TAX FAQs for Individuals
Are there any changes for tax year 2016?
In 2012, Mason voters approved a charter amendment that created an income tax to help provide funding for safety, fire, and EMS services within the city. The amendment allows the rate to be adjusted up or down by Mason City Council in response to the changing needs of the city's safety services. It also set a limit of .15% for safety services.
Residents who own or have an equity interest in the residence in which they live and pay real estate taxes can receive a Resident Homeowner Credit equivalent to the safety services income tax. The Resident Homeowner Credit applies to the qualifying resident’s dependents as well.
These changes are reflected on the 2016 tax form.
What is the individual income tax rate in Mason?
For tax years 2012 and prior, the tax rate was 1%. The 2013 through 2015 safety services tax rate was 0.12%, for a combined tax rate of 1.12%. The combined rate remains at 1.12% for 2016.
I pay local taxes to the city where I work. Can I get a credit on my Mason taxes?
Yes. Residents who work outside the city and pay income taxes to the city where they work can take a full credit on their Mason taxes, as long as the credit doesn't exceed the amount they paid to the other city. The combined credit for taxes paid to other cities and the Resident Homeowner Credit is limited to 1.12%. Residents may get a refund for amounts paid or withheld for Mason if the credit results in an overpayment. Please remember that even if no tax is due, you are still required to file a return.
Who must pay the individual income tax?
All residents of the City of Mason, regardless of age and income. Even if you are not required to file a federal tax return, you must file a Mason tax return if you have taxable income.
Can my taxes be deducted from my paycheck?
Municipal income taxes deducted from your paycheck are paid to the municipality in which you work. If you work in Mason, your Mason income tax should be deducted from your paycheck by your employer and paid to the city for you. If your employer is not in Mason but is willing to withhold Mason taxes for you, your employer can easily set up a withholding tax account by completing the Business Income Tax Questionnaire (PDF) and mailing or faxing it to the Tax Office.
I don't work in Mason. Is my entire tax payment due in April?
Yes and No. All of your taxes must be paid by April 15th of the following year, but you must also file a declaration of estimated tax and make quarterly payments throughout the tax year. Penalties are incurred if 90% of your taxes are not paid by December 15 (for tax years 2016 and beyond ) or January 31st (for tax years 2015 and prior ).
What is the due date for filing my return or quarterly payment?
All residents must file an annual tax return on or by the Federal Tax Return due date (usually April 15th ). Quarterly estimated payments are due on April 15th, July 31st, October 31st, and January 31st for tax years 2015 and prior. Beginning tax year 2016, the due dates are April 15, June 15, September 15, and December 15.
My employer collects income tax for Mason, but I have other income as well. Do I have to file quarterly estimated payments?
Yes, if the amount deducted by your Mason employer will not be at least 90% of the amount of taxes you owe for the year. Otherwise, you may be subject to penalties.
What types of income are taxable?
- Qualifying wages, commissions
- Vacation pay
- Tips, bonuses, gifts in lieu of pay, gratuities
- *Car allowance, personal use of employer-provided vehicle
- Wage continuation plans
- Supplemental unemployment pay, severance pay
- *Employer paid group term life insurance premiums
- *Incentive payments
- *Sick and disability pay
- *401K plans and the like
- *Deferred compensation
- *Employer-provided property, board, lodging and similar items
- Prizes, including trips, connected with employment
- *Stock option from employee stock purchase plan
- *Moving expense reimbursement
- *Profit sharing
- Jury duty pay
- Income from a guaranteed annual wage contract
- Beginning 2016, lottery or gambling winnings
*For additional information, please see the Tax Ordinance.
What types of income are NOT taxable?
- Military pay or allowances paid to members of the Armed Forces, Reserves, National Guard, or Peace Corps
- Pensions and distributions paid as a result of retirement
- Cafeteria plans and the like
- Social Security benefits
- Unemployment compensation paid by the state or federal government
- Disability benefits (does not include sick pay or short-term disabilities)
- Interest, dividends, capital gains or other income from intangibles
- Parsonage housing allowance of ordained ministers
- Gain from the conversion or cancellation of indebtedness
- Income used for unreimbursed business expenses reported on a federal form 2106
- Compensation of a precinct election official
- Lottery or gambling winnings prior to tax year 2016
How do I know if my employer is withholding Mason taxes for me?
Look at box 20 on your W-2. It should show the name of the municipality for which taxes are withheld. This information may also be on your paycheck stub.
When I fill out my Mason tax form, which boxes on my W-2 do I use?
Typically, the qualifying wages found in box 5 are subject to tax. For exceptions, see the General Information Sheet. Box 19 shows the amount of taxes withheld. Box 20 names the municipality for which the taxes were withheld.
Why is my "Medicare" amount (Box 5) higher than the "Wages, tips, other compensation" (Box 1) that I use on my federal tax return?
Many people find that their qualifying wages are higher because they include all types of earnings, some of which may be deferred for federal income tax purposes. These amounts are taxed for municipal purposes because they are excluded from municipal taxes upon retirement.
If I overpay my taxes, can I get a refund?
Yes. The refund amount will be figured on your Mason tax return. You may have the amount credited to your next year's estimate or, if the amount is over $3(for tax year 2015 and prior), you may request a refund check. Beginning tax year 2016, the amount of overpayment refunded or credited to the next year is $10. A 1099-G form will be filed with the IRS for all refunds credited or issued and the amount will also be reported to the city where you reside (if not Mason).
Can I get an extension of the filing deadline?
Yes, if a written request is submitted on or before the due date for filing the return. Extensions may not exceed six months or one month beyond any extension requested of or granted by the Internal Revenue Service. Use the Mason Extension Request (PDF) Form ER to submit your request.
Can a return be amended after it is filed?
Yes. An amended return must be filed to report additional income and to pay any additional tax due, or to claim a refund of overpaid taxes.
How are payments applied to my account?
All payments are first applied to interest charges, then penalties, then against past due taxes in the order in which they became due, and then against all current taxes due. For example, if you owe a balance for 2010, plus penalty and interest, your 2011 payments will apply to the interest and penalties for 2010, then the balance due for 2010, and finally, the amount due for 2011.
I lived in Mason for only part of the year. Do I have to use a special form?
No. Instructions for partial year residents are included with the tax form.
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