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You check the school district box on form IT 1 or form IT 1R, which is included in the annual employer withholding packet and send it to the address on the form or you can register electronically using the Ohio Business Gateway.
2. Do I need to withhold and pay school district taxes based on where an employee lives, works, or both?
The tax is based upon the employee's residency. The location where the employee works is not a factor.
Employers are required to withhold school district income tax from the compensation paid to an employee who resides in a school district that has an income tax. Employers pay the withheld taxes to the Ohio Department of Taxation, and the taxes so collected by the Department are distributed to each taxing school district.
"Resident" of the school district means: An individual who is a resident of Ohio as defined in division (I) of section 5747.01 of the Ohio Revised Code during all or a portion of the taxable year and who during all or a portion of such period of state residency, is domiciled in the school district or lives in and maintains a permanent place of abode in the school district.
3. How do I find out what school districts my employees live in?
You must canvass your employees to find out what district each employee lives in. After that, you may rely on new employees completing an IT 4 exemption form and current employees updating their exemption form. (You do not use the federal W-4 exemption form for Ohio or school district purposes.)
4. What if my employee does not know what school district he lives in?
The employee can go to the Ohio Department of Taxation web site to locate an online resource called The Finder. Once someone provides their street address, The Finder can locate their school district. The employee can also contact their county board of elections or county auditor. By giving their street address, either agency should be able to identify their school district of residence.
5. We only have one employee living in a taxing school district. Can that employee make estimated payments to cover the tax?
No. If you are conducting business in Ohio and employing residents of taxing school districts, you must withhold the school district tax.
6. Can I withhold a flat percentage for the school district income tax just like a local income tax?
No. For a district with a traditional tax: use the federal taxable wage base (not gross wages) and deduct $650 for each Ohio personal exemption prorated over the number of pay periods during a full calendar year to derive the school district tax wage base. For a district with an earned income tax: use the federal taxable wage base (not gross wages) without any deduction for personal exemptions to derive the school district tax wage base. You then multiply the school district tax wage base by the tax rate in effect for the school district.
You may use the computer formula to calculate the tax due for traditional districts. This formula can be found on the Employer Withholding web page under "Withholding tables" and is also shown on the last page of the School District Income Tax Withholding Instructions.
7. Where do I place the school district information on the W-2 and how do I identify it?
Use any available area (such as Box 18) on the W-2. Identify the withholding amount and the school district by its four-digit number.
8. Do I submit my school district W-2s with my form SD 141 annual reconciliation?
No. The W-2 data is sent in with your Form IT 3, Transmittal of Wage and Tax Statements. List your school district withholding total on line 4 of form IT 3.
9. How do I report my school district withholding on magnetic media?
Please refer to the magnetic media specifications on our Employer Withholding Tax page. If you have any questions regarding W-2 reporting, please contact the Employer Withholding Unit at 1-888-405-4039.
10. I received preprinted school district employer withholding forms. I do not have employees affected by this tax. What do I do?
Write your explanation on the front of one SD 101 or SD 141 form, and send it to the address at the top of the form. We will verify no withholding and then inactivate your school district account. To reactivate your school district account, remit your current liability on an SD 101.
11. An employee told me in June that he lives in a taxing district. Am I required to go back to January and withhold all tax due up to the current payroll?
Technically, you should go back to January. However, if this would be a burden for the employee and the employee agrees, you may start withholding from this point. Be sure to tell the employee that he is responsible for any tax due not paid through withholding when he files his Form SD 100, School District Income Tax Return, when it is due (usually by April 15th).
12. Can I include my school district withholding tax with my Ohio withholding tax on my IT 501 form?
No. You must remit your school district tax with the SD 101 form.
13. Do I need to withhold school district tax for the 401(k) or cafeteria plan?
You use the same taxable wage base that you use for Ohio withholding, which usually excludes these items.
14. I don't have to withhold Ohio tax from my domestic employee, but I am willing to withhold school district tax. How do I register?
You don't, unless you agree to also withhold for Ohio income tax. Your employee may need to make school district estimated tax payments with form SD-100ES.
15. My school district withholding for this month is only $1.95. Can I file and remit this quarterly?
Your combined Ohio and school district liability determines your filing frequency. If your combined liability exceeded $2,000 in the twelve-month period that ended on June 30th of the preceding calendar year, you must file and remit monthly. Partial weekly filers and electronic funds transfer (EFT) filers also file and remit school district tax monthly. Others file quarterly.
16. Our software won't allow us to withhold school district tax. Can the employee take care of it himself?
If you are conducting business in Ohio, you are required to withhold the school district tax from affected employees. You should withhold the tax manually if your software program doesn't allow for the withholding.
17. What are the penalties for not withholding or remitting the school district tax?
If an employer does not file a required return by the due date, the penalty may be $50 per month up to $500 or 5 percent per month up to 50 percent of the tax, whichever is greater. If an employer fails to pay any tax owed, the penalty may be 10 percent of the delinquent payment plus twice the interest charged. If the employer withholds the tax and fails to remit it, the penalty may be 50 percent of the delinquent payment.
18. When do I need to register as a school district withholding agent?
You need to register as soon as you discover you have employees living in a taxing school district. See "General guidelines" and "Electronic registration" on our Employer Withholding Tax page for instructions on how to register.
