PERSONAL INDIVIDUAL TAX PREPARATION GUIDE - FOR PERSONAL INCOME TAX RETURNS PA-40
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PERSONAL INDIVIDUAL TAX
PREPARATION GUIDE
FOR PERSONAL INCOME TAX RETURNS
PA-40
DFO-02 (11-14)PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Before reviewing how to assist taxpayers in the and a readiness to help is the essence of cour-
preparation of the PA personal income tax return, tesy. If a taxpayer starts complaining, do not
some key principles must be emphasized. take it personally. Listen to the entire complaint.
Do not interrupt as that will only make the tax-
CONFIDENTIALITY AND INTEGRITY payer more upset.
As a tax preparer through the Volunteer Income
Tax Assistance (VITA) and Tax Counseling for the Questioning Stage
Elderly (TCE) programs, you have a special trust As an interviewer, you must control the conver-
from the taxpayers who seek your help. To main- sation and keep the taxpayer from asking
tain the integrity of this program and to respect unrelated questions. It will be helpful to follow
the trust placed in you, tax information must be these guidelines:
treated as confidential at all times. Also remem- • Phrase questions very clearly, avoiding
ber that VITA/TCE tax preparers are prohibited multiple questions.
from accepting compensation from taxpayers for
preparing PA personal income tax returns. • Repeat questions if necessary. Keep in mind
not everyone understands technical tax
QUALITY SERVICE terms.
Quality service to taxpayers is our goal. It is im-
• Listen carefully to the taxpayer’s responses
portant to check your work for accuracy. Use a
and be patient.
calculator to verify mathematical calculations. If
you are uncertain of the proper method of re- • To the extent possible, explain the return as
porting any transaction, consult your immediate it is completed.
supervisor.
• Encourage people to ask questions if they
Your success as a tax preparer largely depends do not understand.
on your ability to establish rapport with taxpay-
ers and interview taxpayers effectively. First, it is • If you cannot answer a question, say "I do
important to put the taxpayer at ease. You will not know but will find out."
ask questions to determine not only tax liability • Research difficult questions in available tax
but also benefits and credits. For example, many books, consult with your immediate supervi-
taxpayers are not aware of the special tax for- sor or contact your local Department of
giveness provision or the exclusion of a gain Revenue district office.
realized on the sale of a principal residence. If fil-
ing a paper return, you should have the taxpayer NOTE: Questioning can be effective in determin-
sign and date the return upon completion and ing sources of income. However, it is the
provide them with the proper address to which taxpayer who is responsible for the accuracy of
the return should be mailed. the information provided. You, as a preparer, are
not accountable for any misinformation given by
INTERVIEWING TECHNIQUES the taxpayer.
Introductory Stage
Summary Stage
It is important to establish a good relationship
When the return(s) is/are completed, you will
with the taxpayer. Greet the person you will be
need to give the taxpayer some additional infor-
helping in a friendly way and introduce yourself.
mation.
Smile and make eye contact. If anyone has waited
for a long time, apologize for the delay. Many peo- • Have the taxpayer sign and date the return.
ple are nervous when it is time to prepare their If filing a paper return and the filing status
income tax return, so take a few minutes to chat on the return is Married, Filing Jointly, make
informally if necessary. Remember, good humor sure both taxpayers sign the return. If one
Page 1PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
taxpayer is not present, remind the tax- • If a paper return is being prepared, instruct
payer to have his/her spouse sign the the taxpayer to mail the return by midnight
return. on the due date, along with any monies
due.
• If there is an overpayment and the tax-
payer plans to move, advise the taxpayer • If filing more than one tax return for a tax-
payer, advise the taxpayer to mail each
to notify the local Department of Revenue
return separately.
district office immediately to have the ad-
dress updated. This will ensure the refund • Ask if the taxpayer has any questions. Be
is sent to the appropriate address. The post sure to return all tax materials to the tax-
office may not forward refund checks. payer, and give the taxpayer a copy of the
filed return to keep with his/her records.
• If a balance is due, advise the taxpayer of
• Thank the taxpayer and remember to re-
payment options. Payment may be remit-
spect the taxpayer's privacy. Keep all tax
ted by check or money order made payable
information confidential.
to the PA Department of Revenue. Instruct
taxpayers to include the last four digits of TAX ASSISTANCE GUIDELINES
their primary Social Security number (SSN) When assisting a taxpayer with the preparation
and tax year on the front of the check or of a tax return, you should not hesitate to con-
tact your immediate supervisor for guidance.
money order. If a PA-V form is not available
Our main objective is to provide quality service,
from the software used by the preparer or
which can only be achieved by working together.
one is not prepared from the Fill-In PA-V on
the department’s website, the department FEDERAL/STATE ELECTRONIC
advises each taxpayer to use the complete FILING (e-file)
SSN on the check or money order if faster Taxpayers may file federal and PA income tax
clearing is desired and more accurate post- returns electronically, either through a tax pre-
ing of the check is preferred. Otherwise, it parer or by purchasing software.
can take up to four weeks for a check to VITA/TCE sites that e-file returns using special
clear if there is insufficient information such software should mail Form PA-8453 or PA-8879
as taxpayer name, address, and tax year to the following address:
on the check. In the event the department
PA DEPARTMENT OF REVENUE
cannot determine the correct account for
BUREAU OF INDIVIDUAL TAXES
posting of the check, the taxpayer’s ac- ELECTRONIC FILING SECTION
count will eventually be billed and PO BOX 280507
additional correspondence will need to be HARRISBURG, PA 17128-0507
addressed by the taxpayer. If your volun-
These forms should be submitted to the depart-
teer site e-files returns using special
ment at the end of the tax preparation season
software, the taxpayer may be able to with a note stating they are from a volunteer
remit the tax payment online. See site.A PA-8453 is not required if a taxpayer
PAYMENT OPTIONS on Page 72 for addi- signs the federal return with a federal self-select
tional information. PIN and that PIN is carried over to the PA re-
Page 2PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
turn. If the practitioner’s PIN is being used or PA FREE FILE
someone else other than the taxpayer is entering PA Free File succeeds padirectfile and Telefile. PA
the taxpayer’s PIN on the federal return, PA- Free File is a pair of electronic filing options that
8879 must be signed. The PIN does not need to allow for simultaneous filing of state and federal
be entered twice and can be carried over from returns and save the department and taxpayers
the federal return as long as the taxpayer under- administrative costs. Free File tax software,
stands he/she is signing both returns. available online from reputable vendors, pre-
pares state and federal filings for free for
The department also allows statements to be qualifying individuals with federal adjusted gross
filed electronically through the electronic return income of $60,000 or less for the tax year. Free
originators (ERO) with the return. These state- Fillable Forms are online versions of tax forms
ments describe why certain income was or was with basic math calculations designed for people
comfortable preparing their own returns. Free
not reported or why a particular paper document
Fillable Forms may be submitted electronically
is being retained by the ERO (i.e. military orders,
for free or by paper. Free Fillable Forms are gen-
stipend, extension form).
erally available to all Pennsylvania taxpayers
Electronic filing provides the following benefits: except nonresidents, part-year residents and
those with K-1 forms or resident credits. In ad-
• Accuracy. Computer programs catch mis- dition, taxpayers who have already filed their
takes before they become problems. federal tax return for free can use the fillable
forms to file their PA-40 return electronically for
• Acknowledgement. The department elec-
free.
tronically notifies the preparer or ERO that
the return was received and accepted.
ADDITIONAL INFORMATION FOR EROS
The department requires all PA electronic returns
• Refunds. With electronic filing, the tax- to be accepted by the Internal Revenue Service
payer has the option to receive a refund via (IRS). Once accepted by the IRS, the ERO does
direct deposit. This service is not available not have to register separately with the PA De-
when filing a paper return. partment of Revenue.
• File Now, Pay Later. A return can be filed ACKNOWLEDGEMENT OF PA
anytime before the due date. If tax is owed, ELECTRONIC RETURNS
payments may be made by authorizing an The Pennsylvania Department of Revenue will ac-
electronic funds withdrawal. This withdrawal knowledge the receipt of a return. However, the
can be scheduled for a later date and may acknowledgement system will now only inform a
taxpayer if a return was accepted or rejected. If
be paid from the taxpayer’s checking or sav-
a return is rejected, the rejection message will
ings account. The taxpayer may also choose
identify the reject as a business rule or schema
to remit payment via check or money order
error only. Refer to software instructions or con-
with the pre-printed PA-V Payment Voucher, tact the software representative for information
which should be mailed by midnight on the regarding responsibilities for accessing and
due date of the return. retrieving state acknowledgements.
Page 3PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
ACCEPTED PENNSYLVANIA • PA Schedule O
FORMS/SCHEDULES • PA Schedule T - Gambling and Lottery
The following Pennsylvania forms may be trans- Winnings
mitted electronically (refund, equal and balance • PA REV-1630 - Underpayment of Estimated
due, with or without payment), and payment Tax by Individuals
must be made by electronic funds withdrawal,
check, money order or credit card. • PA REV-1630A - Underpayment of Estimated
Tax by Farmers
• Form PA-40 - Pennsylvania Individual In-
come Tax Return (includes nonresident and • PA Schedule 19 - Sale of a Principal
Residence
Part-Year Resident returns)
• PA Schedule NRH - Apportioning Income by
• PA Schedule A - Interest
Nonresident Individuals
• PA Schedule B - Dividends
• Schedule PA-40X Amended Schedule
• PA Schedule C - Profit or Loss From • W-2 Forms
Business or Profession
• 1099-R Forms
• PA Schedule D - Sale, Exchange or
Disposition of Property • W-2G Forms
• PA Schedule D-1 - Computation of NOTE: Federal K-1s are not supported in PA
Installment Sale Income e-File software. However, software packages that
offer pdf file attachments can include the federal
• PA Schedule D-71 - Sale or Exchange of K-1 and its related supporting statements via pdf
Property Prior to June 1, 1971 file with the return if the income and losses from
that K-1 are also input into the return.
• PA Schedule E - Rent, Royalty, Patent and
Copyright Income or Loss
EXCLUSIONS FROM ELECTRONIC
• PA Schedule F - Farm Income and Expenses FILING
• PA Schedule G-L - Out-of-State Credit, Long The following documents are excluded from Fed-
Form eral/State electronic filing:
• PA Schedule J - Estate & Trust Income • Non-calendar, fiscal year returns;
• PA Schedule W-2S - Wage Statement • Amended individual income tax returns for
Summary years prior to 2010;
• Form PA-40NRC - Nonresident Consolidated
• PA Schedule SP - Tax Forgiveness Credit
Income Tax Returns;
• PA Schedule RK-1- Resident Schedule of PA
• Form PA-40 KOZ – PA Income Tax Keystone
S Shareholder/Partner Pass-Through
Opportunity Zone Return;
Income, Loss and Credits
• Returns containing forms/schedules not
• PA Schedule NRK-1- Non-Resident Schedule
listed under federal forms; or “Accepted
of PA S Shareholder/Partner Pass-Through
Pennsylvania Forms/Schedules”.
Income, Loss and Credits
NOTE: Electronic filing of Form PA-41 is only
• PA Schedule UE - Allowable Employee
available through some paid preparers but is not
Business Expenses
available by department or volunteer tax prepar-
• PA Schedule OC ers. Electronic filing of Form PA-20S/PA65 S
Page 4PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Corporation/Partnership Information Return is FORM PA-40 GENERAL INSTRUCTIONS
available from most paid preparers but is not
Filing Due Date
available by department employees or volunteer
The due date for filing the PA personal income
tax preparers.
tax return is the same due date as it is for fed-
CONTACT INFORMATION FOR eral income tax returns. Generally, that date is
E-FILE INQUIRIES April 15 or the next business day if the 15th falls
on a Saturday, Sunday or holiday. If the IRS de-
The PA Department of Revenue has telephone
termines that Emancipation Day for Washington,
lines for exclusive use by EROs, transmitters
DC is a holiday, the due date will be the next
and software developers participating in the
business day after the holiday.
Federal/State e-file program. The operating
hours are Monday through Friday, 7:30 a.m. to Extension
5:00 p.m. (except holidays). A taxpayer may request an extension of time to
file, however this does not extend the payment
NOTE: The following phone number is not to be
deadline. If the taxpayer anticipates a tax bal-
provided to taxpayers.
ance due, he/she should submit payment with
Help Desk 717-787-4017. the extension request.
You may forward correspondence for the elec- Extensions may be requested in two ways:
tronic filing program to the following address: • The taxpayer can submit Form REV-276,
PA DEPARTMENT OF REVENUE Application for Extension of Time to File,
BUREAU OF INDIVIDUAL TAXES postmarked on or before the April 15 due
PO BOX 280507 date.
HARRISBURG PA 17128-0507 • The taxpayer may submit a copy of a feder-
FAX: (717) 772-4193 or (717) 787-2840 ally approved extension of time to file with
his/her state return.
You may also fax information concerning
electronically filed returns to the department An extension grants an individual an additional
using the Personal Income Tax Fax Cover Sheet, six months to file a return. People outside the
DEX-93, which is also available from the Depart- country are automatically granted a two-month
extension to file by June 15.
ment of Revenue’s website,
www.revenue.pa.gov. The fax cover sheet in- Who must file?
cludes the proper fax numbers for Any PA resident, nonresident or part-year resi-
providing specific information regarding electron- dent who:
ically filed returns. Using the fax cover sheet • Received total PA gross taxable income in
enables the department to more quickly and excess of $33 during the tax year, even if no
accurately attach information to the correct tax is due; and/or
taxpayer’s return and further allows for faster • Incurred a loss from any transaction as an
turnaround times for processing of taxpayer cor- individual, sole proprietor, partner in a part-
respondence. nership or PA S corporation shareholder.
For a full explanation of the Federal/State e-file Minors. PA law does not exempt a minor from the
program, please review the Pennsylvania above requirements to file a PA tax return even if
Fed/State E-file Handbook, REV-993. This book- the minor is claimed as a dependent on a federal
let may be downloaded from the Department of return. A parent must file a return on behalf of
Revenue’s website, www.revenue.pa.gov. the minor child in such circumstances.
Page 5PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Decedents. The executor, administrator or other • Where does the taxpayer fulfill local tax
person responsible for the affairs of a decedent obligations?
must file a PA tax return on behalf of the dece- • Where is the taxpayer employed?
dent if the decedent could not or did not elect to
file a joint return with a surviving spouse. • Where does the taxpayer own real estate fit
for year-round living?
Determining Residency
• Where does the taxpayer maintain a driver's
An individual may have to pay income tax as a PA
license and vehicle registration?
resident even if he or she is not considered a PA
resident for other purposes. For income tax pur- • Where does the taxpayer maintain profes-
poses, one must consider both where he or she is sional licenses?
domiciled and where he or she maintained a per- • Where does the taxpayer maintain union
manent place of abode during the taxable year. membership?
An individual’s domicile is their fixed and perma- • Where does the taxpayer declare residency
nent home to which they always have the for fishing or hunting licenses, income tax re-
intention of returning to whenever absent, even turns or school tuition?
though they may live elsewhere. An individual can
• Where does the taxpayer conduct his or her
have only one state of domicile at any given time.
business?
Below are some factors to consider when deter-
mining an individual’s place of domicile: • Where does the taxpayer receive mail?
• Where does the taxpayer spend the greatest • Where does the taxpayer receive
amount of time during the taxable year? unemployment?
• Where does the taxpayer maintain a perma- • Where does the taxpayer record his or her
nent abode for the longest amount of time address for insurance policies, deeds, mort-
gages, leases, passport, federal and local tax
during the taxable year?
returns, etc.?
• Where does the taxpayer support his or her
• Where was the taxpayer domiciled at birth?
spouse and children?
• Where does the taxpayer maintain safe de-
• Where does the taxpayer purchase the ne-
posit boxes?
cessities of life?
• Where does the taxpayer own a cemetery
• Where does the taxpayer have doctors,
plot?
lawyers and accountants?
• Where is the taxpayer listed in the telephone
• Where does the taxpayer house his or her
directory?
pets?
• Where has the taxpayer obtained a home-
• Where does the taxpayer have active bank-
stead exemption?
ing accounts?
• Where does the taxpayer gather for family
• Where does the taxpayer worship regularly? and social events?
• Where does the taxpayer participate in so-
• Where is the taxpayer registered to vote?
cial, fraternal or athletic organizations,
lodges or country clubs? In order to establish a new domicile, the following
three conditions must be met:
• Where does the taxpayer have works of art,
expensive furniture, family portraits or • There must be evidence of a firm and defi-
heirlooms? nite present intention to discontinue making
Page 6PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
the former domicile one’s primary base of maintains as his or her household for an indefi-
operations; nite period, whether he or she owns it or not. An
abode is not permanent if it is occupied only dur-
• There must be evidence of a firm and defi-
ing a fixed or limited period of time for a
nite present intention to make the new
particular purpose. Barracks, bachelor officer's
domicile one’s primary base of operations;
and quarters, quarters on ships and other living ac-
commodations provided by one’s employer for a
• There must be evidence of actual physical definite period do not qualify as permanent
presence and actual abode (transient, tem- dwelling places; nor do college dormitories, fra-
porary or permanent) in the new location. ternity houses, sorority houses and off campus
If all three requirements are met, the date of the rentals by enrolled college students qualify as a
change is the first day of actual physical pres- permanent abode.
ence in the new location.
PA Resident
If an individual left their domicile to seek new Residency in Pennsylvania, for tax purposes, may
employment and intended to remain in the other be established in two ways:
location only if they were to find employment,
there is no change in domicile. Domicile in Pennsylvania: If an individual
is domiciled in Pennsylvania, he or she is
Once established in a locality or state, the domi-
considered a resident unless he or she
cile continues there until a new one is established.
meets all three of the following conditions:
It is not dependent upon continuous physical
presence. It is not abandoned by absence or • He or she did not maintain a permanent
even by presence in a former domicile, no matter abode in Pennsylvania for himself/herself
how long continued, if, in leaving and during the or his/her family;
absence, there is not firm, sincere, unconditional
• He or she did maintain a permanent
intention of remaining in the other jurisdiction for
abode outside Pennsylvania throughout
an indefinite and uncertain period.
the entire taxable year; and
For example, temporary absence from a new
• He or she did not spend in the aggregate
domicile in a former domicile for the purpose of
more than 30 days of the taxable year in
transacting business or for the sake of health,
Pennsylvania.
pleasure, or education, with a definite intention
of returning to the new domicile does not affect a Day Test: If a taxpayer maintains a perma-
person's domiciliary status. nent abode in Pennsylvania and spends a
A retired couple with two permanent homes, one total of 183 days or more of the taxable
inside Pennsylvania and one outside of Pennsyl- year in Pennsylvania, even though he or she
vania, can only have one state of domicile. The is not domiciled in the commonwealth, he or
state of domicile does not change until there is a she is considered a resident.
move to another state or country with the sin-
cere intention of making a "new" permanent Nonresident
home there and abandoning the previous domi- An individual is a nonresident for PA tax purposes
cile. The determination as to their state of if he/she is not a resident as defined above.
domicile should be made based on the factors After determining the location with the greatest
above. connection, it is necessary to see if a new domi-
A permanent abode is a house, apartment, cile outside of Pennsylvania has been
dwelling place or other residence an individual established.
Page 7PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Part-Year Resident If a PA resident service member is serving out-
A part-year resident is an individual who moved side of the Commonwealth of Pennsylvania and
to or from Pennsylvania during the taxable year his/her spouse realizes income in that other
with the intent of permanently changing domi- state, the spouse’s income is only taxable to PA
ciles. A person moving into Pennsylvania with (if the spouse maintains his/her PA residency). A
the intent of residing here permanently becomes resident credit will not be allowed for taxes paid
a resident on the first day he or she lives here to the other state. If the spouse receives income
regardless of reason or housing arrangement subject to employer withholding, he/she should
(such as employer provided housing, living with request a refund of that withholding from the
relatives, etc). other state.
Persons in the Military or Foreign Service If the service member is a nonresident serving
Unless there is an intention to change domiciles, inside the Commonwealth of Pennsylvania and
a person generally does not acquire a new domi- his/her spouse realizes income in PA, that in-
cile by entering the armed forces or lose the come is not taxable to PA as long as the spouse
domicile that the person had upon entering. A is considered a resident of another state. If the
person on military duty is not prohibited, how- spouse receives income subject to employer
ever, from acquiring a new domicile where his or withholding, he/she should request a refund of
her family is stationed. A person in the military that withholding. This may be done by filing a PA
and foreign service, or living in a foreign country personal income tax return and only reporting
for other than a temporary or transitory purpose the PA tax that was withheld (shown in Box 17 of
while a lawful permanent resident or citizen of the W-2). They must also provide a copy of their
the country, is treated as a domiciliary of that spouse’s military orders showing they were or-
country if the person: dered to service in PA, and a copy of their
resident state’s driver’s license.
• Is not an employee of the U.S., its agencies
or instrumentalities (including members of College Student
the armed forces and career appointees in Generally, a child has the same domicile as his or
the U.S. foreign service); and her parents or legal guardian. Becoming a legal
adult does not by itself separate a child from the
• Does not hold an appointive office in the ex-
ecutive branch of the government of the parent or legal guardian’s domicile. The child
U.S. merely acquires the power to establish a sepa-
rate or new domicile.
However, special rules may apply if the employee
or officer maintains a permanent place of abode Minor Child
there. An individual who is domiciled in Pennsyl- The domicile of a minor child is the same as the
vania is considered a nonresident if meeting all domicile of the child's parents. If the parents are
three of the requirements listed in the prior sec- separated, the child's domicile is the domicile of
tions on Pennsylvania residency and domicile. the parent with whom the child lives or that of
the child's legal guardian.
For tax years 2008 and prior, the spouse of a
service member serving in Pennsylvania was Dual Residency
taxed on any PA-sourced income that he/she A dual resident is an individual who is considered
may have earned. Under the Military Spouses a resident of two states for taxing purposes. If an
Residency Relief Act, income earned by the individual is a dual resident, he or she should re-
spouse of a service member shall not be consid- port the income that was earned during the
ered taxable income in the state that the service taxable year from sources both within and out-
member is stationed if that state is not consid- side of PA on both states tax returns. This
ered the spouses resident or domiciliary state. individual would then request a resident credit
Page 8PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
for income sourced to the state of statutory resi- • Compensation
dence in the state that he/she is domiciled in. Pennsylvania taxes nonresidents on com-
pensation for services performed in
NOTE: Special rules apply for PA residents work-
Pennsylvania, unless the taxpayer is a resi-
ing in states with reciprocal tax agreements with
dent of one of the reciprocal agreement
Pennsylvania: Indiana, Maryland, New Jersey,
states.
Ohio, Virginia or West Virginia. If a taxpayer is a
PA resident and also a tax resident for income tax • Net Income or Loss from the Operation
purposes of a reciprocal state, he/she may claim of a Business, Profession or Farm
the PA resident credit. The reciprocal agreement Pennsylvania taxes nonresident owners on
with these states is not applicable since the tax- all allocated, or apportioned, income from
payer is subject to tax as a resident in both the operation of a business entity in Penn-
Pennsylvania and the other state. The taxpayer sylvania. If an individual derives income
must file PA Schedule G-L for each state for which from sources inside and outside Pennsylva-
a resident credit is being requested and enclose a nia, separate accounts and records that
copy of the resident tax return filed with the other clearly reflect the PA business activity
state. This documentation will serve as proof that should be maintained. Otherwise, that indi-
the other state taxed him/her as a resident in that vidual must file PA Schedule NRH to
state and did not allow a credit for tax paid to PA. apportion the income.
For example, Dan is a domiciliary of Pennsylvania • Net Income or Loss from the Sale,
for the entire taxable year. He leased an apart- Exchange or Disposition of Property
ment in Maryland and worked 230 days in Pennsylvania taxes nonresidents on the gain
Maryland. Maryland considers Dan to be a Mary- from the sale of any real or tangible per-
land resident for income tax purposes. He earned sonal property located in Pennsylvania.
$10,000 in compensation for working in Mary- Pennsylvania does not tax nonresidents on
land. Dan must report his compensation as the gain from the disposition of intangible
PA-taxable income. Because he is a PA domicil- property nor allow the use of any loss from
iary, Dan may claim the PA resident credit for such a disposition to reduce other PA tax-
taxes paid to Maryland as long as he does not able gains. If a taxpayer sells property in his
claim a credit on his Maryland return for taxes or her former state before moving into
paid to PA. Pennsylvania, no gain or loss on that sale is
reportable to PA. However, if the taxpayer
How Residents are Taxed moved from Pennsylvania to another state
A PA resident is taxed on all taxable income re- and then sold property or any other tangible
ceived from sources inside and outside property in Pennsylvania, the gain must be
Pennsylvania. reported.
A PA resident may claim a resident credit for any • Income or Loss from Rents, Royalties,
tax imposed by and paid to other states based Patents and Copyrights
upon income which is not from Pennsylvania Pennsylvania taxes nonresidents on the net
sources and is subject to PA personal income tax. income from the use of property located or
The PA Schedule G-L must be completed to claim used in Pennsylvania.
this credit.
• Interest on Installment Sales
How Nonresidents are Taxed Pennsylvania taxes nonresidents on interest
Nonresidents are taxed on the following types of from Installment Sales as PA Schedule D-1
income derived from sources within Pennsylvania: Income.
Page 9PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
• Interest on Business Accounts NOTE: Nonresidents are not subject to PA tax on
Pennsylvania taxes nonresidents on interest ordinary interest and dividends from investments
on business accounts such as accounts re- or gains realized on the sale, exchange or dispo-
ceivable or a business checking account that sition of intangible property. Losses on the sale
is included in business income. of intangible property may not be used to offset
any taxable gain.
• Mortgage or Security Interests
Pennsylvania taxes nonresidents on mort- Apportioning PA Taxable Income
gage or security interests on installment A nonresident employee who performs services
sales that are reported as such utilizing PA inside and outside Pennsylvania is subject to PA
Schedule D-1. If PA Schedule D-1 is not personal income tax on the net compensation for
used and the entire gain is reported in the services performed within Pennsylvania. Usually
year sold, interest on an installment sale is the employer will allocate and separately report
not subject to tax. on federal Form W-2, Wage and Tax Statement,
the PA gross compensation.
• Intangible Personal Property
Pennsylvania taxes nonresidents on intangi- If the employer did not report PA gross compen-
ble personal property employed in a trade, sation on the W-2; or reported an incorrect
profession, occupation or business carried amount as PA gross compensation on the W-2;
on in Pennsylvania. The nonresident tax- or the taxpayer incurred unreimbursed employee
payer does not report such a sale on a PA business expenses in earning or receiving PA
Schedule D, but includes the gain (loss) in gross compensation, PA Schedule NRH, Compen-
determining net income or loss from the op- sation Apportionment, must be completed.
eration of a business, profession or farm. A separate schedule must be completed for each
• Estate or Trust Income employer for whom services within and outside
Pennsylvania taxes nonresident beneficiaries Pennsylvania were performed.
on income from an estate or trust only to If a nonresident taxpayer has income from a
the extent the PA-source income to the ben- business, profession or farm derived from sources
eficiaries is taxable to nonresidents. both within and outside Pennsylvania and has
• Gambling and Lottery Winnings records and accounts that accurately reflect the
Pennsylvania taxes nonresidents on gam- income from Pennsylvania, he or she should re-
bling and Lottery winnings by reason of a port as PA taxable income those amounts based
on these accounts and records. If the accounts
wager placed in this commonwealth, the
and records do not clearly reflect the PA-source
conduct of a game of chance or other gam-
income, the section titled Net Profits from Busi-
bling activity located in this commonwealth
ness or Farm Apportionment Formula on PA
or the redemption of a Lottery prize from a
Schedule NRH must be completed.
Lottery conducted in this commonwealth,
other than prizes of the Pennsylvania Lot- EXCEPTION: Residents of a Reciprocal State
tery. Nonresidents are not subject to PA Residents of Indiana, Maryland, New Jersey, Ohio,
taxes on gambling or Lottery winnings, by Virginia or West Virginia are not subject to tax on
reason of a wager placed outside this com- compensation for services performed inside Penn-
monwealth, the conduct of a game of sylvania on which federal withholding is required
chance or other gambling activity is located such as wages and salaries. However, if an Ohio
outside this commonwealth or the redemp- resident holds 20 percent or more share interest
tion of a Lottery prize from a Lottery in a subchapter S corporation and receives wages
conducted outside this commonwealth. or salary from that corporation, he or she will be
Page 10PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
subject to PA income tax on the wages or salary share of income, whether it was distributed or
from said subchapter S corporation. This excep- not. The income or loss from the partnership or
tion does not apply to income reported as subchapter S corporation must be reported in the
compensation such as executor fees on which same class from which the partnership or sub-
there is no federal withholding requirement, nor chapter S corporation received the income. A line
does it apply to any other class of income. is provided on PA Schedules A, B, D, E and J
specifically for partnership or subchapter S cor-
Residents of these states must file Form REV- poration income. Ordinary business income, farm
420, Employee's Statement of Nonresidence in income, dividends, interest and rental income
Pennsylvania, with their PA employers to be ex- should be added to any similar class of income and
empt from having PA tax withheld. In this included on the appropriate line of Form PA-40.
situation, the PA employer should withhold and Composite returns can be filed on behalf of the
remit tax to the employee’s state of residency. nonresident shareholders or partners. Some-
A resident of one of these reciprocal states times an individual partner or shareholder pays
whose employer withheld PA income tax must file an expense of a partnership or subchapter S cor-
Form PA-40 reflecting no compensation on Line poration, such as interest expense. In this case,
1a and the PA tax withheld on Line 13. In addi- the individual may deduct the expense from
tion, a signed copy of the other state’s resident his/her income only if the partnership agreement
income tax return (without any supporting docu- or articles of incorporation require that the mem-
ments) along with a copy of the actual W-2 and a ber or shareholder pay the business or rental
statement that the taxpayer was a resident of a expenses out of his or her personal assets. These
reciprocal state must be submitted. expenses must be noted on a separate attach-
ment and do not relate to any existing schedule.
A PA resident working in one of these reciprocal
states should request to his or her employer that Do not add health care benefits to the PA wages
they withhold PA income tax. If the employer of shareholder-employees of PA S corporations
withholds the tax for the reciprocal state, the as long as the plan is non-discriminatory, even
taxpayer must file for a refund from that state. If though such benefits must be added to federal
wages.
the PA resident expects to receive income of
$8,000 or more and the employer does not with- Each partner in a business, profession or farm
hold PA income tax, the individual is required to must attach to Form PA-40 a copy of the PA RK-1
make quarterly estimated payments. Failure to for residents or PA NRK-1 for nonresidents. A
make these payments will result in an assess- separate PA RK-1/PA NRK-1 must be submitted
ment of estimated underpayment penalty. for each partnership in which the taxpayer is a
member. If a partnership fails to provide such
How Part-Year Residents are Taxed
forms, the taxpayer must attach a copy of the
A part-year resident is subject to PA personal in-
federal Schedule K-1 and classify the income or
come tax as a resident for the portion of the year
loss according to PA instructions for that class.
they resided in Pennsylvania. The same taxpayer
is subject to PA personal income tax as a nonresi- Each shareholder in a PA S corporation must at-
dent for the remaining portion of the year if he or tach to Form PA-40 a copy of PA-20S/PA-65 RK-1
she continues to work in Pennsylvania unless he for residents or PA-20S/PA-65 NRK-1 for nonresi-
or she becomes a resident of a reciprocal state. dents. A separate PA-20S/PA-65 RK-1/NRK-1
must be submitted for each PA S corporation in
Members of Partnerships and Subchapter
which the taxpayer is a shareholder.
S Corporations
A member of a partnership or a shareholder in a A PA return must be filed even if the PA-20S/PA-65
subchapter S corporation must report his or her RK-1 or PA-20S/PA-65 NRK-1 shows a loss.
Page 11PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Members of the Armed Forces and Nonmili- a PA personal income tax return and include their
tary Persons on Federal Active Service military W-2 Forms and copies of their orders as
For PA personal income tax purposes, armed evidence of active duty military pay earned out-
forces include the Army, Navy, Air Force, Marine side Pennsylvania. If PA tax was withheld for
Corps and Coast Guard. They do not include the active duty service outside the commonwealth,
Merchant Marines, Public Health Service or Na- the taxpayer will be given a full refund of their
tional Oceanic and Atmospheric Administration, withholding. If a portion of the military service is
except if/when any of these are incorporated into active and a portion inactive, the taxpayer should
the armed forces in times of war or emergency. provide documentation that gives a detailed
Further, civilian employees for the Department of breakdown of active duty pay while outside of the
Defense, such as teachers and subcontractor em- commonwealth, combat zone pay (if applicable)
ployees, are not considered members of the and all other military compensation. The sum of
armed forces. these items must equal the reportable wages
shown in Box 16 of the individual's military W-2
Resident Members of the Armed Forces
Form. In addition, the documentation must state
Compensation earned by residents of Pennsylva-
the dates during which each component of com-
nia in the armed forces serving on federal active
pensation was received and must include a copy
duty outside Pennsylvania is not taxable as com-
of the individual's military orders ordering him or
pensation in Pennsylvania. This includes housing
her to a combat zone and/or placing him or her
allowances and a reserve unit's two-week summer
training. Military pay -- including housing al- on active duty as a member of the U.S. armed
lowances received by a PA resident while not on forces at a military facility outside the common-
federal active duty or not on federal active duty wealth during the year. A W-2 Form that identifies
training -- is fully taxable regardless of where the income as active duty pay is not sufficient be-
military service is performed. For example, all in- cause it does not explain where the active duty
come received for inactive duty while attending occurred. The taxpayer may reduce the amount of
weekend drills is taxable. Also, compensation reportable military compensation on Line 1a of his
earned by a PA resident for military service on ac- or her Form PA-40 by the sum of the compensa-
tive duty in Pennsylvania is subject to personal tion received as combat zone pay and/or active
income tax. Under Act 182 of 2006, PA residents duty pay received as a member of the U.S. armed
called to active military duty for disaster relief of forces outside the commonwealth. If authority for
emergency management assistance inside or out- active duty is based upon a PA statute, such as 51
side of Pennsylvania are exempt from taxation on P.S. §§ 508 or 3102, state active duty will be pre-
the compensation paid to them by either the U.S. sumed and the income received is taxable.
government or the commonwealth. The taxpayer Nonresident Members of the Armed Forces
has the burden of establishing that income re- Nonresident military personnel who are serving
ceived for military service outside the on federal active duty in Pennsylvania in compli-
commonwealth was earned while on federal active ance with military or naval orders are exempt
duty. The Department of Revenue will accept as from PA personal income tax on their military pay
proof the authority section of the military orders and housing allowances because of federal law.
directing the taxpayer to federal active duty out- They and their family members are, however,
side the commonwealth. If authority for the active subject to tax on any other PA-source income
duty is based upon a federal statute, such as 32 normally taxable to nonresidents. This includes
U.S.C. §§ 316, 502, 503, 504 or 505, federal ac-
non-active duty pay such as weekend drills.
tive duty will be presumed and the income is
excludable from taxable compensation. To exclude National Guardsmen and U.S. Reservists
income from serving on active duty in the military National Guardsmen and U.S. Reservists ordered
outside of the commonwealth, residents must file to active duty for training at a two-week summer
Page 12PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
encampment pursuant to Title 10 or Title 73 of NOTE: A PA resident in the U.S. foreign service
the U.S. Code are presumed to be on federal ac- is not on active duty for PA purposes, and his or
tive duty. Military pay received for such service is her compensation is subject to tax.
excludable from taxable compensation provided
Members of the Merchant Marines,
the active duty training is performed outside the
Employees of the U.S. Public Health Service
commonwealth. In addition, scholarships or re-
and National Oceanic and Atmospheric
muneration received by cadets and midshipmen
Administration
at U.S. military academies is not taxable because
PA residents serving in the Merchant Marines, the
none of these academies are within Pennsylvania
U.S. Public Health Service, the National Oceanic
and such individuals are on federal active duty.
and Atmospheric Administration or contractors
When a civilian employer either makes up the working in foreign countries, are subject to tax
difference in a National Guard member's or on compensation whether earned within or out-
U.S. Reservist's regular wages or continues full side PA unless the U.S. President declares them
pay for the Guardsman or Reservist during the by Executive Order to be military service during
term of active duty, the differential or full pay times of war or national emergency. Also in-
continuation is considered taxable compensa- cluded in this category are those individuals who
tion. The Heroes Earnings Assistance and Relief are employed by the Department of Defense as
Tax Act (HEART) of 2008 is an exception to school teachers. They are not covered under the
this. If the differential pay is earned while in a Soldiers’ and Sailors’ Civil Relief Act as they are
combat zone or hazardous duty zone, the in- civilian employees of the Department of Defense
come is not taxable. and not members of the armed forces.
A full-time member of the PA National Guard is Military Spouses Residency Relief Act
taxed on all of the following components of mili- The Military Spouses Residency Relief Act
tary compensation: (MSRRA) affects the treatment of residency and
income for spouses of military personnel for state
• Inactive state duty pay received for services
and local tax purposes for tax year 2009 and
both within and outside the commonwealth;
after.
• Inactive federal duty pay received for serv-
The MSRRA permits a service member’s nonmili-
ices as a member of the U.S. armed forces
tary spouse to retain status as an out-of-state
both within and outside the commonwealth;
resident and source any nonmilitary compensa-
• Active federal duty pay received for services tion to the state of residence under the following
within the commonwealth, unless called to circumstances:
active military duty for disaster relief of
• The service member must be in Pennsylva-
emergency management assistance; and
nia in compliance with military orders.
• Active state duty pay received for services
• The service member’s spouse must be in
both within and outside the commonwealth,
Pennsylvania solely to be with his/her
unless called to active military duty for dis-
spouse.
aster relief of emergency management
assistance. • The service member’s spouse must have
the same domicile (legal residence) as the
Nonmilitary Persons on Federal
service member.
Active Service
A PA resident on federal active duty outside Conversely, if a Pennsylvania resident service
Pennsylvania is subject to tax on his or her com- member is serving outside Pennsylvania and
pensation. his/her nonmilitary spouse earns income in that
Page 13PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
other state – and the spouse claims relief under • From intangible personal property employed
the MSRRA – the spouse’s income is only taxable in a trade, profession, occupation or busi-
to Pennsylvania. ness carried on in Pennsylvania.
I. Domicile/Legal Residence A qualifying nonmilitary spouse must have
A person generally does not acquire a new domi- moved to Pennsylvania from another state, be in
cile or legal residence by entering the armed Pennsylvania solely to accompany his/her active
forces. Until a service member intentionally duty service member spouse stationed in Penn-
changes his/her domicile, a service member’s sylvania in accordance with military orders and
domicile is the state he/she called home when have the same state of residency as the service
he/she entered the military. This is the state member.
where the service member files income tax re-
turns (if that state has an income tax) and where Taxpayers claiming relief under MSRRA and a re-
the service member intends to return upon leav- fund of Pennsylvania income tax withheld must
ing the military. provide the following, in addition to a standard
personal income tax return and appropriate
Under MSRRA, a service member’s spouse nei- schedules:
ther loses nor acquires domicile or residency by
being absent or present in any U.S. tax jurisdic- • A copy of the service member’s current mili-
tion solely to be with a service member tary orders showing the order to serve in
complying with military orders. Pennsylvania;
II. Nonmilitary Spouses and Pennsylvania • A copy of the service member’s military
Income Taxation identification card;
For tax years beginning on or after Jan. 1, 2009, • A copy of the nonmilitary spouse’s driver’s
compensation or other income earned in Penn- license from the resident state;
sylvania for services rendered by a service
member’s nonmilitary spouse is not taxable by • A copy of the nonmilitary spouse’s W-2, is-
Pennsylvania, when: sued by the employer;
• The nonmilitary spouse and service member • A copy of the nonmilitary spouse’s tax re-
have the same out-of-state domicile; turn filed for the resident state;
• The spouse is in Pennsylvania solely to be • A copy of the nonmilitary spouse’s military
with the service member (see note below); ID card, identifying the card-holder as the
and spouse; and
• The service member is in Pennsylvania com- • A copy of the service member’s federal
plying with military orders. Department of Defense Form 2058, State of
Legal Residence Certificate (see note below).
However, a nonmilitary spouse’s other income
from Pennsylvania sources is subject to Pennsyl- Taxpayers filing electronically should fax these
vania personal income tax to the extent it is documents within two to three days of e-filing to
earned, received or acquired from sources within 717-772-4193, noting the taxpayer’s name and
the commonwealth as follows: Social Security number on each document. Those
• By reason of ownership or disposition of an filing paper returns should write “MSRRA” across
interest in real or tangible personal property the top of Page 1 of the PA-40.
in Pennsylvania; Spouses of service members who meet these re-
• In connection with a trade or business in quirements and who either had Pennsylvania
Pennsylvania; and/or income tax withheld from wages or made other
Page 14PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
Pennsylvania income tax payments for the tax in a combat zone for purposes of this exclusion.
year may receive refunds of such taxes paid by The $500 combat zone pay exclusion limit for
filing a Pennsylvania personal income tax return, military officers contained in the Internal Rev-
PA-40. The nonmilitary spouse should report zero enue Code is not in the state taxing statute.
wages on Line 1 of his/her Pennsylvania personal Refer to www.irs.gov for a listing of current
income tax return, and include the total Pennsyl- combat zones.
vania taxes withheld (Box 17 of Form W-2) on
PA residents serving in combat zones or qualified
Line 14.
hazardous duty areas designated by the U.S.
NOTE: A nonmilitary spouse working in Pennsyl- President are given the same additional time to
vania but living in a neighboring state whose file their PA personal income tax returns and
spouse is stationed in the neighboring state, may make payments as allowed for federal income
also be eligible if the service person is required tax purposes. The deadline is automatically ex-
to be there per military orders and all other re- tended to 180 days from the last day of service
quirements are met for state of domicile and or the last day of continuous hospitalization for
reason for being in the location with the military injuries incurred in one of these areas. Print
service person. “Combat Zone” at the top of the return and mail
it along with the military orders to:
III. Discontinuation of Pennsylvania Income
Tax Withholding REGARDING COMBAT ZONE
The nonmilitary spouse of a service member PA DEPARTMENT OF REVENUE
whose wages/salary is exempt from Pennsylvania BUREAU OF INDIVIDUAL TAXES
personal income tax under MSRRA should file a PO BOX 280600
Pennsylvania Form REV-419, Employee’s Non- HARRISBURG PA 17128-0600
withholding Application Certificate, with his/her
Pennsylvania employer, claiming exemption from
Pennsylvania income tax withholding. If the return is filed electronically, a copy of the
military orders must still be submitted. Print
IV. Taxation of Service Members’ Military “Combat Zone” at the top of the orders and fax
and Nonmilitary Pay them to 717-772-4193 or mail them to:
MSRRA does not exempt from Pennsylvania per-
sonal income tax nonmilitary income earned by a REGARDING COMBAT ZONE
service member. However, a nonresident service PA DEPARTMENT OF REVENUE
member's active duty military income continues ELECTRONIC FILING SECTION
to be exempt from Pennsylvania personal income PO BOX 280507
tax. HARRISBURG PA 17128-0507
Combat Zones Retirement Income
Combat zone pay received by a U.S. service Retired or retainer pay of a member or former
member is not taxable for PA personal income member of a uniform service calculated under
tax purposes (see Title 72 P.S. § 7301(d)(vii)), Chapter 71 of Title 10, U.S. Code (as amended) is
nor is it considered poverty income for purposes not taxable for PA personal income tax purposes.
of the special tax forgiveness provisions (see
Taxable Income Classes
Title 72 P.S. § 7301 (o.2)(vii)).
PA personal income tax is levied at a flat rate on
For PA personal income tax purposes, combat eight separate classes of income:
zones are areas designated by the U.S. President.
• Compensation
PA National Guard members and U.S. Reservists
are U.S. service members while they are serving • Interest
Page 15PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
• Dividends and Capital Gains Distributions tenants in common). However, for any other
property, such as bank accounts, each individual
• Net Income or Loss from the Operation of a
person is considered an equal owner. In the case
Business, Profession or Farm
of ownership by a taxpayer and spouse and a
• Net Gains or Loss from Sale, Exchange or child appearing as owners on a bank account,
Disposition of Property each would be liable for one-third of the
interest earned.
• Net Income or Loss from Rents, Royalties,
Patents or Copyrights INSTRUCTIONS FOR PREPARING
FORM PA-40
• Estate or Trust Income
If filling out a paper Form PA-40, be sure to fill in
• Gambling and Lottery Winnings all requested information by typing or printing
Gains and Losses legibly.
A gain in one class of taxable income cannot be Only taxpayers who request a PA-40 book will
offset against a loss in any other class of taxable have a book mailed to them.
income, nor may gains or losses be carried back
or forward to another tax year. If a taxpayer has The Department of Revenue uses electronic data
a net loss in any income class, enter the amount imaging to enter tax returns into its computer
of the loss on the appropriate line on Form PA- system. Follow these instructions for entering So-
40; use the actual dollar figure and fill in the oval cial Security numbers, names, addresses and
indicating loss for that category. A completed amounts to help ensure personal income tax re-
schedule must be submitted even if the taxpayer turns are processed accurately and quickly.
incurred a loss in a class of income. A spouse
• Print in black ink.
may only offset losses against his or her own
profit/gain/income. A spouse may not offset a • Use UPPER CASE (CAPITAL) letters.
loss against the other spouse's profit or gain.
However, if spouse A and spouse B jointly own a • Print one number or letter in each box.
business which incurred a loss, they may each • Leave a blank box between whole words.
take their share of the loss against their other
business gains. • Print the taxpayer’s name – last, first, mid-
dle initial and suffix on the correct lines.
Joint Income
If two or more persons, such as a taxpayer and • Print the taxpayer’s correct address.
spouse, own income-producing property -- in- • Print the taxpayer’s apartment number, suite
cluding real estate, savings accounts or stock -- number, room number, rural route, floor, etc
as joint tenants, tenants by the entirety or ten- on the first line.
ants in common, each person must report his/her
proportional share of income from the property, • Print the taxpayer’s PO Box on the second
even if only one Social Security number and line.
name appears on the statement. Generally, such • Fill in all appropriate ovals completely.
income is divided equally between the owners.
• Show money amounts in whole dollars.
In the case where a taxpayer and spouse and a Eliminate any amount less than $0.50 and
third party own real estate, such as parents and increase any amount between $0.50 and
a son or daughter, the taxpayer and spouse are $0.99 to the next highest dollar.
jointly liable for one-half of any gain on the sale,
and the child is liable for the other half (unless • Prepare a copy for the taxpayer’s records
the deed stipulates that the property is held as before submitting.
Page 16PERSONAL INDIVIDUAL TAX PREPARATION GUIDE www.revenue.pa.gov
If the name, address or city begins with Mc, Van, joint return with a deceased taxpayer, the surviv-
O’, etc, do not enter a space or a punctuation ing spouse enters his/her name first. If both
mark. taxpayer and spouse are deceased and filing a
joint return, enter the name of the primary tax-
There are two lines to enter the address. Use the
payer from the previous tax year first.
postal format of apartment number, suite, room
number, rural route, box number, floor, etc. on Address
the first line and the street address on the sec- The address must be the current mailing address
ond line. If there is only a street address, it may of the taxpayer. If using a military address, the
be entered on either line. APO or FPO address should be used.
There are ovals present for “Extension”, If filing for a taxpayer who is using an address
“Amended Return”, “Residency Status”, “Filing that is out of the country, the format established
Status”, “Farmers” and losses in certain income by the U.S. Postal Service must be followed. The
categories. If any of these apply, the oval(s) proper format is to enter the name(s) in the
must be filled in completely. Do not use an X or a spaces provided. The house number and street,
check mark. Also note that Form PA-40 is two- apartment number and street or postal delivery
sided. Do not forget to complete both sides. location is to be entered in the spaces for the
first line of the address. The city, state/province
Social Security Number
and foreign postal code (the equivalent of ZIP
The taxpayer's correct Social Security number
code) should be entered on the second line of
(SSN) must be verified and matched against the
the address. The name of the country should be
state copy of the Wage and Tax Statement, the
entered in the spaces provided for City or Post
W-2 Form. If a W-2 Form has an incorrect SSN,
Office on the Form PA-40. Do not enter any infor-
the taxpayer must obtain a corrected W-2 Form
mation in the state or ZIP Code spaces.
(Form W-2C) from his or her employer.
Daytime Telephone Number
Returns completed for married taxpayers, even if
Provide a telephone number where the taxpayer
filing Married, Filing Separately, must include the
can be reached during the day.
SSN of both spouses.
School Code and School District Name
NOTE: By law (42 U.S.C. Sec. 405(c)(2)(C)(i);
The five-digit code and name of the school dis-
61 Pa. Code Sec. 117.16) the PA Department of
trict where the taxpayer lived on Dec. 31 of the
Revenue has the authority to use the SSN to ad-
tax year must be entered. If the taxpayer was a
minister PA tax laws to identify taxpayers and
nonresident of Pennsylvania on the last day of
their incomes. PA law does prohibit the common-
the tax year, enter 99999 in the school code
wealth from disclosing information individuals
area. If the taxpayer died during the tax year,
provide on income tax returns, including SSNs,
enter the information applicable at the time of
except for official purposes.
death. This information must be entered. Using
Name an incorrect school code may affect the school
The complete name of the taxpayer must be en- district’s funding. Failure to enter this information
tered. In completing a joint return, the spouse's may delay the processing of the return and delay
first name must also be included. If a taxpayer the issuance of any refund.
and spouse use different last names, the person
Some examples of what to consider when enter-
entering his or her name as the spouse must
ing the school code on a return are as follows:
enter the last name he or she is using in the
blocks designated as “Spouse’s Last Name”. Do • Any military personnel should use the
not enter anything in these blocks if the taxpayer school code for the domicile of his/her
and spouse use the same last name. If filing a spouse (if the spouse lives in Pennsylvania),
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