FAQ — Frequently Asked Questions
Q: What is the City of Cambridge Ohio's income tax rate? A: The rate is 2%.
Q: I reside in Cambridge, my wages are my only taxable income and my employer is withholding my Cambridge Income tax properly. Do I need to file a Cambridge Income Tax return? A: Yes, beginning January 1, 2003, mandatory filing is in effect, which means all residents of the City of Cambridge that are employed or have income subject to Cambridge Income tax under Cambridge City ordinance and/or are 18 or over and have no income, are required to file a return.
Q: How do I determine where my local tax is owed? A: Your tax is paid first in the city in which you work. You have an obligation to your city of residence, however you will receive a credit for taxes paid to other cities up to 2%. For example: If you work in a city that has a 1% tax rate and reside in a city that has a tax rate higher than 1%, and your city of residence allows a 160% credit for local tax paid to your work city, then you owe local tax to your city of residence for the difference in the tax rates. If you are a resident and work in a municipality with a tax rate higher than Cambridge, you will be given credit for the taxes paid in the city in which you work, up to the Cambridge tax rate of 2%. We can only allow a credit against your tax liability due to Cambridge. We cannot refund taxes paid to other cities.
Q: Can I request my employer to withhold the additional tax due? A: You may request that your employer withhold the additional tax to the city of your residence, however, your employer is not required to withhold this additional tax. If your employer agrees to withhold this tax as a courtesy for you, please have your employer contact our department at (740)-439-2355. If your employer will not withhold the additional tax for you, it is your responsibility to file a return each year, by April 15th and pay the additional tax due.
Q: I do not work in Cambridge, and did not live in Cambridge for the whole year. How is my tax figured? A: If you do not have the exact figures of the wages earned while a Cambridge resident, your taxes will be figured using a pro-rated basis on the number of months you were employed and the number of months you lived in Cambridge. For example: If you were employed for 12 months of the year, your gross income is divided by 12 to arrive at an approximate monthly income. This amount is then multiplied by the number of months you were a resident of Cambridge. This figure is the total income subject to Cambridge tax. Your income is then multiplied by 2% to arrive at the tax due.
Q: I’m self-employed but my business has not shown a profit. Am I required to file a return? A: Yes, all residents conducting a business or non-residents conducting a business within the city must file an annual return and report the net profits or net losses of said business. The leasing of real or tangible property (i.e. income from a rental property) that you own is considered a taxable business activity that must be reported.
Q: I reside in Cambridge and work in a city/village that has no local tax. What is my tax obligation? A: Because you do not pay tax in the city/village in which you work, you are required to pay your tax liability to your city of residence, Cambridge. Because you have no local tax withheld, you are required to make estimated tax payments to the City of Cambridge to satisfy your local tax obligation. Estimated tax payments are due April 30th, June 30th, September 30th, and January 31st if you owe over $200 per year. You must also file an annual tax return on or before April 15th of the year following the year the income was received to report your final tax liability for that year. The tax due is reduced by your estimated payments and you pay any remaining tax liability due. If your estimated payments exceed your final tax liability, the over-payment will be used as a credit carry-forward to your next year's return.
Q: I’m starting a new business. What do I need to do about city taxes? A: You will normally have to remit two types of city taxes: the net profit tax and the employee withholding tax. The first tax is due on profits of your business, whether your business is a proprietorship, corporation or partnership. To register with our office, you must notify us by printing a business questionnaire, to be completed and returned. If you have employees who work for you in the corporation limits of Cambridge, you are required to withhold taxes of 2% on their total gross wages and remit on a quarterly basis unless you owe over $200, then tax must be paid monthly. Employers are liable for all city withholding taxes required to be withheld from their employee’s wages EVEN if those taxes were not, in fact, withheld. A withholding account will be set up at the same time your net profit account is established. If you have no employees, notify our department of this.
Q: How do I know that the federal tax information I submit with my return will remain confidential? A: Cambridge City Ordinance states, “Any information gained as the result of the filing of any tax returns, investigations, hearings, or verifications required or authorized by this chapter shall be confidential, except for official purposes and except in accordance with proper judicial order.” Divulging such information is in violation of Cambridge Ordinance and could result in court action against the person divulging this information.
Q: How can I make sure my employer is withholding the correct amount of local tax from my wages? A: Look at the gross wage figure on your paycheck stub. Take the gross wages and multiply times (x) .02. This should be the amount of Cambridge tax that should be withheld from your wages. If you find that the correct amount is not being withheld, you must contact your employer to have it corrected. Although your employer is required to withhold the tax from your earnings, it is your responsibility to see that this is done correctly. It is also your responsibility to see that all taxes you owe are paid.
Q: What happens if I can’t pay my taxes when they are due? A: Taxes must be paid as you earn or receive income during the year. All returns are due with payment in full of any tax due by April 15th or a $25 per month up to $150 fee for late filing. Returns filed and payments received after the April 15th filing deadline will be assessed a 15% late one time penalty charge, and interest will accrue. The interest rate on unpaid taxes for tax year beginning January 1, 2017, will be 6% per annum (.50 per month). The interest rate on unpaid taxes for the tax year beginning January 1, 2016, will be 5% per annum. The interest rate on unpaid taxes for prior tax years is still 18% per annum (1.5% per month). EXTENSIONS – If the IRS grants you an extension, Cambridge allows the same extension in the filing of your Cambridge return. Please send a copy of the Federal extension by April 15th to this office.
Q: My spouse and I file separately at the federal/state level. Do we have to do the same for municipal purposes? A: No, a husband and wife, in any taxable year, should file joint returns regardless of their federal or state filing status.
Q: Can someone help me prepare my city tax return? A: Your return should be completed before it is filed, just as your Federal and State tax returns. Included in your income tax packet are line-by-line instructions for completing the return. We will offer training to taxpayers in the preparation of returns. Tax office personnel are available Monday thru Friday 8:30am until 4:30pm. A tax preparer can complete your City return, however, they cannot file it. You must file the return yourself. You must attach all W2's, 1699's, a copy of the first page of your Federal tax return and all documentation supporting the income on your Cambridge return. If you would like to contact the IRS for Federal information call 1-800-829-1640 or the Ohio Department of Taxation at 1-800-282-1780.