4 Ways Cincinnati Residents Can Save Money While Filing Taxes
Nobody likes paying taxes. To make matters worse the average cost of preparing a federal and state income tax return is about $250 according to the National Society of Accountants. The cost can go even higher for folks who live in cities like Cincinnati that have a city tax return that must be filed as well.
Of the three types of income tax, city income taxes offer the fewest ways to save money. In most cases residents are charged a flat rate based on earned income. In the case of Cincinnati, that rate is 2.1 percent and it applies to everyone who lives in Cincinnati no matter where you work or where you live.
No Local Return Required for Some Cincinnati Residents
The good news for people who live and work in Cincinnati is that, if your employer withholds the city tax from your pay, you don’t have to file a local return, saving time and money. Since employers in Cincinnati are required to withhold the full amount of your local taxes, chances are you’re covered.
If you live in the city and work outside of Cincinnati you will have to file a local return to receive credit for what you paid the other city. The good news is you will receive credit for up to 2.1 percent of what you paid to another municipality. The better news is, if you worked in a city like Dayton that has a higher tax rate than Cincinnati, you will be eligible for a refund of the difference.
Free City and State Income Tax Preparation
Cincinnati is one of a growing number of American cities and towns that offer electronic filing of local tax returns. E-filing a local tax return saves time tracking down the appropriate form, filling it out and getting it in the mail, plus you don’t have to do it by hand. The best part is that returns can be e-filed for free directly through the city’s web portal.
When it comes to honoring state income tax obligations, all Ohio residents can save a pretty penny by preparing their own taxes online. The Department of Taxation provides free tax preparation software and e-filing service on the department’s website. Residents can even make secure payments directly through the portal, eliminating the need to write and mail checks.
Related: Yes, It’s Possible to File State Taxes for Free
4 Ways to Save on Federal Tax Preparation
The IRS offers several free options to help taxpayers prepare and file their federal returns. The first option, Volunteer Income Tax Assistance (VITA), is for individuals and married couples who make $52,000 or less annually. Volunteers are IRS certified to provide basic income tax preparation including e-filing.
VITA volunteers are generally located right in communities at libraries, malls, community centers and elsewhere. The IRS also offers free, in person assistance to people aged 60+ through a program called Tax Counseling for the Elderly (TCE), whose volunteers can answer questions about pensions and retirement.
Do It Yourself
Individuals and married couples whose income is less than $58,000 can use one of many commercial websites that make their products available at no cost for federal returns. There are minimal fees for state and local returns prepared through these products..
Individuals and families with income greater than $58,000 a year can use the IRS Free File Fillable Forms to complete their federal returns. Unlike commercial tax preparation software, these forms do not include prompts to guide the user, they require a bit more knowledge about the filing process. They are nonetheless completely free to complete and e-file.
Related: TurboTax, TaxACT and H&R Block Review: Quick Guide to the Best Online Tax Software
Get Your Refund Faster
Perhaps the greatest benefit of e-filing regardless of whether it is city, state or federal is that e-filing accelerators the receipt of your return. How much faster depends, but in most cases the IRS issues refunds within two weeks of e-filing. You can even track the progress of your federal refund online.
