Ohio Local Taxes

In Ohio, employees are often subject to multiple local income taxes based on where they live and work. The application provides comprehensive support for managing these complex requirements, allowing employees to have multiple active local tax records.

Types of Local Taxes in Ohio

The system distinguishes between the following local tax types based on the value selected in the Local Tax Type field on the General tab of the Local Tax Codes page:

Typical Employee Configuration

An Ohio employee will typically have:

• One active school district tax, based on residence.

• One or two active residential taxes, based on the municipality of residence.

• One or more worksite taxes, based on actual work locations.

Ohio Local Tax Requirements

Municipal Income Tax Overview

Ohio has a complex local income tax system with over 600 municipalities imposing income taxes. The regulatory bodies include:

• RITA (Regional Income Tax Agency): Administers municipal income tax for over 400 Ohio municipalities.

• CCA (Central Collection Agency): Administers municipal income tax for several major Ohio cities, including Cleveland.

Electronic filing requirements

According to Ohio Revised Code Section 5747.07, 5747.071, and Ohio Administrative Rule 5703-7-19:

Filing deadlines

Comprehensive reporting rule

According to the Ohio Revised Code Section 718.03(H) (effective since tax year 2016):

If an employer reports local W-2 information for any employee, the employer must file all of that employee's local W2 information, regardless of whether the same agency administers the municipal income tax.

Penalties for non-compliance

Record retention

Employers are required to maintain tax records, including W-2 information, for at least four (4) years from the due date.

Manage Local Taxes

To manage local taxes, you must:

• Add new local tax codes when an employee moves or changes work locations.

• Inactivate local tax codes when they no longer apply:

  • School and residential taxes: When an employee moves to a new residence.

  • Worksite taxes: When an employee changes work locations.

Timecard Import and Local Tax processing

Import Timecard validation

When loading timecards using the Import Batch Timecards page, the system validates that the tax code exists:

• If the local tax code is present in the timecard record, the system validates it against the Local Tax Codes page.

• The system checks for worksite tax records. If the worksite tax code cannot be found, an error is logged. If multiple worksite tax records exist for a crosswalk value, an error is logged.

Automatic Worksite Tax record creation

During payroll calculation (worksheet processing), the system automatically creates local tax records for worksite taxes if:

1. The timecard references a valid worksite tax code on the Local Tax Codes page.

2. The employee does not already have an active record for that worksite location.

3. The tax type is W-Worksite.

This ensures employees are correctly set up for all work locations referenced in their timecards.

Payroll Precalculation validation

During Pay Run Processing precalculation, the system validates local tax configuration for

each employee. The following warnings are generated on the C1 precalc report:

• LOCAL TAX STATUS FOR EMPLOYEE IS MISSING:
  This warning appears when an employee has active local tax records but the Filing Status (Local Marital Status) is blank on the Employee Tax Information page. The employee's local tax cannot be calculated without a Filing Status.
  Resolution: Enter the Filing Status on the Employee Tax Information page in the Local section for the affected locality.

• LOCAL TAX LOC [location] [freq] [marital] NOT ON TABLE, EMPL TAX CAN NOT BE CALC'ED:
  This warning appears when the employee's local tax Locality Code, Pay Frequency, and Filing Status combination does not match any entry in the local tax table. This can occur when:

  • The employee's payroll pay frequency was changed but the local tax pay frequency was not updated to match.

  • The local tax table does not include the employee's specific combination of locality, frequency, and marital status.

  • External systems (such as Unified Talent) created local tax records with a pay frequency that does not match the payroll pay frequency.
    Resolution: Verify that the employee's local tax pay frequency matches the payroll pay frequency. Ensure the Locality Code, Filing Status, and Pay Frequency combination exists in the local tax table on the Local Tax Codes page.

W2 Reporting - Boxes 18-20

When completing W2 forms for Ohio employees:

• Box 18 (Local wages): Reports wages subject to local taxation.

• Box 19 (Local income tax): Reports the amount of local tax withheld.

• Box 20 (Locality name): Must accurately reflect each locality where tax was withheld.

If taxes were withheld for multiple localities, each should be reported separately on the W2.

Standard reports

Standard reports have been modified to reflect multiple local taxes, including:

• Payroll registers showing local tax breakdowns by type.

• Year-end W2 processing reports.

• Local tax reconciliation reports.

• The Calendar YTD Report includes Total Local Tax totals per employee and grand totals by locality code.

• The Payroll Snapshot (Human Resources > Payroll > Pay Run Processing > Payroll Snapshot) displays historical Ohio local tax records on the Taxes page, capturing the employee's local tax configuration

  at the time of each pay run.

Refer to Calendar YTD Report - Ohio Local Tax Totals for more information.

Calendar YTD Report - Ohio Local Tax Totals

When the Multi-Local Tax indicator is enabled, the Calendar YTD Report includes additional columns and totals for local taxes:

• Per-Employee Local Tax Information:
  A Total Local Tax column is printed on the first two lines for each employee, alongside the Federal and State Wages and Tax columns.

• Grand Totals:

  • A grand total for Total Local Tax is printed at the end of the report.

  • Grand totals for Total Local Wages and Total Local Tax are printed at the bottom of the report, broken down by each Locality Code.

• Excel Format:

  • The Excel format includes a Total Local Tax column for each employee.

  • If the "include totals" option is selected when generating the Excel file, the grand totals for Local Tax and the locality-level breakdowns of wages and taxes are also included.

Payroll Snapshot - Ohio Local Tax History

Menu path: Human Resources > Payroll > Pay Run Processing > Payroll Snapshot

The Payroll Snapshot captures a point-in-time record of an employee's payroll information, including local tax settings. When Ohio Local Taxes are enabled, the Payroll Snapshot displays historical local tax information on the Taxes page.

Behavior

• When the Ohio Local Taxes feature is enabled, the standard single local tax fields in the Payroll Snapshot are hidden.

• In their place, an array of the employee's Ohio local tax records is displayed on the Taxes page, showing all local tax records (School, Residential, Worksite, Other) as they existed at the time the snapshot was created.

• The display format is similar to the local tax table on the Employee Tax Information page.

When the Ohio Local Taxes feature is not enabled, the standard local tax fields are displayed in the Payroll Snapshot as usual. This historical view allows payroll administrators to:

• Review the local tax configuration that was in effect for a specific pay run.

• Audit local tax changes over time.

• Troubleshoot local tax discrepancies by comparing the snapshot data to the current Employee Tax Information page.

Related resources

• RITA (Regional Income Tax Agency)

• CCA (Central Collection Agency)

• Ohio Department of Taxation - Employer Withholding