Comprehensive Tax & Legal Solutions

Do you know if your town offers a “residence tax credit?”

On Behalf of | May 30, 2016 | Tax Law

No one enjoys paying taxes. On the other hand, you know they have to be paid, and work to make certain your withholding on your paycheck or your estimated taxes will cover the needed amount of your yearly taxes. Least favorite of all are taxes that you may not have even known you owed.

Everyone is familiar with the Internal Revenue Service, the overseer of federal tax collections. If you live in Ohio, you also are familiar with Ohio Department of Taxation, the agency that handles the state’s collection efforts. But what about paying municipal tax in cities near Toledo, such as Holland, Bloomdale, Waterville, Portage or Weston. You could be like a growing number of Ohio residents and receive a disturbing letter from RITA of a tax delinquency.

Never heard of RITA? It is the Regional Income Tax Agency (RITA) and it helps towns and cities administer their municipal tax. It has increased the number of lawsuits it has filed by more than 2,000 between 2011 and last year. In Ohio, 254 cities collect taxes through RITA.

The complexity here is that if you live in a city that collects this type of tax, you could owe a tax in the city in which you work or your “work place tax.” This tax is typically withheld by your employer.

There is a catch; if you work in a different city, you could owe a “residence tax.” The issue of delinquent taxes typically arises when that city does not offer a full “residence tax credit” on the tax you pay in your work place tax. This can lead to a deficiency between those two taxes.

If your employer does not withhold these residence tax amounts, you must pay estimated taxes to the city. A city does not have to offer a “residence tax credit”

Source:, “How to avoid a lawsuit for back taxes,” Nathan Baca, May 30, 2016