How does RITA allocate income to determine the pro-rated tax liability for part-year residents?
RITA divides the number days that an individual resided in a RITA city by 365 (the total number of days in a tax year) and arrives at an allocation percentage. This allocation percentage is then applied to the total income earned and the total corresponding local taxes that were withheld (if any taxes were withheld on the W-2). Example: A part-year Garfield Heights resident earned $50,000 in W-2 wages while residing in Garfield Heights from January 1 thru May 15 (135 total days). On May 16, this individual moved to Cleveland (a non-Rita city). This individual worked in Cuyahoga Heights all of 2006 (from January 1 thru December 31) and had $1,000 in Cuyahoga Heights local tax withheld on the $50,000 in W-2 wages earned in Cuyahoga Heights. Cuyahoga Heights tax rate of 2% x $50,000 Cuyahoga Heights taxable wages = $1,000 Cuyahoga Heights tax withheld. The allocation percentage RITA will apply to the above example is calculated as follows: 135 days of Garfield Heights residency/365 days i
