities on those wages.

8. Withholding and Final Returns I reside in Cincinnati, my wages are my only taxable income and my employer is withholding my Cincinnati tax liability properly. Do I need to file a Cincinnati tax return? No, but if you had a filing requirement with Cincinnati in the prior year, you should file a final return indicating that an adequate amount was being withheld by your employer so your account can be inactivated.

9. Municipal Tax Filing Status My spouse and I file separately at the federal/state levels. Do I have to do the same for municipal purposes? No, a husband and wife, in any taxable year, may elect to file separately or jointly, regardless of their federal or state filing status. Please be sure to notify us when you elect to change your filing status in any given tax year.

10. City Withholding Tax Is city withholding tax based on employee work location or residency? City withholding is based upon, and employers are required to withhold to, the work location (municipality). Employers who conduct business in Cincinnati are also required to withhold sufficient local taxes on all Cincinnati residents (regardless of their work location).

11. Other Income I have income in addition to that reported on my W-2 from my employer. Should my employer withhold additional tax above the local rate to cover this tax? No. An employer's withholding tax is not deposited into individual employee's accounts, but into the employer's master account. The total tax withheld from all employees is then reconciled with the total local wages earned by said employees. Because all employer's withholding accounts are required to reconcile the total tax withheld from all employees with the total local wages earned by all employees, withholding by employers in excess of the required tax rate is not permitted.

12. Confidentiality How do I know that the federal tax information I submit with my return will remain confidential? Section 311.55 of the Cincinnati Municipal Code allows the Tax Commissioner or any authorized agent of the tax commissioner to request federal information to verify the accuracy of any return made by individuals subject to local tax. Section 311.61 of the Code states that, "Any information gained as a result of any returns, investigations, hearings or verifications required or authorized by this chapter is confidential and no person shall disclose such information except in accordance with a proper judicial order or in connection with the performance of that person’s official duties or the official business of the Municipality as authorized by this chapter. The tax commissioner may furnish copies of returns filed under this chapter to the Internal Revenue Service and to the State of Ohio tax commissioner. Each unauthorized disclosure shall constitute a separate offense of this chapter. In addition to the penalty provided by Section 311-99, any employee of the Municipality who violates the provisions of this section relative to the disclosure of confidential information shall be guilty of an offense punishable by immediate dismissal."  Page 10

13. Income is Taxed Where it is Earned My employer withheld Cincinnati tax, but I live in another municipality.  How can I get a refund? Because income is taxed first where it is earned, if your wages were earned in Cincinnati you would owe Cincinnati tax on that basis and would not be due a refund merely because you live in another municipality. If your employer's office location is in Cincinnati but you worked all or part of your time outside Cincinnati, you would be due a refund of all or part of your Cincinnati tax which you can claim by filing a Cincinnati Individual Tax Return with our office. In this situation, the wages you claimed as having been earned outside of Cincinnati would be subject to the other city’s tax. Also, if you incurred employee business expenses in earning your wages, you may deduct, on your Cincinnati Individual Tax Return, expenses considered ordinary, necessary and reasonable, and incurred in earning the specific wages, salary or commission that could be claimed on Form 2106 of your federal tax return (the IRS rule, which requires that 2106 expenses exceed 2% of Adjusted Gross Income, is inapplicable here).

14. Completing the Tax Return I live in Cincinnati and work in another municipality.  How do I complete my return? If you are an employee, you may request your employer to withhold adequate taxes from your wages for Cincinnati. If your employer does not withhold the full amount due to Cincinnati, you are required to make quarterly estimated tax payments. These payments must be submitted on or before the fifteenth day of April and the last day of July and October of the current calendar year and the last day of January of the next calendar year. Whether or not the estimates have been paid, file a Cincinnati tax return and pay the additional amount of tax due. We will bill you for any additional interest and penalties due for failure to make estimated payments when your return is processed.

15. Determining Residency

16. Help with Preparing the Return Can someone help me prepare my city tax return? Yes, and the help is FREE! We have examiners available from 8:00 a.m. to 4:30 p.m. Monday through Friday who will review your records and prepare your city tax return for you at NO COST. Note that we will prepare only your city return (not federal or state). Just bring your federal tax return and all related schedules including all of your W-2 and/or 1099 forms to our office located at 805 Central Avenue, 6th Floor (across the street from City Hall). Parking is available behind the Centennial Plaza buildings. If you just have a question or two you need answered, call us at (513) 352-2546 during regular business hours.  We guarantee that you'll be able to talk to a real live person. If you want help with your Federal or State returns, contact the IRS at 1-800-829-1040 or the Ohio Department of Taxation at 1-800-282-1780.

17. Municipal Taxation for Businesses What are the basic requirements for municipal taxation of businesses? Businesses are required to remit two types of city taxes: the net profits tax and (if there are employees) the employee withholding tax. The first is the tax due on profits of the business, whether the business is a sole proprietorship, corporation or partnership. Cincinnati taxes the net profits earned within each city by S-corporations at the corporate level. As such, the individual shareholders of S-corps are not taxed. Cincinnati also requires partnerships and limited liability companies (LLCs) to file and remit at the business level on behalf of all partners. All businesses, with the exception of sole proprietorships and single member LLCs, file their city taxes using the Cincinnati Business Tax Return.  Additional information on the net profit tax for businesses, other than sole proprietorships, is available in the Business Tax Return instructions.  Sole proprietorships and single member LLCs file by reporting their Federal Schedule C, E, F, or K-1 income on the proprietor's Individual City Return. Additional information is available in the instructions.

18. Municipal Taxation for Businesses (continued) To remit the second type of tax, the tax withheld from your employees' wages, you will need to establish a withholding account with us. You may do this by calling (513) 352-2546 to request forms and procedures for setting up such an account. Employers are liable for all city withholding taxes that should have been withheld from their employees’ wages EVEN if those taxes were not, in fact, withheld. Because of this obligation, you'll want to make sure you set-up your employer withholding account as soon as you hire employees.

19. Reporting a Business Loss I'm self-employed but my business has not shown a profit. Am I required to file a return? Yes, all residents or non-residents conducting a business within the city must file an annual return and report the net profits or net losses of said business. The leasing of real or tangible property (i.e. income from a rental property) that you own is considered a taxable business activity that must be reported. But, if gross rental income is less than $500 per month, reporting on this property is not required.

20. Unpaid Taxes I owe city taxes but I am unable to pay my full liability at the time my return is due. Should I still file my return? Yes, you should file your return by the due date whether or not you are able to pay the entire amount of tax that you owe. You will receive a bill for the unpaid taxes along with late payment penalty and interest charges. You may also be assessed interest and penalty for nonpayment of estimated taxes (if required in your situation).

21. Reporting Partnership Income I am a Cincinnati resident. I'm a partner in a partnership that operates outside the City limits. Do I owe Cincinnati tax on my income from the partnership? Yes, a Cincinnati resident is taxed upon his/her share of all income earned by partnerships (wherever located) in which he/she is a partner. However, full credit (up to the tax due Cincinnati) is given for all city income tax that was paid to the city or cities in which the income was earned, whether that tax was paid by the partnership as an entity or by you as an individual partner.

23. Filing in a Fiduciary Capacity I'm serving in a fiduciary capacity. What is my responsibility for filing? Trusts and estates conducting business within the city are required to file a city business return and report, at the entity level, all net profits or losses earned or incurred as a result of business activity conducted within the city. Tax is due on the net profits reported as having been earned in the city. Since the tax is paid at the entity level of the trust or estate, beneficiaries are not required to pay city tax on income derived from trusts or estates.

24. Top Ten Ways You Can Help Us Serve you Better What are the top 10 ways you can help? Sign the return and attach a check for any amount due. File your estimate for the current year by April 15. Advise us with regard to any name or address changes. File return for the year you move in or out of our city. Allocate taxes paid when allocating income for move-in/move-out year. Pay 2nd, 3rd and 4th quarter estimated tax payments. Mail the return. Attach any required schedules/forms and/or statements. Attach your federal form W-2. Use qualifying wages when computing your taxable wages.

25. Additional Questions If you have additional questions, please contact our office Monday through Friday between the hours of 8:00 a.m. and 4:30 p.m. at (513) 352-2546