Editor’s Note: The piece below was posted by the City of Powell. While it contains information specific to that city, some of the information below is applicable to those working from home in other Ohio cities. You are advised to contact your own tax professional for advice on this topic.
The COVID-19 pandemic has changed the location of work for many residents and employees in Powell. For those who have changed their physical work location, the State of Ohio has changed the way you may pay your municipal income taxes. Learn more about what this could mean for you in 2022.
Working from home? Here’s what you need to know.
Prior to the pandemic, State law required employers to withhold city income taxes for the place where the employee performed the work. This means if someone worked in the city of Columbus and lived in Powell, they paid Columbus income taxes. When many employees began working from home during the pandemic, the General Assembly temporarily allowed employers to continue to withhold city income taxes for the city where the work was performed before the pandemic. This was known as the primary place of employment. This temporary accommodation for employers ended as of December 31, 2021. This means employers must withhold city income tax based on where the employee performed the work. For many, this is now their home city, or may be a hybrid of their home city and the city in which their employer’s office is located.
If your employer is based anywhere but Powell and you are working from home, please ask your employer to begin withholding taxes for Powell. Even if you do not work from home every day, your employer is required to withhold income taxes for Powell on the days you do work from home.
What if I both reside and work in Powell?
You do not need to change anything. However, remember that the city now has a two-percent income tax rate in effect for those that work in the city.
Will I have to file multiple income tax returns if I work from the office in one city and from home in a different city?
You are not required to file a return for your city in which your office is located. City of Powell residents are required to file an annual tax return with the Regional Income Tax Agenda (RITA), accessible at www.ritaohio.com, regardless of if your employer’s primary location is in Powell or elsewhere. Even if your withholdings are for another jurisdiction, you would file a return through RITA because you are a resident.
If I am paying income taxes, does it really matter who I pay it to?
In Ohio, each city if funded primarily through income taxes paid by those who work and live in our communities. This supports public safety, road maintenance, services, parks and more. Ensuring your employer is paying taxes to the proper entity is vital to our ability to operate and serve our residents.
While employers withhold city income tax for you, the employee (resident) is ultimately responsible for paying each municipality where he or she works their respective income tax, whether it is work from office or work from home.
Am I able to receive a refund of the tax my employer took out for my work city/village while I worked at home due to the COVID-19 pandemic?
For tax year 2021, fill out and file a Tax Year 2021 Form 10A (available at www.ritaohio.com) and you are able to receive a refund of this withheld tax upon completion of an appropriate request for refund. Please be aware that some, or all, of the tax refund from the withheld municipality may be due to the municipality where the work was performed, including your residence community.
For tax year 2020, this question is still being decided in the courts. You can fill out and file a Tax Year 2020 Form 10A to request the refund, and RITA will hold the refund request until a final court decision is made. Make sure to complete the entire form, including checking the box at the top to indicate the request is related to COVID-19, and use Claim Reason Number 2.
Where do I go if I need more help or clarification?
The Regional Income Tax Agency (RITA) collects income tax for the city of Powell. Contact RITA at 866.721.7482 or visit here.
