Different taxes that apply to a Columbus citizen:
Any person who makes money is potentially liable for 4 different phases of income tax. These phases are federal, state, school district, and city taxes. I will be using the example of a Columbus, Ohio citizen to explain these taxes but if you do not live in Columbus simply follow the steps laid out in this post and find your city/school district rates using the tools and methods below.
What if I don’t need to file tax returns?
If you don’t need to file a tax return because your income falls below the required amount, you will need to file them anyway if you have a job. If you were hired and signed the tax form (W-9) without making any changes, then your employer is withholding your taxes. This essentially means that you are pre paying your estimated taxes. If you do not make enough money to pay taxes at all, then you need to get that money back. Thus, if you owe money in taxes or if you have a job you need to file your tax returns.
Where to start
I’ve already mentioned that the order you should fill out your returns in is federal, state, school district, then city. This is because the state and school district returns use the same instructions form in Ohio and these tax returns depend on numbers from other returns. Now you need to know specifically what forms to fill out for each return and what forms you need to send with your return to validate it. I am not including how to fill out the forms in detail because each form has a matching “instructions” form that explains how to fill out the return.
Your federal income tax return is the first phase because the other tax returns use your calculations from your federal return. In the past there were 3 different 1040 forms: 1040EZ, 1040A, and 1040. This year, the IRS has revised their approach by replacing these forms with a single 1040 form and multiple supplemental forms called schedules. The cheat sheet at the bottom of this post will help you determine which forms you need and will also link you to these forms. The general idea for the federal returns in the past was if you earned all your money through wages as an employee, then you could use the 1040EZ, which is the shortest and simplest form. If you earned any money through investments, rental properties, or you are not paid through an employer (self-employed), then you would need to fill out a 1040A and a Schedule C. If you own a business, partnership, or an LLC then you are self-employed and needed to fill out the 1040A/Schedule C. If you own shares or interest in a business that you do not manage or provide work for, then money received from that interest is a dividend and also requires the 1040A/Schedule C. The idea today is similar; the easy form and the extensive form have been removed and everyone fills out a basic 1040 form. Now, the different ways of earning income and certain types of deductions are reflected in the 6 schedules. The link in the cheat sheet takes you to the list of schedules and each schedule has a description of when to use it. For now, just know that Schedule 1 seems to be for alternative income such as investments and unemployment income, and Schedule 4 seems to be similar to the old Schedule C for reporting self-employment.
Now that you know the forms you need to fill out, you need paperwork to show your earnings and expenses. The idea here is that if you are going to write a number on your tax return, you need a piece of paper that shows how you got that number. For wages earned from employment, your employer is required by law to send you a W-2 form that looks like this:
Make a copy of this form, submit the copy with your tax return, and keep the original. If you lost your W-2 or threw it away, you can request another copy from your employer.
For dividend income, the business should send you a form showing what you received in payment throughout the year. Again, make a copy and submit it with your return while keeping the original.
Self-employment income is a little different to show because you are not given a form by someone else showing your income. Instead, you either need to use receipts from your transactions, pictures of checks that you deposited, or pictures of bank statements. If you have the receipts or pictures of checks, use them. If you are reading this for the first time right before filing your tax returns, you probably did not save an entire year’s worth of receipts from your business. In that case, it is going to be annoying but you will have to go back through your bank statements online for every month of the previous year, identify any transaction that is either you receiving money from self-employment or you paying an expense related to self-employment, adding up these numbers to fill out the tax return, and taking a screenshot of the monthly statements to submit with your return.
Now you have all the supporting paperwork and the numbers you need to fill out those tax return forms from before. Simply follow the instructions form step by step and your federal return will be completed. Don’t send it off yet though. Keep all your returns until they are all completed, and send them off together.
State income tax
With a completed federal return, we move on to the state return. Go to this site to find the Ohio state tax return. This form is a bit simpler than the federal form and is mainly based on 1 number from the federal form: federal adjusted gross income on line 6 of the federal return. The state return also has instructions to help you fill it out. A significant difference here is that you do not include income earned in other states from wages or self-employment. So if you worked or did business in another state during the year, the money earned in that state will be taken out of your taxable income that was calculated on the federal return. If you are filing a joint return and your spouse earned money out of state, the principle is the same.
You may be wondering if you earned money in another state, say Michigan, and you don’t claim that money in your Ohio taxes, do you have to file a Michigan state tax return? The answer is that you don’t have to file the return if you did not meet their income requirement for filing, but you may want to anyway. Every tax return for individuals at the federal and state levels are not required to be filed if you didn’t earn enough money. For example, an individual filing alone that earns less than $10,000 does not need to file a federal tax return. The principle is the same for state returns, but the numbers may vary. So if Michigan requires everyone who earns $10,000 to file a tax return and you only earned $5,000 in that state, you are not required to fill out the Michigan tax return. The reason why you might want to is due to employment tax with holdings. If you worked for an employer in Michigan and they withheld money from your wages that were allocated to state taxes, then you can get that money back by filing the state tax return. If you earned self-employment income in Michigan, then you probably did not withhold money from yourself and give it to the Michigan state government so there would be no benefit in filing the return.
School district tax
The next phase of taxes is the school district tax. This tax has a similar exception to the city income tax; if you do not own the property in the school district you reside in, you do not owe school district taxes. If you do own the property, you will need to pay the district taxes. Each school district has been assigned a code and has an independent tax rate. Use this form for the return, and click here to find your school district information (on page 40). You will need to put the code for your district on your return and use your Ohio income tax base, found on the state return (Ohio IT 1040 line 3 – line 4) to complete this form.
City income tax
City tax returns are independent of previous returns so they do not require the use of figures from those returns. Find your city’s department of taxation and fill out the form according to the instructions. The Columbus city tax return form can be found here. If you’re like me, you may not live in the city you work in and you may be wondering if all those Columbus tax withholdings are coming back into your pockets when you fill out the Columbus city return. The unfortunate answer is no, those withholdings were proper and you will not be seeing that money again. Although you may not live in the city, if you work there you are accepting the benefit of government such as the use of their roads and emergency response teams like police and EMTs. Because you’ve accepted these benefits by working there, the city can tax you.
At this point you may be thinking that you have to pay taxes both where you live and where you work, and you’re probably not happy about it. However, there is good news for renters. People who do not own property in a city do not need to pay the city tax because they do not “live” in the city. This means that if you rent a place in Dublin and work in Columbus, you only pay the Columbus city taxes.
Once you have completed this final tax form you have completed your tax returns for the year. You can now submit them all and await your refund checks. I would advise submitting your forms online because you will get your refunds much faster than if you submit by mail. If you made it this far and don’t want to go through this process yourself or want to make sure you are saving as much money as possible, contact a Columbus Tax Attorney and we will do your taxes for you. We charge less than the average tax preparer; that way you know you are making the most out of your money this tax season.
Instructions for 1040
Ohio online tax filing
Ohio state tax return for individuals
Ohio School district tax return
Instructions for Ohio state and school district tax returns
-The City of Columbus tax return code for the school district is 2503
Tool to find tax rates and your location for tax purposes
-First time filers must file manually. After your first year, you can use online here. Contact a Columbus Tax Preparer