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Level 1

Can my city tax my pre-tax 401k contributions?

I live in a small town near Dayton, OH. This is my first time filing taxes with 401k contributions.


I sent this email to individualtax@city.cleveland.oh.us

I have some 401k contributions. My wages box on w-2 is 50661 which subtracts my 401k contributions as it should. Even my state wages box is the same. But when I go to file my local return on this website, my taxable income is 51907.87 which adds my 401k contributions! Shouldn't my local tax be calculated on 50661?

Their response was:

Whatever box on the W-2 indicates the highest wage figure is what we are required to use.   So, if the high wage figure is $51, 907.87, then that is the figure you will need to use.  Get back to me with any additional questions or concerns.

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Level 7

Can my city tax my pre-tax 401k contributions?

The 2018 Cleveland income tax instructions http://ccatax.ci.cleveland.oh.us/taxforms/Y2019/muniit.pdf

states that "Retirement Plans, i.e. 401(k), 403(b), IRA, Keogh, STRS, PERS “picked up” by a public employer are not deductible from wages."




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Level 7

Can my city tax my pre-tax 401k contributions?

The 2018 Cleveland income tax instructions http://ccatax.ci.cleveland.oh.us/taxforms/Y2019/muniit.pdf

states that "Retirement Plans, i.e. 401(k), 403(b), IRA, Keogh, STRS, PERS “picked up” by a public employer are not deductible from wages."




View solution in original post

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Level 1

Can my city tax my pre-tax 401k contributions?

Thanks! I also saw this statement in that document: "City taxes are paid on income (salaries, wages, profits, and other compensation) when it is earned, not when it is received in retirement."

Although, this raises a bigger question. Do all cities do this? (The rest doesn't apply if the answer is yes)
If I'm paying local taxes on my pre-tax contributions now; but in retirement, I move to a city in the USA that taxes my withdrawals. Will I get double taxed?
Level 7

Can my city tax my pre-tax 401k contributions?

Unfortunately, could well happen.  See  <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4646401-do-i-need-to-pay-ma-state-taxes-on-distributions-from-a-40...> for similar situation with state taxes.