Ohio Preparers - City Taxes

[DougO]

Have a client who lives in Gahanna (outside Columbus) whose spouse works for W-2 wage in Columbus. Taxpayer is now self employed and works based out of Gahanna but does work in other communities also. In past, with just W-2 income used Form IR-22 for local taxes. Now am working to figure is we can still use that or do we need Form 37. Appreciate any guidance on how to handle what appears to be separate tax rates and credits available. Also will have difficulty identifying all income locations for S/E profits - can this be all taxed out of home base community?

[Terry D EA]

In Ohio, the tax payer will be obligated to pay taxes in the city that is where his place or residence is. Normally, if you live in one city and work in another, the city in which you reside gives credit for taxes paid to the other city. If your guy is a contractor and performs jobs in other locations and receives a 1099 for services provided, there would be no deductions for any city or local tax. He would pay tax on his earnings in the city he resides. Your post is a little unclear but I think this is what you are asking.

[DougO]

Terry - thanks for responding. I understand about the residency city for paying the tax, and from your comment if seems we need to not worry about allocating income around the state. But my main question where I am unclear is whether I can use the Form IR 22 versus using the Form 37. The IR22 seems to be focused on Columbus area city taxes while the 37 appears to be more statewide for RITA tax reporting and payments. If I am going to get the proper taxes and credit would it be better to use the Form 37 and will that still allow for all appropriate tax and credits to be recorded to the right city. It was much easier when they had W-2 income for Columbus and it was all reported and had been paid through payroll withholding there.

Hope that is clear - I don't want to build a mountain here where we can live on a hill. But boy do you guys have a bunch of local taxes to deal with. I guess I will live with our sales tax here in Nebraska.

[Margaret CPA in OH]

Thanks, DougO, for appreciating the 'taxing' problems we have here. I have 2 contractors, both living in unincorporated areas. So when they have income in taxing municipalities, there are allocations to be made with 4 factors to determine the amount taxable in each. If a loss, we have to track carryovers for 3, 4 or 5 years depending on muni. And, technically, wages are also to be allocated and withholdings remitted unless the work falls within the 12 Day Rule. Oh, we do know how to have taxing fun here but with my recent KY client experience, I just think it can be worse!

[Jack from Ohio]

Use only RITA 37 form for a resident of Gahana. All of their income will be taxed by Gahana due to residing there.

Follow the directions on the form for credit for taxes paid to other communities and the self-employed income.

If the self-employed income is earned in other taxing municipalites, forms for each of those cities will also need to be filed, prorating accordingly.

[DougO]

Thanks to all - and good luck for these next few weeks as you deal with those Ohio returns. Appreciate your directions and guidance as I know you all are busy.