Who Pays the Kansas City City Tax and How to File

The Kansas City, Missouri, earnings tax applies to individuals and businesses connected to the city. The rules for who is required to pay depend on residency status and where income is generated.

Residents of Kansas City, MO

All individuals who live within the legally defined city limits of Kansas City, Missouri, are subject to the 1% earnings tax. This tax is levied on their total earned income, which includes salaries, wages, commissions, and other forms of compensation. The physical location where the work is performed does not alter this obligation; a resident working in another state is still required to pay the tax on all their earnings.

Non-Residents

Non-residents of Kansas City, MO, have a more limited tax liability. They are required to pay the 1% earnings tax only on the portion of their income that is earned for work physically performed within the city’s boundaries. If a non-resident works for a company based in the city but performs some of their work duties outside the city limits, only the income attributable to the days worked inside Kansas City is subject to the tax.

Businesses

The earnings tax also extends to business entities. Corporations, partnerships, and other businesses are subject to a 1% tax on their net profits derived from operations within Kansas City, MO. This requires businesses to properly apportion their net profits to their Kansas City operations to determine their tax base.

Required Forms and Information

Before filing, taxpayers must gather specific documents and complete the correct forms provided by the City of Kansas City for wage earners and businesses.

For Individuals (Wage Earners)

Wage earners must use Form RD-109, the Wage Earner Return, to report their earnings. To complete this form, you will need your W-2 form from each employer, which details your total wages and any Kansas City tax already withheld. The form requires you to transfer wage and withholding information directly from your W-2s to calculate any remaining tax due or refund.

When filling out Form RD-109, you must provide your Social Security number, address, and your employer’s Kansas City account number, which should be on the W-2. The form guides you through applying the 1% tax rate to your gross earnings and then crediting any amounts already withheld by your employer.

For Businesses and Self-Employed Individuals

Businesses and self-employed individuals report their profits tax using Form RD-108 or RD-108B. To complete these forms, you will need data from your federal tax return, such as a Schedule C for sole proprietors, or other business profit and loss statements like Form 1120 for corporations.

These forms require the business’s Federal Employer Identification Number (FEIN) and detailed financial figures. The calculation involves reporting gross receipts and subtracting allowable business expenses to arrive at the net profit figure. This net profit is then used as the base for the 1% earnings tax.

The Filing and Payment Process

Once the appropriate forms are completed, the next step is to formally file the return and remit any payment due. As of January 1, 2025, all city taxes, including the earnings tax, must be filed electronically.

The annual deadline for filing individual and business profits tax returns is April 15, aligning with the federal income tax deadline. Missing these deadlines can result in a penalty of 5% per month, up to a maximum of 25% of the tax due, plus interest.

Taxpayers must submit their returns and payments through the city’s “Quick Tax” online portal. This system allows for payment via credit card or e-check. After submitting electronically, you should receive an immediate confirmation number for your records, and any refund due will be mailed as a check after the city reviews the return.

Special Considerations for Remote and Hybrid Work

The rise of remote and hybrid work has created specific tax situations for non-residents who work for a Kansas City, MO, based employer. These individuals may have had the 1% earnings tax withheld from their entire salary but are only liable for tax on days they physically worked within the city. This discrepancy makes them eligible to file for a refund on taxes paid for days worked outside the city.

Filing for a Non-Resident Refund

Non-residents seeking a refund must file Form RD-109, the standard wage earner return, and attach the supplemental Form RD-109NR. This schedule is specifically designed to calculate the portion of income attributable to work performed outside Kansas City.

Required Documentation

To approve a refund claim, the Kansas City Revenue Division requires verifiable proof of the days worked outside the city. The primary document is a letter from the employer, on official company letterhead, that explicitly states the dates the employee was required to work outside of Kansas City, MO.

In addition to the employer letter, other supporting documentation may include detailed travel logs or expense reports that substantiate the remote work days. The burden of proof is on the taxpayer to provide clear evidence, as the city may deny requests with insufficient documentation.

Calculating the Refund

The refund calculation is performed on Form RD-109NR. The form requires the taxpayer to determine the total number of workdays in the year and the total number of full days worked outside the city. Vacation days, holidays, and sick days cannot be counted as days worked outside the city. This calculation determines the amount of non-taxable income, which forms the basis for the refund claim.