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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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If I live in Ohio, and work in Michigan, do I need to pay local

Resolved Question:

If I live in Ohio, and work in Michigan, do I need to pay local taxes to the city that I live in? Right now, I am paying no local taxes, as the city I work in, in Michigan, does not have a local income tax.
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello JA Customer,

 

The City of Toledo does impose an income tax. The tax applies to salaries and wages and compensation for personal services earned by Toledo residents anywhere it is earned and also applies to non residents of Toledo for work done or for services they performed in the City of Toledo. See item # XXXXX on the instruction page of the following Toledo tax return.

 

http://www.ci.toledo.oh.us/LinkClick.aspx?fileticket=1wlpkmHj56M%3D&tabid=214&mid=994

 

So if you are a resident of the City of Toledo, you would owe this tax on your earnings regardless of where you work.

 

Most cities or townships in the state of OH impose an earnings tax which works in the same manner as Toledo, where you pay the tax as a resident even if you work outside of the town where you live.

 

 

Thank you JA Customer

 

 

 

Customer: replied 4 years ago.

Ok, thank you. I did not know that, and I guess neither did the company that I have been working for, for two years.

 

For two years, no local taxes were taken out of my check, by the company that I work for in Michigan. What recourse do I have, expect to pay it? It will be thousands of dollars.

Expert:  Merlo replied 4 years ago.

Hello again JA Customer,

 

Actually it is not the employer's responsibility to withhold those taxes, unless you work inside of the city of Toledo. When you work for an employer in another state, they are only obligated to withhold state and local taxes based on where you work. The states of OH and MI happen to have reciprocal agreements in place where the employer only needs to withhold OH state taxes even though you are working in MI. But the same provision does not apply to local earnings tax.

 

For local earnings taxes, the only employers obligated to withhold this tax are employers located inside of Toledo. For residents of Toledo who work in another city, it is their own responsibility to file a return and pay these taxes each year. You can request that an employer withhold the tax from your checks, but they are under no obligation to do so.

 

I am sorry I could not give you better news on this, but unfortunately there really is no recourse here, at least with the employer. If the city of Toledo has also assessed you interest and penalties on the tax you owe, you can try to negotiate with them to have those extra charges reduced or waived, but that would be your only option here.

 

 

Thank you JA Customer

 

 

Customer: replied 4 years ago.

Ok, thank you.

 

Do you have anything information on how to go about getting the assessment fee, and interest/penalties waived. What should I say?

Expert:  Merlo replied 4 years ago.

Hello again JA Customer,

 

There really are no forms or formal details on how to go about that, and of course there is also no guarantee they will reduce or remove those fees. I would suggest simply writing a letter to the city and explain to them that you were not aware that this tax applied to residents who did not work in the city of Toledo, and see if they will possibly work with you in reducing or eliminating those fees.

 

 

Thank you JA Customer

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Merlo
Merlo
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25+ years tax consulting. Specializing in returns for US citizens living abroad