| Income Tax Division |
Businesses:
Withholding Tax Information and Filing Requirements |
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| This information is intended to provide a brief summary of filing requirements and does not cover all possible circumstances.
If you have any questions or need additional information, you may contact the Tax Division at (937) 296-2502 weekdays from 8:00 a.m. to 5:00 p.m.
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| Tax Rate |
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In May of 2006 the voters in the City of Kettering approved an increase in the tax rate to 2.25% which went into effect on January 1, 2007. What this means for employers is that all taxable wages paid after December 31, 2006 are subject to the new rate of 2.25%. |
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| Taxable Income |
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In accordance with Section 718 of the Ohio Revised Code, effective January 1, 2004, an employer is required to withhold only on “qualifying wages”, which are wages as defined in Internal Revenue Code Section 3121(a), generally the Medicare Wage Box of the Form W-2, with certain adjustments. |
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Medicare Exempt Employees - are subject to the requirements for “qualifying wages” in the Medicare Wage Box of the Form W-2 even though that box will remain blank. |
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Cafeteria Plans – IRC Section 125 wages are not included in the definition of Medicare wages nor are they included in the Medicare Wage Box. Therefore, after 12/31/03, IRC Section 125 wages are no longer subject to local taxation. |
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401(k), 457 and Supplemental Unemployment Compensation Benefits - These items should all be included in the Medicare Wage Box and are subject to withholding requirements. |
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Nonqualified Deferred Compensation Plan - Income from nonqualified plans is included in the definition of “qualifying wages” at the time the income is deferred and is subject to withholding requirements. Note that distributions received after 12/31/03 will no longer be subject to local taxation. |
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Stock Options - Income from the exercise of stock options is included in the definition of “qualifying wages” and is subject to withholding requirements. |
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Disqualifying Disposition of an Incentive Stock Option - Employer is not required to withhold, but the income is considered “qualifying wages” and the recipient is liable for the tax. |
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Remittance of Tax Withheld
In accordance with the City of Kettering Income Tax Code, all employers who are required to withhold Kettering tax must remit payment of the tax withheld via electronic funds transfer. Currently there are two options available by which an employer can electronically remit payment of tax withheld. |
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The Webfile Program is designed for smaller employers that do not have internal information technology staffs. It allows an employer to log onto our secure website and initiate an ACH Debit (electronic check) to remit employee withholding taxes to the City of Kettering. The on-line registration is simple and convenient; you will be asked to provide your basic account and banking information. If you do not have web access you may call our office and a member of our staff will initiate the transaction on your behalf using the information you provide. |
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The ACH Credit Program is designed for larger employers and payroll service companies with significant, internal information technology capabilities. With this program, an employer will instruct their banking institution to send funds to the City of Kettering. To begin using the ACH Credit Program you will need to register with the City of Kettering by completing an ACH Credit Authorization Form. You may obtain a copy of this form by visiting our website or calling our office during normal business hours. Upon receipt of the completed authorization form we will provide you with the necessary banking and addenda record information you will need to finalize the process. |
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| Exceptions to Electronic Filing Requirement |
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Courtesy withholders, who are not required to withhold Kettering tax, likewise, are not required to file via electronic funds transfer. A courtesy withholder may choose to file via electronic funds transfer because of the benefits the electronic filing system provides. |
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Employers who were required to withhold less than $175.00 in tax in the prior year may continue to file on paper until they exceed the minimum threshold of $175.00 in a calendar year. |
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Subject to approval by the Board of Adjudication, the Tax Manager may grant a temporary exemption of up to eighteen months from the requirement to file via electronic funds transfer if it is found that the electronic filing requirement will impose a substantial hardship upon the employer. An employer must submit a written request for such an exemption and provide the basis for a substantial hardship. |
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| Due Dates |
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Kettering Tax Withheld must be remitted to the Tax Division on a monthly basis unless quarterly filing is approved by the Tax Manager. |
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Monthly Filers - Monthly withholding payments are due on or before the fifteenth day of the month following the end of the withholding period. |
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Quarterly Filers – Quarterly withholding payments are due on or before April 30, July 31, October 31 and January 31. |
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Annual Withholding Reconciliation (Form KW-3)
Any employer who has withheld Kettering income tax during the tax year must file an annual withholding reconciliation (Form KW-3), including copies of all corresponding Form(s) W-2. This return is due each year on or before February 28. Forms may be obtained by calling our office at (937) 296-2502 during normal business hours or by visiting our website at www.ketteringoh.org. |
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