Pennsylvania state income tax

The Pennsylvania Personal Income Tax (PIT) is to be paid for the taxable income of Pennsylvania residents and non residents, estates and trusts, partnerships, S corporations, business trusts and limited liability companies that are not taxed as corporations for the federal income tax purposes .

Income from the following eight classes is taxable in Pennsylvania. They are: 1) compensation, 2) interest, 3) dividends, 4) net profits from the running of a business, profession or farm, 5) net gains or income from property dispositions, 6) income from rents, royalties, patents and copyrights, 7) income from estates or trusts, 8) winnings from gambling and lottery . A loss occurred in one class of income may not be counter balanced against an income from another class. The gains or losses cannot be carried backward or forward from year to year .

Who are required to file a Pennsylvania return?

The following taxpayers are required to file a Pennsylvania Income Tax return :

  • Every resident, nonresident, or part-year resident individual who earns more than $33 in gross Pennsylvania taxable income for their taxable year even if no tax is due.

  • Every resident, nonresident or part-year resident individual who earn or makes a gain or profit during the taxable year from business, profession or farm; sale, disposition or exchange of property; or rents, royalties, patents or copyrights.

  • Every resident or nonresident partner, shareholder and beneficiary who earns or realizes income from a partnership, PA S corporation, estate or trust.

  • ">5in">Every part-year resident shareholder earning and realizing income from a partnership and PA S corporation for that part of the taxable year the member is a resident and from PA taxable source income for that part of the taxable year the member is a nonresident .

  • A person who is given the right to look after the property of a decedent who died during the tax year, or of a minor child, or of a disabled or an individual who cannot prepare his/her return on behalf of that individual.

  • Every resident, part-year resident or nonresident who earns income as a professional athlete or entertainer.

  • Every resident, part-year resident or nonresident who earns income from PA taxable source income as an executor or fiduciary.

  • Every nonresident who receives deferred compensation distributions, which are related to PA taxable source income earned while being a Pennsylvania resident.

  • Every nonresident earning, receiving and realizing Other Miscellaneous Compensation from Pennsylvania sources, which constitutes Pennsylvania taxable income during the taxable year .

    • Military personnel: military pay, including the housing allowances received by a Pennsylvania resident while not on Federal active duty or not on Federal active duty training, is fully taxable regardless of where the military service is performed .

    Out-of-state active Federal duty pay, including housing allowances and all combat-zone pay, is not taxable.

    Nonresident military personnel who are serving in Pennsylvania are exempt from Pennsylvania personal Income Tax on their active duty military pay and housing allowances . However, they must pay tax on any other income normally taxable to nonresidents .

    Nonmilitary persons on Federal Active Service: a Pennsylvania resident on Federal active duty outside of Pennsylvania is not to be taxed on his/her compensation. A Pennsylvania resident in the U.S. Foreign Service though, is not on active duty for Pennsylvania purposes and therefore his/her compensation is taxable .

    Members of the merchant marine and employees of U.S. Public Health Service: Pennsylvania residents serving in the Merchant Marines or U .S. Public Health Service are subject to tax on compensation whether earned within or outside Pennsylvania unless called for active duty during war .

    When to file the returns?

    All taxable income received or accrued during the calendar year must be reported, and the filing must be done before midnight, April 15th, or the next business day if April 15th happens to be a Saturday or Sunday.

    Extension of time: the Department of revenue will grant a reasonable extension of time for filing a Pennsylvania Personal Income Tax return . However, the department will not grant an extension for more than six months unless the taxpayer is outside the U.S. People outside the country are granted an automatic extension of two months to file.

    Filing options: The filing could be done through paper or electronically (paperless filing), of which paperless filing is the safer, faster and easier option . This is because, the taxpayers information will be protected by the latest methods, and the taxpayer receives confirmation that they filed. The systems perform all the necessary calculations, and the Pennsylvania Department of Revenue approves paperless refunds within three to four weeks, which will be double as much in the case with paper returns .

    The paperless filing can be done in three ways. One is the Do-it-yourself Free Electronic Filing, where you select the link for pa.direct.file and use the PIN assigned by the Department.

    Second method is through Telefile. This is the easiest way to file simple Pennsylvania Personal Income Tax return . A taxpayer can find out whether he/she can use Telefile, by visiting the Departments Internet home page or by ordering a Pennsylvania Fast File booklet.

    Another method to file a paperless return is through Tax Preparer or Purchased software. If a taxpayer pays a professional to complete his/her Federal and PA-40 tax returns, the taxpayer should ask his/her preparer to e-file the return . E-file is a joint initiative with the IRS (internal revenue service) that allows to file your Pennsylvania and federal returns simultaneously.

    Paper returns: Taxpayers, who wish to file a paper return, should file a PA-40 .

    Special Tax Provisions for the poor: The general assembly decided to provide special tax provisions to certain citizens in the Commonwealth, considering their poverty . It was decided that imposing personal tax on such persons would deprive them and their dependents of the basic necessities of life . Considering the individuals actual income and the number of persons dependent on it, the general Assembly has provided special tax provisions for eligible persons in order to reduce their economic burden.

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