This page will provide a quick overview of the City of Wilmington income tax requirements.
Frequently Asked Questions
This page answers many of your basic questions such as:
- Am I required to file a Wilmington income tax return?
- What income is taxable and what is non-taxable?
- What if I operate a business?
- As an employer do I have an obligation to withhold Wilmington income tax from my employees?
- Where can I get tax forms?
- When are they due? Where do I send them?
This page is divided into three sections:
A. Individual Filing
Refer to this section if you are an individual whose primary source of income is salary, wages, commissions, bonuses, or other compensation. If you have income from unemployment, pension or retirement income, or have incidental business income, you should also refer to this section.
B. Business Filing
Refer to this section if you operate a business. A business is defined as an enterprise, profession, or activity conducted from profit whether by an individual, partnership, association, corporation, or any other entity. (This category would include self-employed business activities such as the sale of real estate, construction services, consulting, or other professional services. This would also include rental property activities.)
C. General Information
Refer to this section for information regarding filing due dates, estimated taxes, where to obtain and return forms, and where to call if you have further questions.
1. Do I have to file a return?
All residents of Wilmington are required to file a tax return regardless of where they work.
2. Do I have to file a return if I work in Wilmington but live elsewhere?
You are subject to tax on all income earned while working in the City, regardless of where you live or where your employer's main office is located. But, the City holds the employer liable for withholding the tax. Therefore, you do not have to file a Wilmington tax return if you work in Wilmington but live elsewhere. Exceptions to this :
A. If you are a Federal employee working in the City of Wilmington and your city tax is not withheld, you must file a Wilmington tax return.
B. If you are self-employed in the City of Wilmington and live elsewhere, you must file a Wilmington tax return.
3. What income is taxed by the City?
Earned income is subject to the Wilmington local income tax but unearned income is not. Common illustrations of earned income include salaries, wages, commissions, bonuses, and other compensation paid by employer(s) before any deductions. Unlike for your Federal return, you may not deduct contributions to a retirement plan (IRA, 401k, 403b, or 457b). Also taxable are gambling and lottery winnings reported on IRS Form W2G or Form 5754. Gross earnings are taxed in the year earned. Pension and retirement income is not taxable when you are retired and receiving distributions.
4. What income is non-taxable?
The City does not tax unearned income. Examples of unearned income are dividends, interest, capital gains (unless taxed as ordinary income), alimony received, military pay, state unemployment benefits, worker's compensation, social security, welfare assistance, and pension or retirement income.
5. What expenses are deductible from earned income on the return?
The only expenses that can be deducted from earned income as an individual are those reported on the Federal Form 2106. These pertain to unreimbursed business expense incurred as an employee.
6. What if I also earn incidental income on the side?
You may be employed and also earn incidental income on the side. If so, your incidental net income is subject to tax. It might be in the form of fees for consulting or professional services, honorariums from speaking engagements, royalties from publications, small construction jobs, rental property, or other earned income.
7. What if I earn incidental income from more than one unincorporated business?
You may combine the results of each business and report the total on Page One of the Form IR, Please also attach copies of all applicable federal forms.
8. How are net operating losses from side businesses treated?
Net operating losses cannot be used to offset employee wages. For unincorporated businesses, if you operated more than one business, a net operating loss can be used to offset profits from any other type of business you operate. The remainderof the loss that could not be offset to other business profits can be carried forward to be used as a future offset for up to five years. Losses must be reported on Form IR, but are not deducted in the computation of your individual taxable income.
1. Does a business have to file a return?
All businesses located in or working in Wilmington 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. Generally, a business will use Form BR (Business Return) to report its income and expenses. However, if you are employed as an individual but earn incidental income from a side business, you may simply include this in your individual return, Form IR, rather than fill out a separate business return (refer to Section A, question 6).
2. How should S-Corporations and Partnerships report their profits?
Unlike federal tax requirements for Wilmington income tax purposes, profits of S-Corporations and Partnerships are not passed through to shareholders or individual partners for inclusion in their individual returns (in most cases). An exception to this rule is a resident partner involved in a non-resident partnership, which isn't taxed (report on Form IR). S-Corporations and Partnerships and Partnerships must report and pay the Wilmington income tax as a business using Form BR.
3. 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 on page 2, Schedule Y of Form BR to determine the taxable portion to the City of Wilmington.
4. What income should an Unincorporated (sole proprietor) business report?
The income that should be reported depends on whether both the owner and the business are resident or non-resident. An owner is a resident when his or her primary residence is within the city limits. A resident business is a business entity having an office, operation, or business site within the City.
A. 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.
B. 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 Wilmington) in which the business resides, then Wilmington will grant the business a credit up to the amount paid to the other municipality (but not in excess of the 1% Wilmington tax).
C. 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.
D. If the owner and the business are both non-resident, then only income earned on work performed in the City is taxable.
5. 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. 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.
6. How are net operating losses treated?
A Corporation or Partnership may carry forward the loss and can offset it against its future taxable income for up to five years.
For Unincorporated businesses, if you operated more than one Wilmington business, a net operating loss can be used to offset profits from any other type of Wilmington business you operate. The remainder of the loss that could not be offset to other business profits can be carried forward to be used as a future offset for up to five years. Net operating losses cannot be used to offset wages.
7. Can I combine reporting for more than one Unincorporated Wilmington business on a single tax return?
Yes, you may combine the results on one Form BR. Where the businesses are relatively small, (see Section A, question 6), you may use Form IR. In both cases attach copies of all applicable federal reporting forms (Schedule C, E, etc.).
1. As an employer am I required to withhold the Wilmington income tax from employees pay?
A resident employer or an employer having employees working within the City must withhold Wilmington income tax (1%) from all salaries, wages, commissions, bonuses, or other compensation paid to employees before any deductions. This is applicable for a business whose primary office is outside of the city limits, as well as those in the City.
Where a business fails to withhold the income tax from the employee, the City will hold the business responsible for paying the tax.
2. What is the due date for returns?
For calendar year taxpayers the due date is April 15. For other fiscal year end taxpayers the return should be filed within four months after the end of the fiscal year.
3. Are estimated tax payments required?
If so, when are they due? Every individual who anticipated any Wilmington taxable income that is not subject to withholding of the Wilmington tax must file a Declaration of Estimated Income Tax. All businesses that anticipate any Wilmington taxable income must file the Declaration Form, regardless of the amount of income anticipated. The declaration is due April 15 for calendar-year filers, or four months after the end of the fiscal year. The declaration of estimated tax must be submitted with payment of at least 22.5% of the estimated annual tax. An equivalent amount should be paid on the last day of the seventh, tenth, and thirteenth months. The City will bill you automatically for the second, third, and fourth payments.
4. What if I do not file a return? Or, what if, as an employer, I fail to submit employee withholdings?
You may be subject to interest and/or penalties for failing to either submit a return or to withhold and remit employee local income tax.
5. Where can I pick up the tax return forms and where should they be returned?
Tax return forms are available at the Wilmington Tax Bureau. Make checks payable to the City of Wilmington. The forms should be returned to:
City of Wilmington
P.O. Box 786
Wilmington, Ohio 45177
6. Where should I call if I have questions that were not answered on this web site?
You may call the Wilmington Income Tax Bureau at (937)382-1880 (or consult your tax advisor). When in doubt, call and ask! This service is free to Wilmington taxpayers.