Most people in the Kansas City metro know that if you work in Kansas City, MO your employer will withhold a 1% tax along with your normal withholdings. What many people are unaware of, however, is that if you live in Kansas City, MO you owe that 1% regardless of where you work.
When you move to Kansas City, there is no notification that you owe the tax. Most do-it-yourself tax programs, such as Turbo Tax, do not include the Kansas City return. If you don’t work in the downtown area, you may be completely unaware that the tax applies to you.
The consequences of failing to pay your Kansas City taxes can be steep. If the City finds that you have failed to pay your taxes, they will charge 1% interest per month until the taxes are paid. In addition, the City will charge a 5% penalty per month, not to exceed 25%, until the taxes are paid.
There may be a silver lining, however! If you notify the City via the Voluntary Disclosure Program prior to receiving a notice from the City, they will waive the penalties and you will only owe the 1% tax and 1% interest payments for the past 5 years.
If you work outside of Kansas City, or your employer failed to withhold the 1% tax, it’s best to get ahead of any potential problems.
Any questions about the Kansas City Earnings Tax? Let us help! Contact us for help applying for the Voluntary Disclosure Program or determining if the taxes apply to you.