Income Tax Department - FAQ's
| Do I have to file a return? | ||
| All residents 18 years or older for any portion of the tax year that lived in Norwalk are required to file regardless of where they work or if they were employed. There is no maximum age limit or exemption for students. | ||
| All businesses located in or working in Norwalk must file a return annually regardless of the organization’s form (C-Corporation, S-Corporation, Partnership, or Sole Proprietor) and regardless of whether the business had income or a loss for the year. | ||
| What income should an Incorporated business report? | ||
| An Incorporated business should report all income earned for work performed in the City. If you performed work both inside and outside the City limits, an allocation may need to be made by using Schedule Y located on the back of the City of Norwalk annual return. | ||
| What income should an Unincorporated business report? | ||
| Unincorporated business income is reported differently depending on whether or not the owner is a resident or non-resident or the unincorporated business is resident or non-resident. | ||
| • If the owner is a resident and the business is a resident then all income is subject to tax, regardless of where the work was performed. | ||
| • If the owner is a resident and the business is a non-resident, all income is subject to tax, regardless of where the work was performed. However, if taxes are paid to a city (other than Norwalk) in which the business resides, then Norwalk will grant the business a credit up to the amount paid to the other municipality (but not in excess of the 1.5% Norwalk tax.) | ||
| • If the owner is a non-resident and the business is a resident, then only income earned for work performed in the City is taxable. | ||
| • If the owner and the business are both non-resident then only income earned on work performed in the City is taxable. | ||
| Do I have to file a return if I work in Norwalk but live elsewhere? | ||
| You are subject to tax on all income while working in the City of Norwalk, regardless of where you live or where your employer’s main office is located. The City holds the employer liable for withholding the tax. Therefore, you do not have to file a Norwalk tax return if you work in Norwalk but live elsewhere. | ||
| Exceptions: | ||
| • If you are a Federal employee working in the City of Norwalk and your city tax is not withheld you must file a Norwalk tax return. | ||
| • If you are self-employed in the City of Norwalk and live elsewhere, you must file a Norwalk tax return. | ||
| • If you maintain a place of abode within Norwalk City limits for a period of 183 days or more. | ||
| What income is taxed by the City? | ||
| • All compensation and on all net profits from the operation of a business earned by or received by a resident. | ||
| • All compensation earned or received by a non-resident for work done or services performed or rendered in the City, and on all net profits earned or received by a nonresident from the operation or conduct of business in the City. | ||
| • A resident owner’s distributive share of the net profits of a pass-through entity earned from business conducted by the pass-through entity regardless of where such business is conducted, subject to the relief and reciprocity provisions. | ||
| • On a nonresident owner’s distributive share of the net profits of a pass-through entity attributable to the City and earned from business conducted in the City, whether or not such pass-through entity has an office or place of business in the City. | ||
| • The portion attributable to the City of the net profits earned by a corporation from business conducted in the City, whether or not such corporation has an office or place of business in the City. | ||
| Common illustrations of compensation include but are not limited to salaries, qualifying wages, commissions, bonuses, and other compensation paid by employer(s) before any deductions. Unlike on your Federal return, you may not deduct contributions to a retirement plan (IRA, 401K, 403b, or 457b) on your Norwalk return. | ||
| How is taxable income determined for businesses? | ||
| The determination of “taxable income” for the local tax generally follows IRS rules. The exceptions are on Schedule X located on the back of the Norwalk annual return. Some of them are: | ||
| • Capital gains (except those taxed as ordinary income by the IRS), interest and dividends are non-taxable. | ||
| • Capital losses are non-deductible. | ||
| What income is non-taxable? | ||
| Examples of exemptions from local tax are dividends, interest, capital gains (unless taxed as ordinary income), alimony received, child support, military pay, state unemployment benefits, worker’s compensation, social security, welfare assistance, and pension or retirement income. | ||
| What expenses are deductible from income on the return for an individual? | ||
| Expenses that can be deducted from income as an individual are those reported on the Federal Form 2106. These pertain to unreimbursed business expense incurred as an employee and such deduction must be allocated to the municipality where the income associated with the expenses was earned. Currently it is permitted to apply a loss from an unincorporated business filed on your individual return to offset employee wages. | ||
| What if as an individual I also have income from an unincorporated business? | ||
| You may be employed and also earn incidental income on the side from an unincorporated business. If so, your net income is subject to tax. It might be in the form of fees for consulting or professional services, small construction jobs, rental property, or other income. This net income may be included on your individual return along with your income earned from employment. | ||
| How are net operating losses treated? | ||
| Net operating losses sustained in any taxable year allocable to the City may be applied against the portion of the profit of succeeding tax year(s) allocable to the City until exhausted, but in no event for more than three taxable years immediately following the year in which the loss occurred. | ||
Contact
Diane Eschen
38 Whittlesey Ave.
Norwalk, Ohio 44857
Phone: 419-663-6740
Fax: 419-663-6786
Hours:
Monday - Friday 8:00 am - 4:30 pm
norutbil@accnorwalk.com
What is Action Line?
Action Line is where residents can report concerns and problems.