Earned Income Tax

The Southwest Local School District earned income tax went into effect on January 1, 2007. Many of our working residents may have questions. Hopefully, these pieces of information will help: 

What is the tax? 

The school district earned income tax is an income tax separate from federal, state, and city income taxes.  This tax is earmarked specifically to support the school district.  The tax is a residential tax so only those living in the Southwest Local School district are subject to the tax.

What is earned income? 

It is income that you receive from wages, salaries, tips, other employee compensation, and self-employment income, tips, other compensation, and self-employment income from sole proprietorships and partnerships to the extent included in Ohio adjusted gross income.

What income is not considered earned income? 

Retirement income, unemployment compensation, Worker's Compensation, lottery winnings, interest, dividends, capital gains, profit from rental activities, distributive shares of profit from S corporations, alimony received, distributions from trusts and estates and all other types of income that are not earned income, but that are part of Ohio adjusted gross income.

How is the tax paid? 

Residents of the Southwest Local School District pay the tax either through employer withholding, individual quarterly estimates and/or annual returns.  Ohio employers whose employees reside in a school district that has passed a school district income tax must withhold the tax from their employees’ compensation.

How does my employer know to withhold the tax?

You must inform your employer that the Southwest Local School District has a school district earned income tax. Ohio employers are required to ask each employee for his or her public school district of residence and to withhold the tax.

Are employers required to withhold the school district income tax?

Yes, employers are required to with the school district income tax per Ohio Revised Code section 5747.06(E).

Are there any exemptions? 

No, there are no personal exemptions.

Who collects the tax? 

The Ohio Department of Taxation collects the tax. All tax forms are filed with the Ohio Department of Taxation and all taxes due are paid to the state.  The school district will receive quarterly payments from the department.

If I had no earned income last year, do I need to file the school district tax form? 

Yes, senior citizens and others without earned income still need to file tax form SD100. This form is available from the Ohio Department of Taxation’s web page. You will enter zero for earned income, zero for the tax withheld, zero for quarterly payments and zero for amount owed. Then sign the form and file it with your other state tax forms.

What if I had earned income last year? 

Anyone with earned income needs to file the same SD100 tax form. The tax rate is .75% (multiply earned income x .0075). You will subtract your tax withheld or quarterly payments already made. If you still owe a tax, you will submit the payment to the Ohio Department of Taxation. Overpayments are eligible for a refund just like state and national taxes.

When is the filing deadline for the annual return?  

The filing deadline is the same as for the state income tax.  Normally, this is April 15th.  If a taxpayer receives an extension for federal income tax purposes, that extention automatically extends the state and school district income tax filing deadline.

What if I do not pay the school income tax? 

An individual not filing or paying the school district earned income tax will be penalized under the same provisions currently in effect for Form IT-1040, Ohio Personal Income Tax Return.

What is the school district’s I.D. number? 

Southwest Local’s number is 3118. This should be included on your state tax return and your school district tax return as well. Remember, all payments go to the state. We receive our funding from them based on this school district number.

Additional questions? 

Information is available on the state’s web page or through their toll free information number at 800-282-1780. Also, residents and their tax preparers are welcome to call the school district office (367-4139) for further assistance.