The Ohio Department of Taxation has issued the changes in the school district withholding tax rates and instructions for calendar year 2017. ( School District Income Tax Withholding Instructions Expirations; New School Districts, Renewals and Rate Changes Effective 1/1/2017.)

(See the Attachment for Ohio school district withholding tax rates for 2017.)

Employers are required to file state and school district income tax withholding returns and make payment of the withheld taxes through the Ohio Business Gateway on a monthly or quarterly basis using Form SD 101, Employer's Payment of School District Income Tax Withheld, which is usually due on the same due date as the Ohio state income tax withholding return Form IT 501, Employer's Payment of Ohio Income Tax Withheld. (Note: School district income tax withholding is not required to be paid on a partial weekly basis.)

Employers must submit Form SD 141, School District Employer's Annual Reconciliation of Tax Withheld for calendar year 2016 by January 31, 2017. Forms W-2 provided to employees must include school district withholding tax information. Boxes 19 and 20 on the Form W-2 (or any available area) are used to show this information.

As we previously reported, starting with calendar year 2016 the Department is asking employers to show the school district number and name in box 20 when reporting school district withholding. Employers should identify both the amount of school district income tax withheld and the school district (by its four-digit number) on the Form W-2.

The Department requests that employers show the four-digit school district number and the school district name in box 20 when reporting school district withholding. According to the Department, this added information will assist in distinguishing between city and school district withholding amounts.

Many Ohio localities have both a city income tax as well as a school district income tax. The Department has discovered that thousands of Forms W-2 each year list a city name twice with two different tax withholding amounts — one for the amount of city income tax withheld and one for the amount of school district income tax withheld. This has caused some individuals to mistakenly claim the wrong withholding amount or add both withholding amounts together when filing their city and/or school district income tax returns.

For assistance in locating the correct school district number and name, employers may access a website called The Finder which provides the school district number for every school district in Ohio. The Department plans to post example Forms W-2 to its website.

This is considered a voluntary change — employers are strongly encouraged to show the school district information, but penalties will not be imposed for failure to comply. (Email response to inquiry.)

A payment schedule, listing the Ohio and school district employer withholding tax due dates for remitting and reporting can be found here. For more information on withholding taxes in Ohio, see the Department's website.

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ATTACHMENT

Ohio school district withholding tax rates for 2017