Frequently Asked Questions
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, for tax year 2002, 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 also may have an obligation to your city of residence.
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 100% 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.
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 entire 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 15th, July 31st, October 31st, and January 31st. You must also then 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 overpayment 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 if you have employees, 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 and you will be sent a questionnaire, which needs 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. Employers are liable for all city withholding taxes that should have been withheld from their employee’s wages EVEN if those taxes were not, in fact, withheld. Your 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 them times (x), 2%. 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 and 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: All returns are due with payment in full of any tax due by April 15th. You have from January thru April to make payment on any tax liability you may have due. Returns filed and payments received after the April 15th filing deadline will be assessed a $ 25.00 penalty charge and interest will accrue at a rate of 1% per month.
EXTENSIONS – If the IRS grants you an extension, we will allow the same extension for filing your Cambridge return, however, we must receive a copy of the Federal extension by April 15th TO AVOID PENALTY BEING ASSESSED.
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, may elect to file separate or 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 are completed before they are filed. 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 most days Monday thru Friday 8:30am until 4:30pm. A tax preparer can complete your City return for you, however, they cannot file it. You must file the return yourself. You must attach all W2's, 1099's, a copy of the first page of your Federal tax return and all documentation supporting the income on your Cambridge return.
To contact this department, click here.
If you would like help with your Federal or State returns, contact the IRS at 1-800-829-1040 or the Ohio Department of Taxation at 1-800-282-1780.
Q: When can I expect my refund?
A: The city has 90 days from the latter, of the date your taxes were due or the date your completed refund request is received and reviewed. If your return is complete and approved, a refund check will be mailed to you. A refund request is not considered received unless it is complete and all required information has been provided.
Q: What are the most common mistakes people make in filing a tax return?
- Failure to use gross compensation.
- Failure to attach page 1 of your Federal tax return
- Failure to attach W-2’s, Federal schedules and/or forms and income verification.
- Failure to file Declaration of Estimated taxes and make quarterly payments. First quarter payment is due with the filing of the return. 2nd, 3rd and 4th quarters are due as shown on estimated vouchers contained in the Income tax return packet.
- Failure to use correct amount of credit for estimated taxes paid or to figure credit correctly for taxes paid to other municipalities against taxes due.
- Failure to advise of address change.
- Failure to sign return or attach check.
- Failure to file return or mail return timely, resulting in penalty charges assessed.