Louisville, KY

[Jan S]

I have a new client coming in. He lives in Michigan but worked for 6 weeks in Louisville last summer. Local taxes were taken out of his W-2 (I haven't seen the W-2). I couldn't find tax forms on the Louisville website. If the correct % of tax was taken out, does a return have to be filed? If so, can you point me to the forms?

Kentucky is a reciprocal state of MI so I am hoping that they only took out MI tax.

Thanks.

[Nashville]

Do nothing

Dear Metro Blvd and Sterling Heights!

I haven't had experience with Louisville, but I can tell what the trend is for the sudden surge of southern towns with income taxes.

There has for years been resistance in municipalities simply because there was no city administration to handle the filing of several thousand tax returns, and to do so would create virtually as much expense as revenue.

But in recent years, some of the city fathers have absolved this problem by simply creating a withholding tax, with no filing, no refunds, no additional payments. They do this by wording the legislation such that it is levied upon employees through their employers, making the employers responsible for withholding a flat percentage (usually very low) and remitting. Once the tax is collected, that is the end of the accountability as far as the individual is concerned. He cannot file for a refund, or be taxed further.

Of course, this arrangement totally bypasses the self-employed, who escape taxation because the administration of assessment and collection is too complex for the city to handle. I've known cities to silence their critics and compensate for this by increasing their privelege taxes on the self-employed (it's called "equalization" - another synonym for tax increase without calling it what it really is).

All of this lesson in Southern civics hasn't answered your question directly, but read between the lines and it really will. My guess (if Louisville is like other southern towns) is that there is NO City of Louisville individual income tax return to be filed. Whatever the employer took is the end of it, with no refund and no tax due. This should make your job very easy.

Don't forget to include these in schedule A for your deduction on state and local income taxes.