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Individual Earned Income Tax Final Return |
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Frequently Asked Questions |
What is the “Earned Income Tax?”
Earned Income is defined as compensation as determined under section 303 of the act of March 4, 1971 (P.L. 6, No.2), known as the Tax Reform Code of 1971, and regulations in 61 PA. Code Pt. I subpt. B. Art. V (relating to personal income tax). Employee business expenses are allowable deductions as determined under Article III of the Tax Reform Code of 1971. The amount of any housing allowance provided to a member of the clergy shall not be taxable as earned income. Net profits are defined as the net income from the operation of a business, profession, or Tax Reform Code of 1971, and regulations in 61 PA. Code Pt. I subpt. B. Art. V (relating to personal income tax). The term does not include income which is not paid for services provided and which is in the nature of earnings from an investment.
For taxpayers engaged in the business, profession or activity of farming, the term shall not include:
(1) any interest earnings generated from any monetary accounts or investment instruments of the farming business;
(2) any gain on the sale of farm machinery;
(3) any gain on the sale of livestock held twelve months or more for draft, breeding or dairy purposes; and
(4) any gain on the sale of other capital assets of the farm.
What income is specifically exempt from the earned income tax?
Income such as dividends, interest, income from trusts, bonds, insurance proceeds and stocks (Schedule D) is exempt. Also exempt are payments for disability benefits, old age benefits, retirement pay, pensions, social security payments, public assistance or unemployment compensation payments made by any governmental agency, any wages or compensation paid by the United States for active service in the armed forces of the United States including bonuses or additional compensation for such service, supplemental unemployment compensation from employers or unions.
If the tax is withheld in another PA community where I work, do I also pay the PA District in which I live?
No. Generally the tax withheld by your employer will be remitted to your resident jurisdiction. However, you are still required to file an annual tax return with your resident taxing jurisdiction.
If I am subject to the Philadelphia wage tax, must I pay this tax?
No, but you are still required to file a final return, If employed in Philadelphia, you may use the Philadelphia Wage Tax as a credit against your liability to your resident jurisdiction, but the credit may not exceed your resident jurisdiction tax rate. No refund or credit can be taken for any withholding greater than the tax rate for your resident taxing jurisdiction. Philadelphia wage tax credits may not be applied to your spouse’s liability.
Whose Earned Income Tax will be withheld by their employer?
Any individual working in a jurisdiction that levies the tax on residents and non-residents will have the tax withheld by their employer. If you work in a jurisdiction that does NOT tax non-residents, your employer is only required to withhold for those individuals who live in that jurisdiction. Occasionally, employers located in a jurisdiction where the tax is not levied will volunteer to withhold if your resident jurisdiction levies the tax.
Must all taxpayers file a final return?
Yes. A local earned income return must be filed annually by April 15, (unless the 15th falls on a Saturday or Sunday then the due date becomes the next business day) for the preceding calendar year. If you had no earned income, state the reason why on your final return.
What should I do if I lived in a jurisdiction/municipality for only part of the year?
You are required to file a return for any period of time you were/are a resident to a municipality for which Berkheimer is the tax administrator. You are required to file for the period of time you lived in that municipality and prorate your income, expense, withholding, etc. Also you MUST complete the change of address section on the top front of your final return. Below is a formula you can use for prorating:
***Total years income / 12 months or 365 days X length of time living in Jurisdiction = Income taxable to that jurisdiction (same formula can be used for withheld and expenses)****
What documentation do I need to submit with the final return?
You should submit documentation which sufficiently supports the amount reported on each line of your return, including but not limited to, W-2s, State business reporting schedules, expense schedules, etc. Refer to each line of the enclosed tax return and instructions for the specific form or schedule required. Photocopies are acceptable.
Where is my Earned Income reported on my W2?
Your local earned income should be reported in the box labeled “State Wages, tips, Etc.” (Please note: If the amount reported in the State box is substantially different than the amount reported as Medicare Wages, you should submit an explanation for this difference.) If this box is not completed, then you should refer to the box labeled “Medicare Wages.” Please note if you are employed out of state you should be referring to the box labeled "Medicare Wages." Your local earned income tax withheld should be reported in the box labeled "Local Income Tax."
What address do I send my return to?
If you or your spouse are expecting a refund/credit, please mail to:
Refund/Credit
HAB-EIT
PO Box 903
Bangor, PA 18013
If you are making a payment, please mail to: If you or your spouse are expecting a refund/credit and making a payment please use the refund/credit address.
Payment
HAB-EIT
PO Box 905
Bangor, PA 18013
If you are not expecting a refund or making a payment, please mail to:
No Payment/No Refund
HAB-EIT
PO Box 907
Bangor, PA 18013
Who should I make my check payable to?
For the local earned income tax all checks should be made payable to HAB-EIT.
How can I find out what Municipality my address is located in?
If you need to locate what jurisdiction you are residing in please go to:
http://munstatspa.dced.state.pa.us/FindLocalTax.aspx?T=1
** Please note this is not a Berkheimer website and we are not responsible for any such third party content that may be accessed via this link.**
Where can I locate the tax rate for a specific jurisdiction?
** Please note this is not a Berkheimer website and we are not responsible for any such third party content that may be accessed via this link.**
Can I file an extension for the Local Earned Income Tax?
If you file a Federal or State Application for Extension, send us a copy along with estimated payment by April 15th .
How can I file an amended return?
My employer is located in an area with a distressed tax. Am I entitled to a refund?
Some taxing jurisdictions have a distressed tax (Act 205 or Act 47) that is imposed on both residents of that jurisdiction and non-residents employed within that jurisdiction. If the additional earned income tax imposed exceeds the earned income tax rate due your resident municipality/school district under Act 511, that portion of the tax is not refundable; rather, it remains within the township or borough which has enacted the distressed tax.