There’s no denying 2020 was a year for the record books. Many of us sheltered in place and found ourselves unexpectedly working from home, and we’re just now learning some of the tax implications of that necessity.

Below you’ll find a letter our team of tax pros is currently providing our Ohio tax clients. If you have questions about this, please contact our office directly. And as always, if you need additional tax support, we’re here to help!

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Greetings:

If you are an employee whose regular work location is in a taxing city, you typically have city tax withheld from your paycheck. In a normal year, you are allowed to file for a refund for taxes paid on wages earned on days that you worked from home or other locations outside of city limits.

However, Ohio House Bill 197 was passed in early March 2020 stating that during the period of emergency declared by Executive Order 2020-01D, any day on which an employee works from home or another location because of the emergency declaration shall be deemed to be a day working from the employee’s principal place of business. Therefore, Ohio municipalities are taking the position that no refunds should be issued for the days worked from home or other location due to the pandemic. 

It is questionable whether it is legal for the municipalities to tax wages that were not earned within their jurisdiction, and a lawsuit has been filed by The Buckeye Institute against the City of Columbus and the State of Ohio.

If the lawsuit is decided in favor of The Buckeye Institute, you potentially could be due a refund of the municipal taxes that were withheld.

We are following this litigation and plan to alert our clients that could be effected by this decision in the event that it becomes appropriate to file for a refund.

If we are preparing your 2020 tax returns and you would like to be notified if the municipal refund policy is reversed, please contact our office.