Ohio Preparer's

[Terry D EA]

I need some assistance with preparing two cities on Ohio. Taxpayer lived in two different cities and only earned income in one. The next factor is the client is an Amazon delivery driver that delivers every day outside of the city limits of both cities. If someone could contact me to discuss this, I would appreciate it. Send me a private message with your contact info and I will reach out to you. Thanks in advance to anyone willing to give me a hand.

[Jim Oh Bkkr]

1st city (no income) I would look to see IF there is a filing requirement.  Some only have a filing requirement IF there is TAXABLE income.  (My local put in a requirement for everyone.  They quickly learned that move more than tripled their workload with no increase in revenue. Then they offered a one-time waiver for retirees.)

2nd city (income) all earnings, whether in city or out, is most likely taxable.

[Terry D EA]

That is exactly what I thought. I'm going to check the rates in Drake. They have Kent at 2.25%. Kent is the city where the client lived until October. Kent is also a RITA city so am I correct that I have to do RITA as well? I put the information regarding the move on the RITA form and the result was zero.

[JJStephens]

City tax in Ohio is a plate of spaghetti. Here's the skinny:

Withholding is based on workplace city. Even if the taxpayer lives elsewhere, the employer is required to withhold tax for wherever they work...and the workplace city gets to keep the money. If someone has Sch C/E/F income, that income is also taxed by the city where the income is earned. That may require preparing a city return for that city (even if it's not the taxpayer's city of residence). Sche C/E/F losses can be used to offset other C/E/F income but it cannot be used to offset wage income.

If their residence city has an income tax, taxpayers typically have to file a tax return for that city (a very few cities do not require filing if the taxpayer also worked in the same city and city tax was fully withheld on their income). Most taxing cities have a tax rate of 1.0 -2.5% though a few are as high as 3% rate...and several of them give no credit for taxes withheld elsewhere. That means if a taxpayer lives in a 3% city and works in a different 3% city, they might end up paying 6% in city taxes. Whee!

Each city gets to decide if they want to give credit for taxes withheld in other cities. Some give full credit (up to the local tax rate), some give partial credit (typically half the local tax rate) and some give no credit. Bedrooms communities typically give little or no credit for city taxes withheld elsewhere.

Ohio has more cities with an income tax than the rest of the country combined. However, there are some cities that do not have a city tax and most people in rural areas don't have to file a city return.

Some income is exempt from city tax including retirement, social security, interest, dividends, cap gains and income earned prior the taxpayer's 18th birthday.

In the great state of Ohio, school districts are also permitted to enact an income tax...and a substantial number of them do. School district withholding is always based on the taxpayer's residence. That makes it a bit easier.

I moved here 35 years ago from Florida (no state tax). I was shocked to learn that in additional to federal tax, I now got to pay state, school district and city income taxes as well. It's great to be a Buckeye (not so much during tax season but fer sure during football season!).

[JJStephens]

RITA administers city tax for hundreds of municipalities. As a result, the RITA return is somewhat convoluted. Drake handles RITA reasonably well for straightforward returns but can get squirrely in special circumstances like part year situations. I suggest you check the results carefully to make sure it produces what is expected. You can also call Drake and get some help. They have access to some instructions/cheat sheets that are not available to us in the field. FWIW, about half my calls to tech support each year are special situation RITA issues. They typically find some obscure check box in a place no one would ever think to look (sometimes not even in the RITA section).

[BulldogTom]

@JJStephens  I never, ever want to live in Ohio!  

Tom
Longview, TX

[Lion EA]

I have one client who moves back and forth from CT to OH (gets rehired by Highlights and moves for a couple years, then returns to her mother's house in CT for a couple years, rinse & repeat) and a CT kid who attended college in OH and worked a bit while in college and maybe one more. Drove me crazy!

[Abby Normal]

15 minutes ago, BulldogTom said:

@JJStephens  I never, ever want to live in Ohio!  

Tom
Longview, TX

Or PA, NJ or NY. But yeah, Ohio is the worst. My first Ohio was a part-year moved to MD. I ended up doing 4 separate OH returns.

[Margaret CPA in OH]

JJStephens has done a great favor by writing the tome above.  Perhaps it should be pinned.  That's why I did not respond, no time.  There are additional anomalies, too.  The 12 day occasional entry rule; the limitation on NOL's including for how long and whether 100% or less - now 50% in Cincinnati; no tax if working from home and the taxing entity is not where you live but taxed when you are working in the office. 

Yes, RITA is a major PIA.  I won't do them any longer.  Clients can go to their local tax office where it can be done for free.  Or they can do them online now.  ATX does have the RITA forms for an extra charge but, as noted, you really have to know the outcome first and check the right boxes.  NOL's for different cities are near impossible to get right.

There are some good reasons to live in Ohio.  There are some other reasons not to live in Ohio and the municipal/entity tax climate is among them.  For all the good the state legislature does in lowering state tax, the munis make up for it.

 

[JJStephens]

I served for several years on the council of the small burg where I used to live in. The OH legislature has repeatedly cut taxes over the past several years (yay!) but a major part of what they cut to pay for the tax cut was funding to municipal governments. Now, the muni's are having to raise taxes to survive. Everyone loves a tax cut...until the services they rely on are cut as a result. Deep sigh.

My last vote before resigning when I moved one town over was to enact a local tax. Made me sick having to do it but we were the last muni in our county to enact a local tax (1%) and we would have been bankrupt without it.

[BTS]

Lovely Rita !!!!

[jasdlm]

I've given up on the ATX software and started filing the RITA returns for my clients online (I'm in KS so only a handful of OH clients).  It's pretty straightforward on the RITA website.  Wish I had thought of doing it that way years ago ... it would have saved me hours.

[Gail in Virginia]

5 hours ago, Margaret CPA in OH said:

 

Yes, RITA is a major PIA.  I won't do them any longer.  Clients can go to their local tax office where it can be done for free.  Or they can do them online now.  ATX does have the RITA forms for an extra charge but, as noted, you really have to know the outcome first and check the right boxes.  NOL's for different cities are near impossible to get right.

 

 

What information does the client need to take to the local tax office to get the return done for free?  Do they all do that?  I have a client that has moved to Cochocton OH, and I have no idea how to do his city tax return.  He picked up a city tax information sheet but no mention in that of due date (I assume same as federal from what it says about federal extension, but not sure) or of RITA or of any way to file electronically.  Nor did he pick up any forms.  I will try to go online this weekend for research, but this makes my head hurt to think about this and if he can just take a copy of his federal return to them and pay them money, I think that would be wonderful from my point of view.  

[Margaret CPA in OH]

Gail, have you looked here? https://www.cityofcoshocton.com/income-tax/  Scroll down the page to General Information, a tax office phone number and the forms.  I didn't read all of the information but the form itself shows the due date of April 18.  I can't promise that the return will be done for free.  I just know that the RITA returns of my clients have been done for free.  Coshocton appears to have its own tax office and not through RITA.  The information sheet and the return itself seem to identify all the data needed to prepare the return.

Many smaller communities do not have online capabilities for filing.  RITA does but only for those municipalities that are managed by RITA.  Looking at the form, it seems to  me pretty straightforward.  ATX does not have all city returns.  Coshocton is not in my 1040 package.  The municipalities package may have it.  You can use the OH General City Tax form.  I has most of the smaller cities listed as options but follow a complete form from the city website to be sure you don't miss anything.  They do work and are required to be accepted by all munis.

I hope this helps. Sorry it took so long to answer.

[Jim Oh Bkkr]

Oh lord, don't forget HB5 from a few years ago, gave them the ability to tax gambling winnings.

[RichRhodesEA]

We have the city package.  I think that the only thing different is that you can efile RITA.  We get so many efile rejects from RITA that are not able to be corrected (tech support says...yeah...we know it's an issue...you have to paper file) that if it is not a super straight forward RITA return, we just paper file.  Saves the headaches.  Also, if a move is involved are anything slightly squirrely, I just complete and paper file the generic form.  Ohio laws mandates that they accept it.  If they want more returns efiled, they need to fix the system between them and professional software.  We can get some rejects to go by using Drake instead of ATX, but who has that sort of time!

[Gail in Virginia]

Thanks, Margaret.  I was able to download the forms I need, and I am emailing the office with the questions that I have.  The link to the site was most helpful!

 

[Terry D EA]

Thanks, everyone. Unfortunately, the answers are good and no doubt spot on from J Stephens and Margaret, none of them made my day any easier. I moved from Ohio to NC nearly 30 years ago. Bank then, no Rita but the same crap with the cities. This return should be easy but it is the part year portion in two different cities that I don't think Drake is handling well. So, I gotta dig deeper. 

[JJStephens]

Here are two things I look for on multi-city part-year returns that involve RITA. Either of these can cause a RITA error.

1.     Dates of employment must be entered on the W-2/Ohio screen for all W2s, not just the RITA W2s. Further, on W-2s with multiple city withholdings, dates must be entered on the same number of lines as there are muni’s with withholding.

2.     On W2 entry, box 18 must be equal to the larger of box 1 or box 5.

[Jim Oh Bkkr]

13 hours ago, Terry D EA said:

that I don't think Drake is handling well.

Terry, Drake has NEVER handled it well.  There is a guy on the Drake forums that has been b*tchin' about it, with good suggestions, for years.  For a couple of years, I had to "dummy up" the w-2 input screen to get the local to populate properly.  Then correct it, to prepare the federal and state.

[BTS]

ProSeries doesn't handle Rita 37 very well either.   Rita 37 one of the most asinine forms I have ever seen.     CCA is so much better.  Unfortunately most towns, and cities in our area use Rita.