Frequently Asked Questions

Answers


What is form 2106?

We apply essentially the same guidelines to 2106 expenses as does the federal government. Expenses must be carried forward to Schedule A, but without regard to the 2% AGI factor. We allow the deduction of Employee Business Expenses as reportable on the taxpayer's form 2106, subject to audit and approval by the Income Tax Division.

For verification it is necessary that a copy of the Schedule A, and a detail statement of any Line 4 deduction, "Business Expenses not included on lines 1 through 3," also must be submitted. Please note: other miscellaneous deductions shown directly on Schedule A are not deductible on Canton's tax return.

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How do I handle stock options?

The difference between the "issue price" and the "market price at exercise" is taxable when the stock option is exercised.

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How do I handle Early Retirement - Separation Payouts?

"Early retirement incentive programs" and separation payouts (termination pay, golden parachutes, etc.) are taxable if the recipient was employed within the city of Canton at the time of retirement, regardless of the employees residency status. Resident taxpayers' separation payments are considered taxable, regardless of employment location; however, credit is given for taxes lawfully imposed and paid to the city of employment, up to 2%.

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How do I handle Lump Sum Distributions?

Lump sum distributions made from qualified pension and profit-sharing trusts, and not made persuant to an employee's retirement, are taxable.

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How do I submit Federal Schedules?

When submitting copies of federal schedules please remember to copy both sides of the schedules where appropriate. As an example, often we receive a copy of Schedule C and the taxpayer has copied only the front side of the schedule. This delays processing the return until the remainder of the information is available.

On Schedule E the addresses of the rental properties is necessary information, but it is sometimes missing. Also, this schedule needs to accompany the Canton tax return even if a loss is shown.

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What if I do not include a payment with my return?

Taxpayers who file a return timely but do not include payment with the return will be assessed interest penalties up to the time the payment is made. If a taxpayer is financially unable to meet the tax obligation, an installment payment agreement might be allowed, at the discretion of the Income Tax Division.

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What are "Qualifying Wages"?


"Qualifying Wages" are wages, as defined in Section 3121(a) of the Internal Revenue Code, without regard to any wage limitations (e.g., the Social Security wage limitation), adjusted as follows:

  1. Deduct any amount included in wages if the amount constitutes compensation attributable to a plan or program described in Section 125 of the Internal Revenue Code.

  2. Add the following amounts:

    1. Any amount not included in wages solely because the employee was employed by the employer prior to April 1, 1986.

    2. Any amount not included in wages because the amount arises from the sale, exchange, or other disposition of a stock option, the exercise of a stock option, or the sale, exchange, or other disposition of stock purchased under a stock option. This applies only to those amounts constituting ordinary income.

    3. Any amount not included in wages if the amount is described in Section 401(k) or Section 457 of the Internal Revenue Code. This applies only to employee contributions and employee deferrals.

    4. Any amount that is supplimental unemployment compensation benefits described in Section 3402(o)(2) of the Internal Revenue Code and not included in wages.

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What is witholding?

Any taxes withheld by an employer are held in trust. It is illegal to withhold any sum and not subsequently forward it to the Division of Taxation as required by the Income Tax Code. Businesses must deposit withheld taxes monthly or quarterly, depending upon the amount withheld.

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What are extensions?

Unless there are unique circumstances (determined on a case-by-case basis), no extension for filing a year-end tax return or making the required year-end payment will be granted for any individual or business whose account is in a delinquent status with us. The delinquency can relate either to documents that have not been filed or to payments that have not been made.

Also, filing an extension with us does NOT relieve the responsibility for making full payment by the original due date, of the tax anticipated due.

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What is the City of Canton Income Tax Rate and what type of Income is taxable?

The income tax rate is two percent (2%). Generally, qualifying wages (including most income which is deferred) and business net profits are taxable. A list of taxable and non-taxable income is available at this website.

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What if I reside in Canton and work in an area with no municipal tax. How often must I file with Canton?

You must file a Declaration of Estimated Income Tax by April 30th of each year, if the estimate of tax that will not be withheld exceeds one hundred dollars ($100.00) On it you must estimate the amount of tax you will owe for the year. One-fourth of the estimate must be paid with the Tax Return/Mandatory Declaration form. Subsequent payments are due July 31st and October 31st of the current year, and January 31st of the following year.

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Is there an age limit for individuals subject to Canton Income Tax?

Yes. All individuals under eighteen years of age are exempt from City of Canton Income Tax and are eligible for a refund of municipal tax withheld. Senior Citizens aged 65 and older are entitled to a Canton Income Tax credit of $200, or the amount of tax due to Canton, whichever is less.

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I am retired. My only income is from Social Security, company pension, interest, and dividends. Am I required to file a City of Canton Income Tax Return?

No. You are not required to file an income tax return with Canton, nor are you taxed by Canton on these types of income. However, you must file a one-time exemption certificate with us so we will not send you income tax returns in future years.

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If an individual files late, is there a penalty?

Yes, interest penalties are assessed on an unpaid balance at the rate of 3% per month. Unpaid withholdings are penalized at the rate of 6% per month.

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Can I receive assistance in preparing my City of Canton Income Tax Return?

Yes. The Income Tax Division personnel can assist you either by telephone, mail, or in person. If you visit the Tax Office please bring a copy of your Federal Income Tax Return and all W-2's and 1099's. These will help us assist you in preparing your Canton Tax Return.

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Can I obtain a copy of the City of Canton Income Tax Ordinance?

Click on Ordinances on the top of this page to view the tax ordinances online.

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What is an Independent contactor?

Many individuals claim to be operating as independent contractors, and some employers have classified certain employees as independent contractors. However, we follow the federal guidelines for determining "independent contractor" status.

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What must I do if I am a contractor?

All contractors must be registered with the city's Income Tax Division before performing work within the city. You can obtain the appropriate registration forms from the Income Tax Department, or the Building & Code Department.

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What do I do with a 1099?

It is a requirement of the Income Tax Division that copies of 1099's (for other than interest or dividend payments) be submitted by both the payer and the recipient of a 1099.

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Copyright 2007 - City of Canton Treasury Department
All rights reserved - email: cantontax@cantonohio.gov