What income is taxed by the City?
Earned income is subject to the Middletown local income tax but unearned income is not. Common illustrations of earned income include salaries, qualifying wages, commissions, bonuses, and other compensation paid by employer(s) before any deductions. Unlike for your Federal return, you may not deduct contributions to a retirement plan (IRA, 401k, 403b, or 457b) on your Middletown return. Also taxable are gambling and lottery winnings reported on IRS form W2G or Form 5754. Earnings are taxed in the year earned. Pension and retirement income is not taxable when you are retired and receiving distributions.

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1. Do I have to file a return?
2. Do I have to file a return if I work in Middletown but live elsewhere?
3. What income is taxed by the City?
4. What income is non-taxable?
5. What expenses are deductible from earned income on the return?
6. What if I also earn incidental income on the side?
7. What if I earn incidental income from more than one unincorporated business?
8. How are net operating losses from side businesses treated?