I live in Lakewood, Ohio, and my employer is in Cleveland, Ohio, but we work remotely most days of the week. I have Lakewood taxes withheld each pay, will I owe for Cle?

[ginanwolf]

I live in Lakewood, Ohio, and my employer is in Cleveland, Ohio, but we work remotely most days of the week. I was given the option to withhold taxes for either Cleveland or my residence tax, which is Lakewood, but they couldn't take out both. I started in June 2018, and I have had them withhold Lakewood taxes, but Cleveland is not taken out. Do I have to do something different for Cleveland, or no since I am taking out for Lakewood, and I work remotely 3-4 days out of the week? 

Thank you in advance for your help!

[Hal_Al]

Simple answer: you just pay Lakewood tax, since you both live and work there. 

BUT, it sounds like you may work in Cleveland often enough that you may be subject to Cleveland tax as well. Generally, if you work more than 20 days*, in a year, in a city with a tax, you are required to file a return for that city. Your residence city will give you a credit, or partial credit for the tax you pay the work city**. 

You may want to contact the Central Collection Agency (CCA), which administers Cleveland Income tax, for instructions and verification on filing. Phone 216.664.2070

*20 days is the general rule in Ohio, but each city may have it's own threshold.

**The city of Lakewood has a tax rate of one and one-half percent (1.5%), but only allows a credit of up to one-half of one percent (0.5%) for a tax paid to other localities. Since the Cleveland tax is 2.5%, you will effectively be double taxed for the days you worked in Cleveland.

[ginanwolf]

Thank you so much, that helps a lot. Looks like I will have them take out Cleveland from now on and just get billed quarterly by Lakewood, Ohio.

[Hal_Al]

That's probably best. Be advised that you should get a refund from Cleveland, for the days you didn't work there.  That takes a special form from CCA. You may need to contact them to get that form. My city calls it the "Itinerant worker" form. I don't know what CCA/Cleveland calls it.

Because you are a resident, you still need to file a Lakewood return and pay tax on all your wages (less the partial credit). You will not be able to use TurboTax to do either City return; Lakewood because it's not a CCA (or RITA) city and Cleveland because of the special form

[ginanwolf]

Thank you again! I just spoke with Lakewood and am contacting CCA for the form!

[Sri5902]

I live in Lakewood, Ohio and I work remotely out of my home location.  But my employer is located in Cleveland, Ohio. How does the taxes work in my scenario? Am I supposed to pay both the taxes (Cleveland & Lakewood) even though I worked remotely 100% of my time in 2020? @Hal_Al 

[Hal_Al]

Ohio, passed HB 197 which basically says working from home due to the COVID-19 pandemic shall be deemed to be a day performing personal services at the employee’s principal place of work. So you still need to pay the Cleveland city income tax.

If your working at home  situation is not due to Covid, you can file a Cleveland return for a refund, for the days not worked there.  Contact CCA, there may be a special form  for claiming a refund in this situation.  My city calls it the itinerant employee refund form.

Since you do work some days in Cleveland, you employer is probably correct to withhold Cleveland tax. 

 You normally only have to file a return in the city you live in. It is not necessary to file one in the city you work in, if different. Your employer will remit withholding to the city you work in, but you do not file a return unless you're claiming a refund or your employer didn't withhold enough ( both highly unusual). The city you live in will allow a credit or partial credit for the withheld tax you paid to the work location city.