More Frequently Asked Questions
Frequently Asked Questions
During the past several weeks, residents have been calling with questions about the income tax. Based on these questions the City provided additional FAQ’s and some more specifics to share their questions and answers:
Is the Income Tax Based on Where You Live or Where You Work?
According to the Ohio Revised Code (ORC), taxes are first paid to the City where you work. For example, if you earn wages in Dayton, the 2.25% Dayton income tax is withheld by your employer. If you own a business in Dayton, you report that business’s net profit to Dayton.
If you work in a municipality without an income tax (Beavercreek, Bellbrook), then income taxes are withheld and remitted to your resident community. For example, if you live in Centerville and work in Beavercreek, your employer would withhold and remit taxes to Centerville. Should the income tax pass, then the Beavercreek employer would withhold and remit taxes to the City of Beavercreek.
If I Paid Taxes to Another Community Do I Still File and Pay Taxes to Beavercreek?
Every resident over 18 and all businesses located in Beavercreek must file a Beavercreek tax return. However, if you are employed and pay taxes to the municipality in which you work you will receive a 100% credit for 1.5% of the taxes you paid to that community in which you worked. You would pay no additional taxes to the City of Beavercreek.
If I’m a Resident and Work in Beavercreek or Work as a Civilian on the Base is this is a New Tax for me?
For those who are not currently paying an income tax, as noted in the first two examples above, this will be a new tax. Residents in the above two categories will see a 1.5% income tax deducted from their wages effective January 1, 2014 if the residents vote for the implementation of the income tax.
If I’m in the Categories Above and Own Property, Will What I Pay in Income Tax be Offset by Reductions in My City Property Tax?
Since the income tax is 1.5% of an individual’s wages, the property tax reductions phased in over the next four years may not completely offset income taxes paid. Every resident will be affected differently, based on their circumstances (earnings and property value). Therefore, the City has developed a Property Tax Savings and Income Tax Calculator located on the City’s website so each resident can determine how they will be affected.
Can City Council Reduce the 100% Credit I Receive For Taxes Paid to Another Municipality During the Seven Years the Income Tax Is in Place?
Per the City Ordinance, specifically Section 38.18 (D) Credit for Tax Paid to Another Municipality states:
“Amendments to §38.18 of this ordinance shall be voted on by the electors of the City of Beavercreek. The City of Beavercreek Council shall adopt an ordinance with the proposed amendment, not less than one hundred eighty days (180) prior to the proposed election at which election the proposed ordinance shall be submitted to the voters.”
Meaning any amendments or changes to the credit percentages must be placed back on the ballot and voted on by the residents.
If I’m Retired and Have Only Pension and Interest on Savings or Certifications of Deposits (CD) Will These be Taxed?
Pensions and social security payments are exempt from the City Tax. See question below. Interest on savings accounts, CD’s, etc. is also exempt from the tax. Dividends and capital gains on stocks and bonds are also exempt from the City Tax.
What Types of Income is Excluded Under the Definition of “Pension” Income?
Pensions would include; pension paid under federal, state and private pension plans. These would include pension plans such as Civil Service (CSRS), Federal Employee (FERS), Ohio Public Employees (OPERS), School Employees (SERS), Police and Fire Retirement systems, etc. Also, retirement distributions from social security, individual retirement accounts (IRA), private pension’s plans (401K & 457), non-profit (501C3) and retirement annuities are all excluded.
What Income is Not Considered Taxable Income?
Although not all inclusive those listed below are the more common items that are tax exempt under the Ohio Revised Code:
- Active Military Duty pay including reserves and National Guard
- Intangible Income: Interest and dividend income, capital gains
- Social Security
- Pensions (See above)
- Welfare benefits, State unemployment benefits or workers compensation
- Alimony (Spousal Support), child support
- Proceeds of insurance annuities, permanent disability benefits, compensation for damages for personal injury
- Earning of person under 18 year of age.
What Guarantee Do We Have the City Council Will Not Allow the Voted Property Tax Levies to Expire?
Per the City Ordinance 38.17, Allocation of Funds, states that the method in which the tax revenue will be disbursed, specifically: Section 2 states:
“Such part thereof as shall be necessary to offset the lost revenue generated by the three (3) voted property tax levies when they expire. These levies include the 1.0 mill Street Levy expiring in 2013, the 3.7 mill Police Levy expiring in 2014, and the 2.6 mill Street Levy expiring in 2016. Additionally, City Council will review income tax collections annually. Should the collections in any year exceed collection projections, than the Council can through passage of appropriate legislation, direct the County Auditor to reduce the existing remaining voted levy millage by a stated amount. ”
This requires City Council, should the income tax pass, to allow the voted levies to expire. It also provides language to allow them to reduce the existing levies quicker if tax receipts exceed the tax projections.
This is another section of the ordinance that City Council could not change unless the section was placed on the ballot and voted on by the residents as noted below, which is subsection (5) of 38.17.
“Amendments to §38.17 of this Ordinance shall be voted on by the electors of the City. The City Council shall adopt an ordinance with the proposed amendment, not less than one hundred eighty days (180) prior to the proposed election at which election the proposed ordinance shall be submitted to the voters.”
What Prevents the City Council From Placing New Levies on the Ballot during the Seven Income Tax Term?
City Ordinance 38.98 Relief of Property Taxes, prohibits Council from placing any new Police or Street property tax levies on the ballot during the seven years the income tax is in place (through December 31, 2020). This is another section of the ordinance that would require resident approval to change.
If the Income Tax Passes, How will it be Determined Which Capital Improvements Projects Will be Selected and Funded?
If the income tax passes, the City will establish a Capital Improvement fund. The amount of income tax money transferred to the fund is directed by the ordinance. The ordinance indicates a minimum of 20% of the revenue generated from the income tax to be directed to the Capital Improvement fund. During each budget process, the City will determine the amount of funding (minimum of 20%) and the projects that would be budgeted for the upcoming year. These projects are taken from the Five Year Capital Improvement Plan that is updated annually. In addition, the City will use the Park Master Plan to determine improvements in this area. These previously indentified projects would then be prioritized and funded through the budget process. The review of the Five Year Capital Improvement Plan and the annual budget process is open to the residents to ensure input into the process including which infrastructure projects should be funded. The current project listings have been provided on the City’s website.
Will My Tax Return Information be Kept Confidential and What Safeguards are in Place to Ensure Confidentiality?
The City has built into the ordinance specific confidentiality restrictions and penalties related to the confidentiality of residents records. These restrictions are depicted in the ordinance under 38.12(D)
“Any information gained as a result of returns, investigations, hearings, or verifications required or authorized by this chapter is confidential, and no person shall disclose such information except in accordance with a proper judicial order or in connection with the performance of that person’s official duties or the official business of the City or as authorized by this chapter or the charter or ordinance authorizing the levy. The Superintendent may furnish copies of returns filed under this chapter to the Internal Revenue Service and to the Tax Commissioner. Any person divulging such information in violation of this chapter, shall, upon conviction thereof, be deemed guilty of a misdemeanor and shall be subject to a fine or penalty of not more than Five Hundred Dollars ($500.00) or imprisoned for not more than six months, or both. Each disclosure shall constitute a separate offense.”
In addition, this critical issue is addressed in section 38.99 Penalty (F) which states:
“In addition to the penalty provided in subsection A. hereof, any employee of the City who violates Section 38.12, relative to the disclosure of confidential information, is guilty of an offense punishable by immediate dismissal. Each disclosure shall constitute a separate offense.”
These are very common components of any municipal legislation. Many municipalities have similar or less strict provisions in their ordinances. Confidentially issues and safeguards have not been an issue for the municipalities that have had an income tax for many years, some of which adopted their legation when it was first placed in the Ohio Revised Code.
Are Gambling Winnings Subject to the Income Tax?
Under section 38.03 of the City Ordinance the 1.5% tax is imposed; ”On all income derived, which require reporting on IRS form W-2G, Form 5754 and/or any other form required by the Internal Revenue Service, from anywhere from prizes, awards, gaming, wagering, lotteries, gambling, or schemes of chance by a resident, and on all income derived from prizes, award, gaming, wagering, lotteries, gambling, or schemes of chance by a non-resident when such income is won or received from sources within the City.”
Winnings can be offset by losses just like your federal and state returns.
If I still have questions, where can I go or who can I contact to obtain more information?
The City’s website www.ci.beavercreek.oh.us has a Municipal Income Tax tab that can be accessed for more information on the income tax. There is also a Property Tax Saving Calculator on our website that you can use to determine your property tax savings and if you will be required to pay the City Income Tax. You can also send your questions to firstname.lastname@example.org or you can contact the City directly at 427-5510.