Pennsylvania TaxWise® User Guide
Personal Income Tax Return (PA-40)
Local Earned Income Tax Return
Property Tax/Rent Rebate Claim (PA-1000)
Version 1c
April 2014
Please send comments and suggestions
to Steve Conary, PA1 Training Specialist
AARP Foundation Tax-Aide
TaxWise® is a registered trademark of CCH Small Firm Services
AARP Foundation Tax-Aide
Pennsylvania TaxWise® User Guide
Pennsylvania TaxWise® User Guide
Table of Contents
Introduction ....................................................................................................................................... 1
Taxpayer Information ........................................................................................................................ 1
School Code and School District Name ............................................................................................. 1
Filing Status ....................................................................................................................................... 2
Unreimbursed Allowable Employee Business Expenses (PA Schedule UE) ..................................... 2
Interest (PA Schedule A) .................................................................................................................... 2
Dividends and Capital Gains (PA Schedule B).................................................................................... 4
Net Profit from a Business (PA Schedule C) ...................................................................................... 4
Net Gain or Loss from Sale of Property (PA Schedule D) .................................................................. 5
Rents and Royalties (PA Schedule E) ................................................................................................. 5
Gambling Income............................................................................................................................... 5
Form W-2G ................................................................................................................................... 6
Other Income (Form 1040 Line 21) ................................................................................................... 6
Other Deductions (PA Schedule O) ................................................................................................... 6
Pensions and Annuities ..................................................................................................................... 7
Examples ....................................................................................................................................... 7
Wage Statement Summary (PA Form W-2S) ..................................................................................... 8
Sale of Principal Residence ................................................................................................................ 8
Estimated Tax Payments ................................................................................................................... 9
Special Tax Forgiveness (PA Schedule SP) ......................................................................................... 9
Credit for Income Taxed or Income Tax Paid to another State ....................................................... 10
Use Tax ............................................................................................................................................ 11
Underpayment of Estimated Tax (PA Rev 1630) ............................................................................. 12
E-Filing Return ................................................................................................................................. 13
Signatures (Form 8453) ................................................................................................................... 13
Refund/Payment Options ................................................................................................................ 13
Pennsylvania State Unemployment Insurance (SUI) ....................................................................... 14
Local Earned Income Tax ................................................................................................................. 14
Correct Employer Local EIT Withholding .................................................................................... 14
Incorrect Employer Local EIT Withholding ................................................................................. 15
Property Tax/Rent Rebate Claim (PA-1000) .................................................................................... 16
Nonresident Personal Income Tax Return ...................................................................................... 17
Appendix I – PA Taxable Interest..................................................................................................... 18
Appendix II – PA Tax-Exempt Interest ............................................................................................. 19
Appendix III – Returns if Spouse Died During Tax Year ................................................................... 20
Appendix IV – Returns for Same-Sex Couple................................................................................... 21
Appendix V – Amending Returns (Federal and State) ..................................................................... 22
Appendix VI – PA Addresses and Contact Information ................................................................... 23
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Introduction
This guide contains instructions for using TaxWise® to prepare a Pennsylvania Personal
Individual Tax Return (PA-40), a Local Earned Income Tax Return and a Property
Tax/Rent Rebate Claim (PA-1000) for the typical in-scope taxpayer that the AARP
Foundation Tax-Aide program serves. It does not include detailed tax law – refer to the
current Pennsylvania Personal Individual Tax Preparation Guide (DFO-02) and Property
Tax/Rent Rebate Guide (DFO-3) for specific Pennsylvania tax law information.
This guide follows the layout of each Pennsylvania form and schedule and presumes the
taxpayer’s income and other information are properly entered on the Main Information
Sheet and the other appropriate TaxWise forms for the federal return. Information that
automatically flows to the Pennsylvania forms and generally requires no intervention by
the counselor is not addressed in this guide. Also included are three appendices with
detailed step-by-step instructions for special situations as noted in the table of contents.
Taxpayer Information
The city and/or occupation fields on the state return are shorter than those on the
Federal return. If this information has been shortened on the form, the box under the
address will be highlighted. If changes are needed, check the box and make the changes
in the city and/or occupation fields.
School Code and School District Name
The school code and name are required entries. Copy and paste both from Help or use
the dropdown box in the field. For TaxWise Online, enter the two digit county code and
then either 1) use the keyboard down arrow key to highlight the correct code and name
and then press Tab or Enter; or 2) click the x in the right corner of the entry box to
remove the county code, then scroll down to the desired code and name and then press
Tab or Enter to put the code on the form.
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If the taxpayer was a nonresident of Pennsylvania on the last day of the tax year, enter
99999 in the school code area. If the taxpayer died during the tax year, enter the
information applicable at the time of death.
Filing Status
The Filing Status is pre- selected based on the federal status on the Main Information
Sheet. Select Final as the status only if the taxpayer lived in Pennsylvania during the tax
year, but permanently moved away or if for any other reason, the taxpayer will not have
any PA taxable income (or loss) in the following tax year. Provide the reason, such as
moved to another state. Do not use this status for a decedent.
Unreimbursed Allowable Employee Business Expenses
(PA Schedule UE)
PA Schedule UE is used to report unreimbursed allowable employee business expenses.
Add the schedule by linking from PA-40 line 1b. Use this schedule to report expenses
such as union dues, work clothes, educator expenses including those reported on the
1040 as an adjustment to income, jury duty pay returned to the employer (use the
second line in Part C) and to report education expenses the taxpayer’s employer or the
law required the taxpayer to obtain to retain his/her present position or job in Part F.
Do not lump expenses together as “miscellaneous” and do not use per diem rates – must
be actual expenses incurred. A separate PA Schedule UE must be completed for each
taxpayer and for each employer and occupation.
Interest (PA Schedule A)
Interest income may be taxable or tax-exempt (see Appendices I and II) and must be
properly entered on the Interest Statement to transfer correctly to the Pennsylvania
return. Note that Municipal Bond Funds may be partially taxable in PA – the payer will
generally provide the tax exempt portion for each state. In that case, the state adjustment
is a ‘+’ and the amount is equal to (100 – PA %) x Total Amount ÷ 100.
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A penalty for an early withdrawal will automatically offset the total interest on PA
Schedule A.
Taxable distributions from the earnings and profits of money market or mutual funds
and investment trusts and companies must be reported as dividend income on PA
Schedule B and are not considered interest income.
PA Schedule A is required only if the total PA-taxable interest is more than $2,500. The
schedule must show the recipient, the name of each payer and the amount from each
payer. Therefore, a taxpayer and spouse must complete separate schedules unless all
income is joint. However, selecting Taxpayer or Spouse on a Schedule A collapses the
payer information to one line labeled PA TAXABLE INTEREST as shown below which
does not meet PA reporting requirements:
If the interest income for either the taxpayer or spouse is more than $2,500, ensure the
recipient is properly identified on the Interest Statement and add and complete a PA
Schedule A for each as follows:
A. If the taxpayer’s interest income is not more than $2,500, click on Taxpayer as the
owner for the first Schedule A and accept the one line entry of PA TAXABLE
INTEREST. If the taxpayer’s interest exceeds $2,500, complete the following steps in
order:
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1. Check the “Check here to uncalculated entries” box.
2. Select Taxpayer as the owner
3. Edit the details so that only the taxpayer’s interest is listed
②
①
③
B. Add and complete a second Schedule A for the spouse. If the spouse’s interest income
is not more than $2,500, click on Spouse as the owner and accept the one line entry of
PA TAXABLE INTEREST. If the spouse’s interest income exceeds $2,500, complete the
following steps in order:
1. Check the “Check here to uncalculated entries” box.
2. Select Spouse as the owner
3. Edit the details so that only the spouse’s interest is listed
4. Delete the last line in section 1 labeled ALL OTHERS.
Dividends and Capital Gains (PA Schedule B)
The same instructions apply to dividends and capital gains reported on PA Schedule B as
described for PA Schedule A.
Net Profit from a Business (PA Schedule C)
A PA Schedule C will automatically be added if there is a Federal Schedule C. Enter the
name of the business or the name of the owner on the Federal Schedule C even though
not required as this is required on PA form but cannot be added without an override.
Enter the number of the Federal Schedule C that corresponds to the PA Schedule C (1, 2,
etc.) as shown below:
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Net Gain or Loss from Sale of Property (PA Schedule D)
The same instructions apply to net gain or loss from sale of property (typically stocks
and bonds) reported on Schedule D as described for Schedule A. In addition, the taxpayer
or spouse may not use the other’s loss to reduce his/her gain, i.e., each must file a
separate Schedule D if one has a loss and the other a gain even if both totals are not more
than $2,500. If less than $2,500 total gain, use a joint Schedule D if all three (TP, SP and
JT) have gains or all have losses. Otherwise file separate Schedule Ds for taxpayer and
spouse. Similar to the Schedule A instructions, check the uncalculate box, then select the
owner and then enter information for the owner.
Note: a PA Schedule D must be added and assigned to the taxpayer and/or spouse if
there are any short-term or long-term gains or losses from Schedules(s) K-1 entered
directly on Schedule D Lines 5 or 12 respectively. The income will otherwise not appear
on the PA-40, Schedule SP or PA-1000.
Rents and Royalties (PA Schedule E)
PA Schedule E will automatically be added if there is a Federal Schedule E for rent or
royalty. PA Schedule RK-1 will not be included since there will be no Federal K-1 in
accordance with the instructions for entering in-scope K-1 income items (see Pub 4012).
Gambling Income
All taxable gambling winnings must be reported on PA Schedule T – add the schedule by
selecting the radio box at Line 8:
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Winnings reported on a Federal W2-G are automatically entered on the schedule. Add
any winnings not reported on a W-2G (which would also be entered on TaxWise 1040
Wkt7 to flow to Form 1040 Line 21). Spouses must report gambling activities separately
on separate Schedules T, and the losses of one spouse cannot be used to offset the
winnings of the other.
Pennsylvania Lottery losses (cost of non-winning tickets) may not be used to offset other
gambling and lottery winnings. Also, no expenses attributable to gambling and lottery
income are deductible, e.g., travel, parking, postage, entry fees. However, other gambling
and lottery losses may be used to offset those gambling and lottery winnings.
Form W-2G
Mark the box labeled "*" at the
bottom of the W-2G if the gambling
winnings are not subject to
Pennsylvania income tax (typically
PA Lottery winnings).
Other Income (Form 1040 Line 21)
Other income from Form 1040 Line 21 such as Jury Duty Pay (but not gambling winnings
reported on a W-2G) is shown below PA-40 Line 8:
Select the “add to line 1” radio button to add this other income as gross compensation. If
there is both other income that is gross compensation from Form 1040 Line 21 and
gambling winnings, check the Schedule T box as described under Gambling Income
above and add a scratch pad to the PA-40 Line 1 with the other (non-gambling) income.
Other Deductions (PA Schedule O)
Pennsylvania allows deductions for 529 Tuition Accounts and HSA contributions. Add
and complete PA Schedule O.
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Pensions and Annuities
Distributions from retirement plans (pensions, IRAs, 401(k)s, 403(b)s) are generally not
taxable by Pennsylvania, but some distributions reported on a 1099-R are taxable by
Pennsylvania.
•
•
•
Mark Box 1 on the TaxWise 1099-R form to identify pension or annuity payments
that must be added to compensation on Form
40, line 1a.
Mark Box 2 on the TaxWise 1099-R form to
identify income from life insurance contracts,
annuities or endowments included in Federal
income taxable income (code 7D for example).
These will be listed on PA 40 Schedule A.
Mark Box 3 on the TaxWise 1099-R form to
identify income from charitable gift annuities
included in Federal taxable income. These will be listed on PA 40 Schedule A.
If the distribution reported on a 1099-R is not taxable by PA, do not complete the Box 13
entries even if the paper 1099-R has information in those fields. Otherwise, the PA Form
W-2S will show incorrect information which may trigger an audit by the PA Department
of Revenue.
Examples
•
Box 7 Code 1 & 2 Early Distribution – taxable for PA purposes, unless (1) pension
or retirement plan was an eligible plan for PA tax purposes, and (2) taxpayer retired
after meeting the age conditions of the plan or years of service conditions of the plan.
If the above are not true, then must determine the PA-taxable amount of the
distribution. (Ex: $1,500 early distribution from 401(k) plan to which taxpayer
contributed $1,000 previously taxed by PA. Check Box 1 and enter the net amount
taxable in PA in the second state line for box 14 in the TaxWise 1099-R.)
•
Annuities, Life Insurance, or Endowment Contracts – distribution from an annuity
that is not part of a retirement or pension plan such as an IRA, 401(k) or an
employer-sponsored retirement program, is PA-taxable income and will often (but
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•
•
not always) have code D in box 7. Note: code D is typically used in combination with
codes 1, 2, 3, 4, or 7. If taxpayer is required to report an amount from an annuity for
federal income tax purposes, s/he must also report the amount as interest income for
PA PIT purposes. Also, if taxpayer is required to report an amount from a life
insurance and endowment contract for federal income tax purposes, s/he must also
report the amount as interest income for PA personal income tax purposes. Check
Box 2. This will include the taxable amount on PA Schedule A line 3 – Distributions
from life insurance, annuity, or endowment contracts included in Federal taxable
income.
Charitable Gift Annuities – if taxpayer established a gift annuity to a charitable
organization from which s/he is receiving periodic payments, s/he has PA-taxable
income. Check Box 3. The taxable amount will be included on PA Schedule A line 4 –
Distributions from charitable gift annuities included in Federal taxable income.
Form 1099-R Box 7 distribution code 4 (Death Distribution) – these payments
are not taxable for PA, however, must be included in the gross amount on line 4 of
Part C: Eligibility Income on PA Schedule SP.
Wage Statement Summary (PA Form W-2S)
Part B of this form lists the Miscellaneous and Non-employee Compensation from
Federal Forms 1099-R, 1099-MISC and other statements. The “Type” of income must be
designated with the appropriate code in column b for each payer. See the top part of Part
B for a list of codes.
Sale of Principal Residence
Gain on the sale of the taxpayer’s principal residence is generally excluded from PA
taxable income. Add and complete PA Schedule 19 and PA Schedule D only if any or all of
the gain does not qualify for the exclusion. However, excluded gain is included when
determining eligibility for Special Tax Forgiveness and must be entered on line 8 of PA
Schedule SP (see below).
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Estimated Tax Payments
All estimated tax payments and credits from the previous year PA return must be
entered on the TaxWise F/S Tax Pd worksheet to properly carry over to the PA-40. If the
taxpayer and spouse made separate estimated tax payments, enter the spouse’s
payments in the bottom section of the TaxWise F/S Tax Pd worksheet. If there were
separate payments that need to be reassigned between the taxpayer and spouse or if
there were joint payments and the taxpayer and spouse are now filing separate returns,
complete PA REV-459B Consent to Transfer, Adjust or Correct PA Estimated Personal
Income Tax Account and include it with the return(s).
Note: If the taxpayer expects to have more than $8,000 of taxable income in the next tax
year not subject to withholding, he/she must make estimated tax installments payments.
Add and complete Form PA-40ES.
Special Tax Forgiveness (PA Schedule SP)
Pennsylvania has a sliding scale of tax forgiveness for lower income taxpayers. Eligibility
income for tax forgiveness includes income not taxed such as tax-exempt interest,
insurance proceeds and inheritances and gain on sale of a residence and may not be
offset by contributions to tuition account programs or health savings accounts. Some of
this not taxed income will be automatically entered by TaxWise, but certain items such as
inheritances (including a pension or IRA with distribution code 4), gain on sale of a
residence and gifts must be manually added to this schedule. If the distribution from an
annuity on a 1099-R has a code 4 or 4D and the taxable portion is taxable as interest by
PA (see Annuities, Life Insurance, or Endowment Contracts above), the taxable
portion is already included in Line 1. In this case, enter the difference between the gross
distribution and the taxable portion in Line 4.
Eligible dependents are dependent children (including foster children) and nieces,
nephews and siblings if children and the custody of the nieces, nephews or siblings is
assigned to the taxpayer by court order. Disabled and mentally challenged adults are also
eligible dependents. All must be claimed as dependents on the taxpayer’s federal return.
Parents and grandparents are not eligible dependents for tax forgiveness.
If submitting a paper PA-40 which includes Special Tax Forgiveness credit, include a copy
of page 1 of the federal return.
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Credit for Income Taxed or Income Tax Paid to another State
Pennsylvania gives credit for either the income taxed or the income tax paid to nonreciprocal states. The credit is based on either the income taxed if other state tax rate is
higher than PA or the income tax paid if the other state rate is lower. For 2013,
Pennsylvania also gives credit for foreign taxes paid.
Complete the Federal return first, then the other state returns and then the PA return.
Note: if deferred compensation such as a contribution to 401(k) or 403(b) plan that
reduces the W-2 Box 1 federal wages is also allowed by the other state, the PA gross
compensation will reflect the reduced amount. Link a scratch pad to PA-40 Line 1a and
add back the deferred compensation. The amount on the PA-1000 (Property Tax or Rent
Rebate Claim) Line 11a must also be adjusted to add back the deferred compensation.
Add a PA Schedule G-S for each other state (or country for 2013) if the income taxed in
the other entity is limited to compensation, interest and/or dividends – otherwise add a
PA Schedule G-L. Separate schedules are required for the taxpayer and the spouse and
there must also be separate PA Schedules A and/or B for the taxpayer and spouse as
applicable. Adding the Schedule G-S or G-L will also add a Schedule G-R.
Complete Part 1 with the name of the state or country and the two-letter code as
instructed. Enter the income subject to tax in the other state or country in Column B in
the appropriate Line 2 row. Column A will then populate with the data from the PA-40.
Enter the tax due and the tax paid to the other state or country in 4a and 4b respectively.
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PA Schedule G-S
Note: taxpayer may not claim credit for tax paid to another country after the 2013 tax
year.
The taxpayer must fax (using Form DEX 93) or mail the other state return or the
documentation of the foreign tax paid to the PA Department of Revenue within fifteen
days of e-filing the PA-40. If the foreign country requires an income tax return to be filed,
fax or mail a copy of this return; if no tax return is required, fax or mail the statement
from that foreign country stating tax due; or fax or mail the federal foreign tax credit
Form 1116 plus a copy of the tax document showing the tax due.
If taxes paid to another state are higher than the credit allowed on the PA-40, the
difference may be applied to any local earned income tax due.
Use Tax
Use tax is the counterpart of sales tax and applies to taxable purchases made over the
Internet, through toll-free numbers, from mail order catalogs and from out-of-state
locations, or any other occasion where sales tax was not charged and collected by the
seller. The use tax rate is the same as the sales tax rate: 6 percent state tax, plus an
additional 1 percent local tax for items purchased or used in Allegheny County and 2
percent local tax for Philadelphia.
Complete the worksheet on PA-40 page 2 to add the appropriate amount of Use Tax to
the return. The first section applies to general purchases that are individually less than
$1,000. The second section applies to individual purchases of $1000 or more. Note that
sales tax paid to another jurisdiction can offset the sales tax due PA – enter on line 7.
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Underpayment of Estimated Tax (PA Rev 1630)
TaxWise will add PA 1630 if the tax due exceeds $245 and will show the interest due on
Line 27 of the PA-40. If the taxpayer had no tax liability the prior year as shown on PA-40
Line 12 for that year, check the box at Line 12 on the PA 1630 to eliminate any interest
due on the underpayment.
If the taxpayer had a tax liability the prior year, enter the liability minus any tax
forgiveness credit shown on PA-40 Line 21 in the 100% column at Line 12 on PA 1630.
Also complete the Special Exception Information section at the bottom of page 2:
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and enter the date the taxpayer expects to
pay the tax due in Part III on page 2.
Ignore any other red fields on the PA 1630.
E-Filing Return
Select the Yes button at the bottom of PA-40 page 2 to electronically file the return. Note:
the Pennsylvania return can be e-filed only if the federal return is e-filed.
Signatures (Form 8453)
Taxpayer (and spouse) must sign and date Form 8453 to verify the return has been
examined and is true, correct and complete to the best of the taxpayer’s knowledge, to
authorize Tax-Aide to e-file the return and to confirm the method of payment or refund.
Refund/Payment Options
The taxpayer may have a refund deposited in the same bank account selected for the
federal return, deposited into a different bank account (which requires entry of the
routing number and account number on Form 8453) or mailed to the home address.
Payment for any amount due may be by check which the taxpayer mails with the voucher
(PA-V) from TaxWise by April 15 or by an electronic debit to the taxpayer’s bank account
if that option selected on Form 8453. If choosing electronic debit, the amount, payment
date (not later than April 15) and the account information must be entered on Form
8453.
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Pennsylvania State Unemployment Insurance (SUI)
PA SUI, an entry in Box 14 on the W-2, is deductible on the Federal Schedule A as a State
and Local Income Tax (Line 5a). If entered on the W-2 as PASUI, TaxWise will
automatically carry it to Line 5a. If entered as SUI or PA SUI or in some other fashion, it
must be manually entered on Line 5a using a scratch pad.
Local Earned Income Tax
Taxpayers are required to pay local earned income taxes at the higher of their work
location nonresident rate or their home location resident rate (if either or both exist) and
employers are required to withhold at the higher rate.
Political Subdivision (PSD) codes and tax rates can be found at
munstatspa.dced.state.pa.us/FindLocalTax.aspx. There is a link on that page to an Excel®
list of all PSD codes in the state or enter the home address and work location address in
the designated fields for the PSD codes and the current tax
rates. Select Municipal Tax Information under Historical
Tax Reports, then the tax year of interest and then the
municipality for the rates for the applicable tax year.
Correct Employer Local EIT Withholding
The following instructions are based on the employer properly withholding local earned
income for the entire tax year per the requirements above. See next section if this does
not apply (taxpayer moved for example and rates changed).
1. Add the PA Local Income Tax form. TaxWise will automatically populate it with the
earned income (compensation and self-employment income) and unreimbursed
business expenses from the PA-40 and withholding from W-2s. Enter the Political
Subdivision code and the local earned income tax rate for the taxpayer’s residence,
estimated tax payments (if any), any credits, and any other required information in
accordance with the instructions from the taxpayer’s tax collection administrator.
2. If the residency rate is equal to or higher than the work location rate for the taxpayer
and spouse, go to step 4.
3. If the residency rate is lower than the work location rate for either the taxpayer or
the spouse, check the direct entry box on the TaxWise form and adjust the taxwithheld amounts on Line 10 for both taxpayer and spouse to equal gross
compensation (Line 1) times the residency earned income tax rate. These amounts
will be lower than the amounts withheld if the residency rate is lower than the work
location rate.
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4. If the taxpayer or spouse has unused credit for tax paid to another state, that credit
may be applied to the local earned income tax liability on Line 12 (Miscellaneous
Credits). A copy of the other state return must be included with the local income tax
return when mailed.
5. Print each completed return and have taxpayer (and spouse) sign it. Mail the return
plus a copy of every W-2 plus a copy of the PA Schedule UE if used plus the form
received from the tax collection agency plus a check for any balance due per tax
collections agency instructions.
6. If the taxpayer and/or spouse made estimated payments for their local earned
income tax and is itemizing deductions on the federal return, add the total of the local
estimated payments to Schedule A Line 5a with a scratch pad.
Incorrect Employer Local EIT Withholding
The employer withholding could be incorrect through error or if the taxpayer moved
during the tax year to a municipality with a different tax rate and did not promptly notify
the employer of the change. If the employer under-withheld due to the employer’s error,
the employer is liable for the tax due. If the employer under-withheld for other reasons
or over-withheld, the taxpayer is liable for the tax due or is due a refund.
1. Add the PA Local Income Tax form. TaxWise will automatically populate it with the
earned income (compensation and self-employment income) and unreimbursed
business expenses from the PA-40 and withholding from W-2s. Enter the Political
Subdivision (PSD) code for the taxpayer’s residence, estimated tax payments (if any),
any credits, and any other required information in accordance with the instructions
from the taxpayer’s tax collection administrator.
2. Calculate the total local earned income tax due based on the higher of the work
location and residency rates for the portion of the tax year that each rate applies for
each source of earned income (W-2s or self-employment). Then calculate the
effective overall tax rate for the tax year by dividing the total tax due by total earned
income. Enter this effective rate in the Local tax rate field in TaxWise and allow
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TaxWise to automatically populate the remaining fields. Do not check the direct entry
box on the TaxWise form.
3. If the taxpayer or spouse has unused credit for tax paid to another state, that credit
may be applied to the local earned income tax liability on Line 12 (Miscellaneous
Credits). A copy of the other state return must be included with the local income tax
return when mailed.
4. Print each completed return and have taxpayer (and spouse) sign. Mail the return(s)
plus a copy of every W-2 plus a copy of the PA Schedule UE if used plus a copy of
every W-2 plus the form received from the tax collection agency plus the worksheet
used to determine the effective tax rate plus a check for any balance due per tax
collections agency instructions.
5. If the taxpayer and/or spouse made estimated payments for their local earned
income tax and is itemizing deductions on the federal return, add the total of the local
estimated payments to Schedule A Line 5a with a scratch pad.
Property Tax/Rent Rebate Claim (PA-1000)
Add this form if the taxpayer or spouse appears to qualify for the rebate based on age
(generally 65 or older) and income ($35,000 or less if property owner or $15,000 or less
if renter).
Enter the two-digit county code in the first section, select the appropriate items in
section B and enter any untaxed income items in Lines 11a-g – note that an IRA or
pension distribution that has a distribution code 4 is already included in Line 6 and does
not need to be added to Line 11c. Note: if an adjustment for deferred compensation was
required on the PA-40 (see Credit for Income Taxed or Income Tax Paid to another State
on page 10 for more information), the same adjustment is required on PA-1000 Line 11a.
Enter the property tax paid on the principal residence on a scratch pad linked to the
“Real estate taxes on your principal residence, not listed above” field on the federal
Schedule A even if the taxpayer is not itemizing federal deductions. Include all tax bills
(generally school district, county and municipality) as homeowners whose income is
$30,000 or less and whose property tax bills equal more than 15% of their income will
receive an additional 50% of their base rebate.
If the taxpayer wants to direct deposit the rebate, enter the routing transit number and
account number for the bank account in the Direct Deposit section on page 2. Note: there
is no crosscheck of these numbers with the numbers entered elsewhere so use extra care
to ensure they are correct.
Add and complete PA-1000 Schedules A and B if claimant owned more than one home or
if widow(er) remarried. Add and complete PA-1000 Schedules D, E and F if renter
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received cash public assistance, or the residence was used for purposes other than a
personal residence or if there are additional names on the deed.
Finally, add and complete PA-1000RC – Rent Certificate and Rental Occupancy Affidavit –
if the claimant is a renter or owner/renter. The claimant ‘s landlord must sign to certify
the information or the claimant must complete the affidavit section stating why the
landlord’s signature was not obtained and have it notarized before mailing.
First time filers must include proof of age (copy of driver’s license for example), copy of
spouse’s death certificate if a widow or widower under 65 or proof of disability (SSI
award letter or letter from Veterans Administration as examples). All filers must include
proof of income (page 1 of Form 1040 and page 1 of PA-40). Also include a copy of the PA
Schedule E if taxpayer received gas lease or royalty payments and write “gas lease” or
“royalty” beside the entry on the PA 1000 so that the PA Department of Revenue does not
assume part of the property is rented.
All claimants, except those residing in Philadelphia, must include copies of documents
that show taxes due in the tax year and proof that taxes were paid in the tax year. Best is
a copy of each tax bill with stamp by bank or municipality showing date paid or Form
1098 from Mortgage Company showing taxes paid if paid via escrow account. Otherwise
include a copy of each tax bill and a copy of cancelled check for each payment. Again,
include documentation for all tax bills (school district, county and municipality) so that
homeowners whose income is $30,000 or less and whose property tax bills equal more
than 15% of their income are eligible for the 50% additional rebate.
Claimant must mail all documents in the PA-1000 envelope by June 30.
Nonresident Personal Income Tax Return
A nonresident of Pennsylvania is taxed on certain income derived from sources within
Pennsylvania:
• Compensation (unless the taxpayer is a resident of a state with a reciprocal tax
agreement: Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia)
• Net income from a business
• Sale of property located in Pennsylvania
• Net income from rents and royalties
• Gambling winnings from a wager placed in Pennsylvania
A nonresident files the same Form PA-40 as a resident for any of the above income items.
A resident of a reciprocal state whose employer withheld PA income tax must file Form
PA-40 reflecting no compensation on Line 1a and the PA tax withheld on Line 13. In
addition, submit a signed copy of the other state’s resident income tax return (without
any supporting documents) along with a copy of the actual W-2 and a statement that the
taxpayer was a resident of a reciprocal state.
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Appendix I – PA Taxable Interest
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Savings and loan associations, credit unions, bank deposits, bonds, certificates of
deposit, interest-bearing checking accounts, tax refunds, mortgages or other
obligations
Agricultural Credit Insurance Fund (Agricultural Credit)
Bonneville Power Administration (Pacific Northwest Transmission)
Electric and Hybrid Vehicle Development Fund
Export-Import Banks
Federal Financing Bank
Federal Home Loan Mortgage Corporation (Freddie Mac)
Federal National Mortgage Association (Fannie Mae)
Federal Ship Financing Fund (Merchant Marine Act)
Geothermal Resources Development Fund (Geothermal Research)
Government National Mortgage Association (Ginnie Mae)
Merchant Marine Obligations (Maritime Administration)
U.S. Housing Authority - Low-Rent Housing
Pension Benefit Guarantee Corporation
Rural Development Insurance Fund
Rural Housing Insurance Fund
Rural Telephone Bank
Securities Investor Protection Corporation (Securities Investor Production Fund)
Small Business Administration
Synthetic Fuels Corporation
U.S. Railway Association
Burial fund earnings
Interest income on dividends from insurance companies, whether disbursed or not
Distributions from IRC Section 529 qualified tuition account programs not used for
educational purposes
Distributions from health or medical savings accounts not used for medical expenses
that are included in federal taxable income
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Appendix II – PA Tax-Exempt Interest
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Pennsylvania Municipal and State Obligations
Banks for Cooperatives
Federal District Banks For Cooperatives
Central Banks for Cooperatives
Commodity Credit Corporation
Farm Credit System Capital Corporation: Consolidated Obligations
Farm Credit System Joint Stock Banks
Farm Credit System Land Banks and Land Bank Associations
Federal Deposit Insurance Corporation
Federal Farm Credit Banks
Federal Financing Bank 12
Federal Home Loan Banks
Federal Crop Insurance Corporation
Federal Land Bank Associations
Financing Corporation
General Insurance Fund:
– Armed Services Mortgage Insurance
– National Defense Housing Insurance
– Rehabilitation and Neighborhood Conservation Housing Insurance
– Rental Housing Insurance Fund
– Rental Housing Insurance Fund Mortgage Insurance
– War Housing Insurance Law
– Insurance of Loans for Manufacturer of Houses
– Mortgage Insurance Benefits
– Government of Guam 48
– Government of Puerto Rico
Government of the Northern Mariana Islands and covenant to establish a
Commonwealth of the Northern Mariana Islands in a political union with the U.S.
Government of Virgin Islands
Public Building Trust Participation Certificates
Mutual Mortgage Insurance Fund
National Credit Union Administration Central Liquidity Facility
Production Credit Associations
Public Housing Agencies
Resolution Funding Corporation (REFCORP)
Student Loan Marketing Association (Sallie Mae)
Tennessee Valley Authority
U.S. Postal Service
U.S. Treasury Notes, Bonds, Bills, Certificates and Savings Bonds
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Appendix III – Returns if Spouse Died During Tax Year
(Note: follow and complete these steps in order!)
The following steps apply if the Filing Status on the Federal return is Married Filing Jointly
(MFJ). If not MFJ, these steps do not apply.
PA permits MFJ for the state return if fiduciary for decedent agrees. If s/he doesn’t agree, PA
requires Single for surviving spouse and Deceased for decedent. However, TaxWise does not
allow a Single state return if federal return is MFJ. But, PA will accept an MFS return for the
survivor instead of a Single return.
These steps detail preparation of MFJ Federal return and MFJ State return for both OR MFJ
Federal, MFS State return for survivor and no return for decedent. In all cases, surviving spouse
must be designated as taxpayer and decedent as spouse.
1.
2.
3.
4.
5.
6.
7.
8.
Complete Federal return in normal fashion with Filing status MFJ plus enter % followed by
one space followed by the name of the survivor or the executor in Name Line 2 on Main
Info Sheet. Be sure to assign decedent’s income to spouse (code S). If PA Filing Status is not
MFJ, assign joint income (typically interest, dividends, and capital gains and losses) to
taxpayer (T) instead of joint (J).
If taxpayer and spouse are filing state MFJ return, prepare PA 40 in normal fashion and
then go to step 3. Otherwise, go to step 5.
Select PA Sch SP (Taxpayer) in Forms Tree
a. Click Married, Married and claiming tax forgiveness with spouse and Deceased in
Part A
b. Clear the red from the “If decedent is checked above…” box – do not check it
c. Add scratch pad to Column A Line 2 in Part C
d. Add to the scratch pad the difference between the annualized income for the
decedent (that designated by code S only) for each item in each class (wages,
interest, dividends, etc.) and the amount received while alive.
e. Complete remainder of Part C for taxpayer.
Complete PA 40 in normal manner and e-file. STOP
If the taxpayer (survivor) is filing MFS state return:
a. Verify taxpayer and joint income assigned to taxpayer (code T) and decedent’s
income to spouse (code S) at federal level.
b. Prepare normal federal MFJ return
c. Select taxpayer in PA 40 state filing status area
d. Open PA Schedules A, B, D, etc. as applicable and assign ownership to taxpayer
Select PA Sch SP (Taxpayer) in Forms Tree
a. Click Married, Married and filing separate PA returns, Certification and taxpayer in
Part A (do not select Deceased).
b. No annualization required.
Complete PA 40 in normal manner and e-file.
If MFS State return, estate for decedent must file decedent’s individual tax return
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Appendix IV – Returns for Same-Sex Couple
(Note: follow and complete these steps in order!)
1. Identify one partner as “Taxpayer” and other as “Spouse” for use later on Federal
MFJ return.
2. Prepare individual Federal and PA returns for each person:
a. Determine filing status of each person. Filing status options are Single or Head
of Household.
b. Cannot use same dependent twice if HH.
c. Spouse may not need to have individual Federal and PA returns created if s/he
does not meet the filing requirements for both.
3. Designate both Federal and both PA returns as paper (if paper is selected for
federal, PA cannot be electronically filed).
4. Enter income, adjustments, deductions, etc. for each on individual returns.
5. Complete Quality Review for returns.
6. Run diagnostics.
7. Print one copy of each Federal return for taxpayer records and mark as “DID NOT
FILE; USED ONLY TO CREATE PA RETURN”.
8. Print copy of each PA return for taxpayer records and copy of each for taxpayers to
mail to PA Department of Revenue.
9. Open the Federal return for the partner identified as “Taxpayer”.
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Change filing status to MFJ.
Change the Federal return type to “e-file”
Change state return to none (no PA return).
Add “Spouse” personal information including dependents, if any, to the return.
Add “Spouse” income, adjustments, deductions, etc.
Complete normal Quality Review.
Run diagnostics and create federal e-file.
Print the federal return for taxpayer records and mark as “E-FILED FEDERAL
RETURN”
E-file the MFJ federal return
10. Couple will leave with copies of a MFJ Federal return (e-filed), two individual
Federal returns (not filed), two individual PA returns to mail in and two individual
PA returns for their records.
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Appendix V – Amending Returns (Federal and State)
(Note: follow and complete these steps in order!)
1.
Must use TaxWise® for the year being amended. Must have been trained on tax law
and software for that year.
3.
Add 1040X from Add Forms tab.
2.
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9.
Obtain electronic copy of 2013 return actually e-filed (if possible). If not available or
for earlier years, recreate original return(s) including errors and omissions.
IMMEDIATELY check the “Check to override all original entries…” box on page 1
(usually in the Income and Deductions section).
IF amending a PA return, add PA X from Add Forms tab and IMMEDIATELY check the
“Check this box to override all original entries…” box in the Income section on page 1.
Only after completing steps above, add missing information or update original
information on normal forms and worksheets in TaxWise: new or changed W2s,
1099Rs, etc., updating interest on original Interest Statement, dividends on original
Dividend Statement, etc.
If combining two Federal returns into one Married Filing Jointly return:
a. Change filing status to Married Filing Jointly on Main Information Worksheet.
b. Complete PIN for spouse to authorize practitioner pin
c. Enter all spouse data on the taxpayer’s return.
d. If spouse originally had a balance due, enter amount paid on line 15 of Form
1040-X. If spouse received a refund on the original return, enter the amount of
the refund as a negative number on line 15 of Form 1040X.
Complete page 2 of the 1040X by adding explanation and date.
Complete page 2 of PA-40X (if applicable) by adding explanation and date.
10. If applicable, check the “Once amended return is complete, check this box” box on page
1 of PA-40.
11. Print 1040X and any schedules that have changed and assemble in sequence number
order with 1040X on top. Do not include the revised 1040. If combining two returns,
also attach copies of the two original returns clearly marked as “Original”. These will
all be mailed to the IRS by taxpayer along with check for any amount due.
12. Print amended PA-40, PA-40X and other schedules that have changed. These will be
mailed to PA Department of Revenue along with check for any amount due.
13. Amended returns stand-alone – do not combine original return(s) amounts due or
refunds with amended return(s) amounts due or refunds.
14. Mail amended returns before tax due date (generally April 15) if possible to avoid
penalties and interest if money due.
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Appendix VI – PA Addresses and Contact Information
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For e-filed returns:
– Fax documents to the PA Department of Revenue, using the DEX-93 Personal
Income Tax Fax Cover Sheet
 Available at www.revenue.state.pa.us
 Send a separate fax with separate cover sheet for each return
 Fax e-file return attachments to: 717-772-4193 or 717-787-2840
 Fax other state’s returns to: 717-705-6651
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Mail documents to:
PA Department of Revenue
Bureau of Individual Taxes
PO Box 280507
Harrisburg PA 17128-0507
If there is more than $1 on Line
28 due – mail to:
PA Department of Revenue
Payment Enclosed
1 Revenue Place
Harrisburg PA 17129-0001
If there is an overpayment – $1 or
more on Line 29 – mail to:
PA Department of Revenue
Refund/Credit Requested
3 Revenue Place
Harrisburg PA 17129-0003
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If there no tax due or
overpayment – no amount on
Line 28 or 29 – mail to:
PA Department of Revenue
No Payment/No Refund
2 Revenue Place
Harrisburg PA 17129-0002
Mail Property Tax/Rent Rebate Claims to:
PA Department of Revenue
Property Tax or Rent Rebate Program
PO Box 280503
Harrisburg PA 17128-0503
Mail Estimated Tax Vouchers to:
PA Department of Revenue
PO Box 280403
Harrisburg PA 17128-0403
PA Help Desk (for volunteers only, not for taxpayers): 717-787-4017
or 800-452-3108
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