Beginning on January 1, 2012 residents of Pennsylvania will begin to see significant changes in how the Local Earned Income and Net Profits Tax is collected and processed. These changes are a result of Act 32 of 2008 which was adopted by the legislators to streamline the tax return filing process and reduce the cost to collect the local tax.
Under Act 32, employers are required to withhold the greater of the employee’s resident income tax rate or the employee’s worksite non-resident rate. All new employees and employees who have a name and/or address change are required by law to complete a Certificate of Residency. The importance of completing the Certificate of Residency is to ensure that the employer is withholding at the correct resident rate for each employee.
Quarterly Estimated Earned Income Tax Form
Individuals who are self-employed, who receive compensation other than by employment with an employer or business entity, or who receive earnings not subject to local tax withholdings are required to file a Quarterly Estimated Earned Income Tax Form.
Payment of the Quarterly Estimated Earned Income Tax Form can be made on-line through eFiling by clicking on the “Quarterly Payments / Extensions” tab. You will need to register as a new user to establish an account. A PIN (Personal Identification Number) is needed to register, please contact our office if you did not receive a PIN with your preprinted Declaration packet. Once you have an account established, you can file and pay one quarterly payment at a time or you can pre-schedule all four quarterly payments. Click here for the eFiling Declaration User Guide.
Final Earned Income & Net Profits Tax Return
The Final Earned Income & Net Profits Tax Return is due annually on or before April 15. Taxpayers file an annual tax return to reconcile the taxable local wages and tax due against employer withholdings, prior year credits, and self-payments that have been remitted to the tax office over the course of the tax year. A tax return is due from all residents regardless of whether or not an employer has withheld the tax due.