Earnings Tax Office
How are my Montgomery taxes used? (pdf file)
What is the tax rate for the City of Montgomery?
The City of Montgomery has a 1% Earnings Tax which applies to all who live, work or operate a business in Montgomery.
What is the filing deadline and how may I receive an extension?
The filing deadline for the City of Montgomery is April 15th for Individuals and Businesses on a calendar year end. Extensions may, upon request, be granted for filing of the annual return, provided an IRS extension has been secured. Extension requests must be made in writing and received by the Montgomery Tax Office before the original due date of the return. Only those extension requests received in duplicate with a self-addressed, postpaid envelope will have a copy returned after being appropriately marked.
I moved to Montgomery during the year, do I need to file for the entire year?
Any partial year resident or business needs to file a return only for the period of time that they actually resides and/or did business in Montgomery. When prorating your income, you must also prorate any other city credit. A partial year resident and/or business should enclose an explanation of how their liabilities were calculated.
My partner and I started a small business in Montgomery this year and have only a loss to report. Do we need to file a return?
Yes, even if the business has incurred a loss, a return must be filed. Additionally, the loss may be carried forward up to five (5) years to offset any future gains.
Does the City of Montgomery give credit for taxes paid to other municipalities?
The City of Montgomery grants credit up to 1% for taxes paid to other municipalities. A spouse who pays in excess of 1% cannot offset their spouse’s untaxed income.
My minor child had a summer job. Do they need to file?
All residents, regardless of age, must file a return if they have earned income to report.
What forms are required to accompany my Montgomery Tax Return?
For a resident return to be complete: please include the following: W-2 forms, showing qualifying wages and taxes paid to other cities; a copy of the front page of the Federal 1040 Form, including all federal schedules that pertain to lines 12,17,18 and 21, if any. If you have partnership income shown on Federal Schedule E, copies of the Federal K-1 Forms must also be included. Additionally, please include a copy of tax returns filed with other municipalities.
For a business return to be complete: a copy of the Federal Return with all pertinent federal schedules must be attached. For example, a sole proprietor would need to include a Federal Schedule C; a landlord should submit a copy of their Federal Schedule E, etc. Corporations should also ensure that their Schedule Y allocation tables are completed.
What income is NOT taxable to Montgomery?
Interest, dividends, Capital Gains, government unemployment benefits, workers compensation payments, alimony, child support, active duty military pay, social security benefits and retirement income are not taxable to the City of Montgomery.
My company incorrectly withheld payments to the City of Montgomery. I have requested a refund. When can I expect a check?
The Earnings Tax Office has 90 days from the time that a completed return with all needed information is received to issue a refund. The Tax Commissioner will need the following information: a request for the refund including a letter from your employer confirming that a withholding error has occurred, a completed return and all applicable W-2 forms.
My financial situation has worsened and I cannot pay my Montgomery Tax liability. Should I file?
YES, file your Montgomery return return whether or not you can pay the tax owed. A satisfactory payment schedule can be worked out with the Tax Commissioner.
I am a resident and have started a part-time consulting business out of my home and have a loss for this tax year. Can I offset my wage liability with the loss?
No, business losses taxable to Montgomery cannot offset wages. Losses may be carried forward for up to five (5) years to offset any future gains.