Clueless paycheck question

[ohbirdie]

I am fairly new here, but value your intelligence and thought I would ask about something I just discovered. I started a new job in August. It is not located in a municipality so they do not take out any local taxes. However, the city I live in requires me to pay 1.75% to them. So now that I realized that I am not having any withheld, I need to plan to pay a large chunk every year at tax time. How would you plan for this? I have been told two solutions:

1. Have a certain amount automatically be deducted from each paycheck to go into a savings account and use that to pay each year.

2. Increase my state and federal with holdings so I get a bigger refund and then use that to pay my local taxes.

Any thoughts? I am clueless about this. TIA

[birdmom]

I think it varies by state. Where we are (PA), employers are required to withhold the higher of the tax amount, which in your case would be the 1.75%. I'm not sure about states other than PA, though.

[mrssavy42112]

I agree that you need to find out what is required locally. I don't get anything withheld, but I am required to pay quarterly to both federal & state. Thankfully I don't have any municipality tax also. Perhaps you need to pay it quarterly, or just in a lump.

[birdmom]

Can you check with HR or accounting? Or ask coworkers what they do? I'm sure that you're not the only one with that concern.

[ohbirdie]

I talked to payroll today. They said that they are not required to withhold anything therefore, they don't. It is my responsibility to pay the 1.75% to the city I live in. I don't have a problem with that. I am just wondering on how best to prepare for it every year.

[Norticprincess]

Pay it quarterly. That's what our local wants us to do, and attempts to enforce. The county and the Boro have two different agencies it is a pita. They both have it so you can pay online. It only takes a few minutes to set up.

[jenjen]

Do you have to prepare a tax return for the city or does it merge into your state or county forms? If its separate, I'd see how they want the money. There may be penalties if you don't submit some $ quarterly. If you need to pay through the year, send $ to a separate bank acct. if it flows to your state or county return, you may be able to have PR withhold more and apply it. I think each location has different rules.