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Pennsylvania Free Printable Personal Individual Tax Preparation Guide - For Personal Income Tax Returns PA-40 (DFO-02) for 2024 Pennsylvania Personal Individual Tax Preparation Guide - For Form PA-40

The tax filing deadline of April 16th is here! - eFile your return online here , or request a six-month extension here .

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Personal Individual Tax Preparation Guide - For Form PA-40
Personal Individual Tax Preparation Guide - For Personal Income Tax Returns PA-40 (DFO-02)

PERSONAL INCOME TAX PREPARATION GUIDE FOR PERSONAL INCOME TAX RETURNS PA-40 DFO-02 (EX) 12-22 www.revenue.pa.gov PERSONAL INCOME TAX PREPARATION GUIDE WHAT’S NEW Electronic Filing Option: Taxpayers can utilize our online filing system to file their Pennsylvania personal income tax returns for free. Visit mypath.pa.gov to access the new system, which also allows taxpayers to make payments, view notices, update account information and find the answers to frequently asked questions. E-filing offers advantages not available to taxpayers filing by paper, including error-reducing automatic calculators; prompt confirmation of a successful filing; faster refund processing and direct deposit options. Child and Dependent Care Enhancement Tax Credit: The PA-40 Schedule DC was created for this credit. Please refer to the instructions on the from and beginning on Page 22 of the PA-40 IN for more information. The PA-40 Schedule OC is now a tax year specific form due to the inclusion of the Airport Land Development Program and the Housing Tax Credit. Electronic Payment Requirement: Payments equal to or greater than $15,000 must be made electronically. Payments not made electronically will be subject to a penalty equal to 3% of the payment amount not to exceed $500. PURPOSE The Personal Income Tax Preparation Guide’s purpose is to provide volunteer preparers and Department of Revenue Field Office personnel with additional information and instructions for the preparation of the PA-40, Personal Income Tax Return. Although it may also be used by individual taxpayers who prepare their own PA-40, the preparation guide was written using language from a preparer’s perspective. Before reviewing how to assist taxpayers in the preparation of the PA personal income tax return, some key principles must be emphasized. CONFIDENTIALITY AND INTEGRITY As a tax preparer through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, you have a special trust from the taxpayers who seek your help. To maintain the integrity of this program and to respect the trust placed in you, tax information must be treated as confidential at all times. Also remember that VITA/TCE tax preparers are prohibited from accepting compensation from taxpayers for preparing PA personal income tax returns. QUALITY SERVICE Quality service to taxpayers is our goal. It is important to check your work for accuracy. Use a calculator to verify mathematical calculations. If you are uncertain of the proper method of reporting any transaction, consult your immediate supervisor. Your success as a tax preparer largely depends on your ability to establish rapport with taxpayers and interview taxpayers effectively. First, it is important to put the taxpayer at ease. You will ask questions to determine not only tax liability but also benefits and credits. For example, many taxpayers are not aware of the special tax forgiveness provision or the exclusion of a gain realized on the sale of a principal residence. If filing a paper return, you should have the taxpayer sign and date the return upon completion and provide them with the proper address to which the return should be mailed. INTERVIEWING TECHNIQUES Introductory Stage It is important to establish a good relationship with the taxpayer. Greet the person you will be helping in a friendly way and introduce yourself. Smile and make eye contact. If anyone has waited for a long time, apologize for the delay. Many people are nervous when it is time to prepare their income tax return, so take a few minutes to chat informally if necessary. Remember, good humor and a readiness to help is the essence of courtesy. If a taxpayer starts complaining, do not take it personally. Listen to the entire complaint. Do not interrupt as that will only make the taxpayer more upset. Questioning Stage As an interviewer, you must control the conversation and keep the taxpayer from asking unrelated questions. It will be helpful to follow these guidelines: • Phrase questions very clearly, avoiding multiple questions. • Repeat questions if necessary. Keep in mind not everyone understands technical tax terms. • Listen carefully to the taxpayer’s responses and be patient. Page 1 www.revenue.pa.gov PERSONAL INCOME TAX PREPARATION GUIDE • To the extent possible, explain the return as it is completed. • Encourage people to ask questions if they do not understand. • If you cannot answer a question, say "I do not know but will find out." • Research difficult questions in available tax books, consult with your immediate supervisor or contact your local Department of Revenue district office. NOTE: Questioning can be effective in determining sources of income. However, it is the taxpayer who is responsible for the accuracy of the information provided. You, as a preparer, are not accountable for any misinformation given by the taxpayer. Summary Stage When the return(s) is/are completed, you will need to give the taxpayer some additional information. • Have the taxpayer sign and date the return. If filing a paper return and the filing status on the return is Married, Filing Jointly, make sure both taxpayers sign the return. If one taxpayer is not present, remind the taxpayer to have his/her spouse sign the return. • If there is an overpayment and the taxpayer plans to move, advise the taxpayer to notify the local Department of Revenue district office immediately to have the address updated. This will ensure the refund is sent to the appropriate address. The post office may not forward refund checks. • If a balance is due, advise the taxpayer of payment options. Payments may be remitted through the myPATH portal by visiting mypath.pa.gov and entering the taxpayers routing number and account number. Taxpayers may also remit payments via check or money order made payable to the PA Department of Revenue. Instruct taxpayers to include the last four digits of their primary Social Security Number (SSN) and tax year on the memo line of the check or money order. If a Form PA-40 V is not available from the software used by the preparer or one is not prepared from the Fill-In PA-40 V on the department’s website, the department advises each taxpayer to use the complete SSN on the check or money order if faster clearing is desired and more accurate posting of the check Page 2 • • • • is preferred. Otherwise, it can take up to four weeks for a check to clear if there is insufficient information such as taxpayer name, address, and tax year on the check. In the event the department cannot determine the correct account for posting of the check, the taxpayer’s account will eventually be billed and additional correspondence will need to be addressed by the taxpayer. If your volunteer site e-files returns using special software, the taxpayer may be able to remit the tax payment online. See PAYMENT OPTIONS beginning on Page 72 for additional information. If your location only prepares paper returns, please advise the taxpayer that they can easily enter the figures into the myPATH portal without the need to create an account. This will ensure faster and more secure processing of their return. If the taxpayer prefers to send in the paper return, instruct them to mail the return by midnight on the due date, along with any monies due. If filing more than one tax return for a taxpayer, advise the taxpayer to mail each return separately. Ask if the taxpayer has any questions. Be sure to return all tax materials to the taxpayer, and give the taxpayer a copy of the filed return to keep with his/her records. Thank the taxpayer and remember to respect the taxpayer's privacy. Keep all tax information confidential. TAX ASSISTANCE GUIDELINES When assisting a taxpayer with the preparation of a tax return, you should not hesitate to contact your immediate supervisor for guidance. Our main objective is to provide quality service, which can only be achieved by working together. FEDERAL/STATE ELECTRONIC FILING (e-file) Taxpayers may file federal and PA income tax returns electronically, either through a tax preparer or by purchasing software. VITA/TCE sites that e-file returns using special software should maintain Form(s) PA-8453 or PA-8879 in their files unless requested to submit them to the department. PERSONAL INCOME TAX PREPARATION GUIDE A PA-8453 is not required if a taxpayer signs the federal return with a federal self-select PIN and that PIN is carried over to the PA return. If the practitioner’s PIN is being used or someone else other than the taxpayer is entering the taxpayer’s PIN on the federal return, PA-8879 must be signed. The PIN does not need to be entered twice and can be carried over from the federal return as long as the taxpayer understands he/she is signing both returns. These forms should be submitted to the department at the end of the tax preparation season with a note stating they are from a volunteer site. A PA-8453 is not required if a taxpayer signs the federal return with a federal self-select PIN and that PIN is carried over to the PA return. If the practitioner’s PIN is being used or someone else other than the taxpayer is entering the taxpayer’s PIN on the federal return, PA-8879 must be signed. The PIN does not need to be entered twice and can be carried over from the federal return as long as the taxpayer understands he/she is signing both returns. The department also allows statements to be filed electronically through the electronic return originators (ERO) with the return. These statements describe why certain income was or was not reported or why a particular paper document is being retained by the ERO (i.e. military orders, stipend, extension form). Electronic filing provides the following benefits: • Accuracy. Computer programs catch mistakes before they become problems. • Acknowledgement. The department electronically notifies the preparer or ERO that the return was received and accepted. • Refunds. With electronic filing, the taxpayer has the option to receive a refund via direct deposit. This service is not available when filing a paper return. • File Now, Pay Later. A return can be filed anytime before the due date. If a tax is owed, payments may be submitted directly through the myPATH portal without the need to create an account. Simply visit mypath.pa.gov and select the option to 'Make a Payment". In addition, payments can be scheduled to be withdrawn via electronic funds transfer (EFT) from the taxpayer's bank account at a later date. The taxpayer may also choose to remit payment via check or money order with Form PA-40 V, Payment Voucher, which should be www.revenue.pa.gov mailed by midnight on the due date of the return. ADDITIONAL INFORMATION FOR EROS The department requires all PA electronic returns to be accepted by the Internal Revenue Service (IRS). Once accepted by the IRS, the ERO does not have to register separately with the PA Department of Revenue. ACKNOWLEDGEMENT OF PA ELECTRONIC RETURNS The Pennsylvania Department of Revenue will acknowledge the receipt of a return. However, the acknowledgement system will now only inform a taxpayer if a return was accepted or rejected. If a return is rejected, the rejection message will identify the reject as a business rule or schema error only. Refer to software instructions or contact the software representative for information regarding responsibilities for accessing and retrieving state acknowledgements. ACCEPTED PENNSYLVANIA FORMS/SCHEDULES The following Pennsylvania forms may be transmitted electronically (refund, equal and balance due, with or without payment), and payment must be made by electronic funds withdrawal, check, money order or credit card. • Form PA-40 - Pennsylvania Individual Income Tax Return (includes nonresident and Part-Year Resident returns) • PA Schedule A - Interest • PA Schedule B - Dividends • PA Schedule C - Profit or Loss From Business or Profession • PA Schedule D - Sale, Exchange or Disposition of Property • PA Schedule DC - Child and Dependent Care Enhancement Tax Credit • PA Schedule D-1 - Computation of Installment Sale Income • PA Schedule D-71 - Sale or Exchange of Property Prior to June 1, 1971 • PA Schedule E - Rent, Royalty, Patent and Copyright Income or Loss Page 3 PERSONAL INCOME TAX PREPARATION GUIDE • PA Schedule F - Farm Income and Expenses • PA Schedule G-L - Out-of-State Credit, Long Form • PA Schedule J - Estate & Trust Income • PA Schedule SP - Tax Forgiveness Credit • PA Schedule RK-1- Resident Schedule of PA S Shareholder/Partner Pass-Through Income, Loss and Credits • PA Schedule NRK-1- Non-Resident Schedule of PA S Shareholder/Partner Pass-Through Income, Loss and Credits • PA Schedule UE - Allowable Employee Business Expenses • PA Schedule OC • PA Schedule O • PA Schedule P • PA Schedule T - Gambling and Lottery Winnings • PA REV-1630 - Underpayment of Estimated Tax by Individuals • PA REV-1630A - Underpayment of Estimated Tax by Farmers • PA Schedule 19 - Sale of a Principal Residence • PA Schedule NRH - Apportioning Income by Nonresident Individuals • Schedule PA-40 X Amended Schedule • W-2 Forms • 1099-R Forms • W-2G Forms • REV-1882 - Health Insurance Coverage Information Request • REV-276 - Extension of Time to File • REV-459B - Consent to Transfer, Adjust or Correct PA Estimated Personal Income Tax Account • W-2 RW - PA W-2 Reconciliation Worksheet NOTE: Federal K-1s are not supported in PA e-File software. However, software packages that offer pdf file attachments can include the federal K-1 and its related supporting statements via pdf file with the return if the income and losses from that K-1 are also input into the return. EXCLUSIONS FROM ELECTRONIC FILING The following documents are excluded from Federal/State electronic filing: Page 4 www.revenue.pa.gov • Non-calendar, fiscal year returns; • Amended individual income tax returns for years prior to 2020; • Form PA-40 KOZ – PA Income Tax Keystone Opportunity Zone Return; • Returns containing forms/schedules not listed under federal forms; or “Accepted Pennsylvania Forms/Schedules”. NOTE: Electronic filing of Form PA-41 is only available through some paid preparers but is not available by department or volunteer tax preparers. Electronic filing of Form PA-20S/ PA65 S Corporation/Partnership Information Return is available from most paid preparers but is not available by department employees or volunteer tax preparers. CONTACT INFORMATION FOR E-FILE INQUIRIES The PA Department of Revenue has an email ([email protected]) for exclusive use by EROs, transmitters and software developers participating in the Federal/ State e-file program. You may also fax information concerning electronically filed returns to the department using the Personal Income Tax Correspondence Sheet, DEX93, which is also available from the Department of Revenue’s website, www.revenue.pa.gov. The fax cover sheet includes the proper fax numbers for providing specific information regarding electronically filed returns. Using the fax cover sheet enables the department to more quickly and accurately attach information to the correct taxpayer’s return and further allows for faster turnaround times for processing of taxpayer correspondence. For a full explanation of the Federal/State e-file program, please review the Pennsylvania Fed/State E-file Handbook, REV-993. This booklet may be downloaded from the Department of Revenue’s website, www.revenue.pa.gov. FORM PA-40 GENERAL INSTRUCTIONS Filing Due Date The due date for filing the PA personal income tax return is the same due date as it is for federal income tax returns. Generally, that date is April 15 or the next business day if the 15th falls on a Saturday, Sunday or holiday. If the IRS determines that Emancipation PERSONAL INCOME TAX PREPARATION GUIDE Day for Washington, DC is a holiday, the due date will be the next business day after the holiday. Extension A taxpayer may request an extension of time to file, however this does not extend the payment deadline. If the taxpayer anticipates a tax balance due, he/she should submit payment with the extension request. Extensions may be requested in various ways: • The taxpayer can make an extension payment via myPATH. (This feature does not require a myPATH account) • The taxpayer can submit Form REV-276, Application for Extension of Time to File, postmarked on or before the April 15 due date. • The taxpayer may submit a copy of a federally approved extension of time to file with his/her state return. Extensions can also be submitted through Federal/ State Electronic Filing (e-file). An extension grants an individual an additional six months to file a return. People outside the country are automatically granted a two-month extension to file by June 15. Who must file? Any PA resident, nonresident or part-year resident who: • Received total PA gross taxable income in excess of $33 during the tax year, even if no tax is due; and/or • Incurred a loss from any transaction as an individual, sole proprietor, partner in a partnership or PA S corporation shareholder. Minors. PA law does not exempt a minor from the above requirements to file a PA tax return even if the minor is claimed as a dependent on a federal return. A parent must file a return on behalf of the minor child in such circumstances. Decedents. The executor, administrator or other person responsible for the affairs of a decedent must file a PA tax return on behalf of the decedent if the decedent could not or did not elect to file a joint return with a surviving spouse. Determining Residency An individual may have to pay income tax as a PA resident even if he or she is not considered a PA www.revenue.pa.gov resident for other purposes. For income tax purposes, one must consider both where he or she is domiciled and where he or she maintained a permanent place of abode during the taxable year. An individual’s domicile is their fixed and permanent home to which they always have the intention of returning whenever absent, even though they may live elsewhere. An individual can have only one state of domicile at any given time. Below are some factors to consider when determining an individual’s place of domicile: • Where does the taxpayer spend the greatest amount of time during the taxable year? • Where does the taxpayer maintain a permanent abode for the longest amount of time during the taxable year? • Where does the taxpayer support his or her spouse and children? • Where does the taxpayer purchase the necessities of life? • Where does the taxpayer have doctors, lawyers and accountants? • Where does the taxpayer house his or her pets? • Where does the taxpayer have active banking accounts? • Where does the taxpayer worship regularly? • Where does the taxpayer participate in social, fraternal or athletic organizations, lodges or country clubs? • Where does the taxpayer have works of art, expensive furniture, family portraits or heirlooms? • Where does the taxpayer fulfill local tax obligations? • Where is the taxpayer employed? • Where does the taxpayer own real estate fit for year-round living? • Where does the taxpayer maintain a driver's license and vehicle registration? • Where does the taxpayer maintain professional licenses? • Where does the taxpayer maintain union membership? • Where does the taxpayer declare residency for fishing or hunting licenses, income tax returns or school tuition? • Where does the taxpayer conduct his or her business? Page 5 PERSONAL INCOME TAX PREPARATION GUIDE • Where does the taxpayer receive mail? • Where does the taxpayer receive unemployment? • Where does the taxpayer record his or her address for insurance policies, deeds, mortgages, leases, passport, federal and local tax returns, etc.? • Where was the taxpayer domiciled at birth? • Where does the taxpayer maintain safe deposit boxes? • Where does the taxpayer own a cemetery plot? • Where is the taxpayer listed in the telephone directory? • Where has the taxpayer obtained a homestead exemption? • Where does the taxpayer gather for family and social events? • Where is the taxpayer registered to vote? In order to establish a new domicile, the following three conditions must be met: • There must be evidence of a firm and definite present intention to discontinue making the former domicile one’s primary base of operations; • There must be evidence of a firm and definite present intention to make the new domicile one’s primary base of operations; and • There must be evidence of actual physical presence and actual abode (transient, temporary or permanent) in the new location. If all three requirements are met, the date of the change is the first day of actual physical presence in the new location. If an individual left their domicile to seek new employment and intended to remain in the other location only if they were to find employment, there is no change in domicile. Once established in a locality or state, the domicile continues there until a new one is established. It is not dependent upon continuous physical presence. It is not abandoned by absence or even by presence in a former domicile, no matter how long continued, if, in leaving and during the absence, there is not firm, sincere, unconditional intention of remaining in the other jurisdiction for an indefinite and uncertain period. For example, temporary absence from a new domicile in a former domicile for the purpose of transacting Page 6 www.revenue.pa.gov business or for the sake of health, pleasure, or education, with a definite intention of returning to the new domicile does not affect a person's domiciliary status. A retired couple with two permanent homes, one inside Pennsylvania and one outside of Pennsylvania, can only have one state of domicile. The state of domicile does not change until there is a move to another state or country with the sincere intention of making a "new" permanent home there and abandoning the previous domicile. The determination as to their state of domicile should be made based on the factors above. A permanent abode is a house, apartment, dwelling place or other residence an individual maintains as his or her household for an indefinite period, whether he or she owns it or not. An abode is not permanent if it is occupied only during a fixed or limited period of time for a particular purpose. Barracks, bachelor officer's quarters, quarters on ships and other living accommodations provided by one’s employer for a definite period do not qualify as permanent dwelling places; nor do college dormitories, fraternity houses, sorority houses and off campus rentals by enrolled college students qualify as a permanent abode. PA Resident Residency in Pennsylvania, for tax purposes, may be established in two ways: Domicile in Pennsylvania: If an individual is domiciled in Pennsylvania, he or she is considered a resident unless he or she meets all three of the following conditions: • He or she did not maintain a permanent abode in Pennsylvania for himself/herself or his/her family; • He or she did maintain a permanent abode outside Pennsylvania throughout the entire taxable year; and • He or she did not spend in the aggregate more than 30 days of the taxable year in Pennsylvania. Day Test: If an individual maintains a permanent abode in Pennsylvania and spends a total of 183 days or more of the taxable year in Pennsylvania, even though he or she is not domiciled in the commonwealth, he or she is considered a resident. PERSONAL INCOME TAX PREPARATION GUIDE Nonresident An individual is a nonresident for PA tax purposes if he/she is not a resident as defined above. After determining the location with the greatest connection, it is necessary to see if a new domicile outside of Pennsylvania has been established. Part-Year Resident A part-year resident is an individual who moved to or from Pennsylvania during the taxable year with the intent of permanently changing domiciles. A person moving into Pennsylvania, with the intent of residing here permanently, becomes a resident on the first day he or she is actually, physically present in the Commonwealth, regardless of reason or housing arrangement (such as employer provided housing, living with relatives, etc). Persons in the Military or Foreign Service Unless there is an intention to change domiciles, a person generally neither acquires a new domicile by entering the armed forces nor loses the domicile that the person had upon entering. A person on military duty is not prohibited, however, from acquiring a new domicile where his or her family is stationed. A person in the military and foreign service, or living in a foreign country for other than a temporary or transitory purpose while a lawful permanent resident or citizen of the country, is treated as a domiciliary of that country if the person: • Is not an employee of the U.S., its agencies or instrumentalities (including members of the armed forces and career appointees in the U.S. foreign service); and • Does not hold an appointive office in the executive branch of the government of the U.S. However, special rules may apply if the employee or officer maintains a permanent place of abode there. An individual who is domiciled in Pennsylvania is considered a nonresident if he or she meets all three of the requirements listed in the prior sections on Pennsylvania residency and domicile. For tax years 2008 and prior, the spouse of a service member serving in Pennsylvania was taxed on any PA-sourced income that he/she may have earned. Under the Servicemembers Civil Relief Act, income earned by the spouse of a service member shall not be considered taxable income in the state that the service member is stationed if that state is not www.revenue.pa.gov considered the spouse’s state of residence or domicile. If a service member is a PA resident serving outside of the Commonwealth of Pennsylvania and his/her spouse realizes income in that other state, the spouse’s income is only taxable to PA (if the spouse maintains his/her PA residency). A resident credit will not be allowed for taxes paid to the other state. If the spouse receives income subject to employer withholding, he/she should request a refund of that withholding from the other state. If the service member is a nonresident serving inside the Commonwealth of Pennsylvania and his/her spouse realizes income in PA, that income is not taxable to PA as long as the spouse is considered a resident of another state. If the spouse receives income subject to employer withholding, he/she should request a refund of that withholding. This may be done by filing a PA personal income tax return and only reporting the PA tax that was withheld (shown in Box 17 of the W-2). They must also provide a copy of their spouse’s military orders showing they were ordered to service in PA, and a copy of their resident state’s driver’s license. College Student Generally, a child has the same domicile as his or her parents or legal guardian. Becoming a legal adult does not by itself separate a child from the parent or legal guardian’s domicile. The child merely acquires the power to establish a separate or new domicile. Minor Child The domicile of a minor child is the same as the domicile of the child's parents. If the parents are separated, the child's domicile is the domicile of the parent with whom the child lives or that of the child's legal guardian. Dual Residency A dual resident is an individual who is considered a resident of two states for taxing purposes. If an individual is a dual resident, he or she should report the income that was earned during the taxable year from sources both within and outside of PA on both states tax returns. This individual would then request a resident credit for income sourced to the state of statutory residence in the state that he/she is domiciled in. Page 7 PERSONAL INCOME TAX PREPARATION GUIDE NOTE: Special rules apply for PA residents working in states with reciprocal tax agreements with Pennsylvania: Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia. If a taxpayer is a PA resident and also a resident of a reciprocal state, for income tax purposes he/she may claim the PA resident credit. The reciprocal agreement with these states is not applicable since the taxpayer is subject to tax as a resident in both Pennsylvania and the other state. The taxpayer must file PA Schedule G-L for each state for which a resident credit is being requested and enclose a copy of the resident tax return filed with the other state. This documentation will serve as proof that the other state taxed him/her as a resident in that state and did not allow a credit for tax paid to PA. For example, Dan is a domiciliary of Pennsylvania for the entire taxable year. He leased an apartment in Maryland and worked 230 days in Maryland. Maryland considers Dan to be a Maryland resident for income tax purposes. He earned $10,000 in compensation for working in Maryland. Dan must report his compensation as PA-taxable income. Because he is a PA domiciliary, Dan may claim the PA resident credit for taxes paid to Maryland as long as he does not claim a credit on his Maryland return for taxes paid to PA. How Residents are Taxed A PA resident is taxed on all taxable income received from sources inside and outside Pennsylvania. A PA resident may claim a resident credit for any tax imposed by and paid to other states based upon income which is not from Pennsylvania sources and is subject to PA personal income tax. The PA Schedule G-L must be completed to claim this credit. How Nonresidents are Taxed Nonresidents are taxed on the following types of income derived from sources within Pennsylvania: • Compensation Pennsylvania taxes nonresidents on compensation for services performed in Pennsylvania, unless the taxpayer is a resident of one of the reciprocal agreement states. • Net Income or Loss from the Operation of a Business, Profession or Farm Pennsylvania taxes nonresident owners on all Page 8 www.revenue.pa.gov allocated, or apportioned, income from the operation of a business entity in Pennsylvania. If an individual derives income from sources inside and outside Pennsylvania, separate accounts and records that clearly reflect the PA business activity should be maintained. Otherwise, that individual must file PA Schedule NRH to apportion the income. • Net Income or Loss from the Sale, Exchange or Disposition of Property Pennsylvania taxes nonresidents on the gain from the sale of any real or tangible personal property located in Pennsylvania. Pennsylvania does not tax nonresidents on the gain from the disposition of intangible property nor allow the use of any loss from such a disposition to reduce other PA taxable gains. If a taxpayer sells property in his or her former state before moving into Pennsylvania, no gain or loss on that sale is reportable to PA. However, if the taxpayer moved from Pennsylvania to another state and then sold property or any other tangible property in Pennsylvania, the gain must be reported. • Income or Loss from Rents, Royalties, Patents and Copyrights Pennsylvania taxes nonresidents on the net income from the use of property located or used in Pennsylvania. • Interest on Installment Sales Pennsylvania taxes nonresidents on interest from Installment Sales as PA Schedule D-1 Income. • Interest on Business Accounts Pennsylvania taxes nonresidents on interest on business accounts such as accounts receivable or a business checking account that is included in business income. • Mortgage or Security Interests Pennsylvania taxes nonresidents on mortgage or security interests on installment sales that are reported as such utilizing PA Schedule D-1. If PA Schedule D-1 is not used and the entire gain is reported in the year sold, interest on an installment sale is not subject to tax. • Intangible Personal Property Pennsylvania taxes nonresidents on intangible PERSONAL INCOME TAX PREPARATION GUIDE personal property employed in a trade, profession, occupation or business carried on in Pennsylvania. The nonresident taxpayer does not report such a sale on a PA Schedule D, but includes the gain (loss) in determining net income or loss from the operation of a business, profession or farm. • Estate or Trust Income Pennsylvania taxes nonresident beneficiaries on income from an estate or trust only to the extent the PA-source income to the beneficiaries is taxable to nonresidents. • Gambling and Lottery Winnings Pennsylvania taxes nonresidents on gambling and Lottery winnings by reason of a wager placed in this commonwealth, the conduct of a game of chance or other gambling activity located in this commonwealth or the redemption of a Lottery prize from a Lottery conducted in this commonwealth, other than noncash prizes of the Pennsylvania Lottery. Nonresidents are not subject to PA taxes on gambling or Lottery winnings, by reason of a wager placed outside this commonwealth, the conduct of a game of chance or other gambling activity is located outside this commonwealth or the redemption of a Lottery prize from a Lottery conducted outside this commonwealth. NOTE: Nonresidents are not subject to PA tax on ordinary interest and dividends from investments or gains realized on the sale, exchange or disposition of intangible property. Losses on the sale of intangible property may not be used to offset any taxable gain. Apportioning PA Taxable Income A nonresident employee who performs services inside and outside Pennsylvania is subject to PA personal income tax on the net compensation for services performed within Pennsylvania. Usually the employer will allocate and separately report on federal Form W-2, Wage and Tax Statement, the PA gross compensation. If the employer did not report PA gross compensation on the W-2; or reported an incorrect amount as PA gross compensation on the W-2; or the taxpayer incurred unreimbursed employee business expenses in earning or receiving PA gross compensation, PA Schedule NRH, Compensation Apportionment, must be completed. www.revenue.pa.gov A separate schedule must be completed for each employer for whom services within and outside Pennsylvania were performed. If a nonresident taxpayer has income from a business, profession or farm derived from sources both within and outside Pennsylvania and has records and accounts that accurately reflect the income from Pennsylvania, he or she should report as PA taxable income those amounts based on these accounts and records. If the accounts and records do not clearly reflect the PA-source income, the section titled Net Profits from Business or Farm Apportionment Formula on PA Schedule NRH must be completed. EXCEPTION: Residents of a Reciprocal State Residents of Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia are not subject to tax on compensation for services performed inside Pennsylvania on which federal withholding is required, such as wages and salaries. However, if an Ohio resident holds 20 percent or more share interest in a subchapter S corporation and receives wages or salary from that corporation, he or she will be subject to PA income tax on the wages or salary from said subchapter S corporation. This exception does not apply to income reported as compensation such as executor fees on which there is no federal withholding requirement, nor does it apply to any other class of income. Residents of these states must file Form REV-419, Employee’s Nonwithholding Application Certificate, with their PA employers to be exempt from having PA tax withheld. In this situation, the PA employer should withhold and remit tax to the employee’s state of residency. A resident of one of these reciprocal states 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, 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 must be submitted. A PA resident working in one of these reciprocal states should request to his or her employer that they withhold PA income tax. If the employer withholds the tax for the reciprocal state, the taxpayer must file for a refund from that state. If the PA resident expects to Page 9 PERSONAL INCOME TAX PREPARATION GUIDE www.revenue.pa.gov receive income of $8,000 or more and the employer does not withhold PA income tax, the individual is required to make quarterly estimated payments. Failure to make these payments will result in an assessment of estimated underpayment penalty. partnership in which the taxpayer is a member. If a partnership fails to provide such forms, the taxpayer must attach a copy of the federal Schedule K-1 and classify the income or loss according to PA instructions for that class. How Part-Year Residents are Taxed A part-year resident is subject to PA personal income tax as a resident for the portion of the year they resided in Pennsylvania. The same taxpayer is subject to PA personal income tax as a nonresident for the remaining portion of the year if he or she continues to work in Pennsylvania unless he or she becomes a resident of a reciprocal state. Each shareholder in a PA S corporation must attach to Form PA-40 a copy of PA-20S/PA-65 RK-1 for residents or PA-20S/PA-65 NRK-1 for nonresidents. A separate PA-20S/PA-65 RK-1/NRK-1 must be submitted for each PA S corporation in which the taxpayer is a shareholder. Members of Partnerships and Subchapter S Corporations A member of a partnership or a shareholder in a subchapter S corporation must report his or her share of income, whether it was distributed or not. The income or loss from the partnership or subchapter S corporation must be reported in the same class from which the partnership or subchapter S corporation received the income. A line is provided on PA Schedules A, B, D, E and J specifically for partnership or subchapter S corporation income. Ordinary business income, farm income, dividends, interest and rental income should be added to any similar class of income and included on the appropriate line of Form PA-40. Composite returns can be filed on behalf of the nonresident shareholders or partners. Sometimes an individual partner or shareholder pays an expense of a partnership or subchapter S corporation, such as interest expense. In this case, the individual may deduct the expense from his/her income only if the partnership agreement or articles of incorporation require that the member or shareholder pay the business or rental expenses out of his or her personal assets. These expenses must be noted on a separate attachment and do not relate to any existing schedule. Members of the Armed Forces and Nonmilitary Persons on Federal Active Service For PA personal income tax purposes, armed forces include the Army, Navy, Air Force, Marine Corps and Coast Guard. They do not include the Merchant Marines, Public Health Service or National Oceanic and Atmospheric Administration, except if/when any of these are incorporated into the armed forces in times of war or emergency. Further, civilian employees for the Department of Defense, such as teachers and subcontractor employees, are not considered members of the armed forces. Do not add health care benefits to the PA wages of shareholder-employees of PA S corporations as long as the plan is non-discriminatory, even though such benefits must be added to federal wages. Each partner in a business, profession or farm must attach to Form PA-40 a copy of the PA RK-1 for residents or PA NRK-1 for nonresidents. A separate PA RK-1/PA NRK-1 must be submitted for each Page 10 A PA return must be filed even if the PA-20S/PA-65 RK-1 or PA-20S/PA-65 NRK-1 shows a loss. Resident Members of the Armed Forces Compensation earned by residents of Pennsylvania in the armed forces serving on federal active duty outside Pennsylvania is not taxable as compensation in Pennsylvania. This includes housing allowances and a reserve unit's two-week summer training. Military pay -- including housing allowances received by a PA resident while not on federal active duty or not on federal active duty training -- is fully taxable regardless of where the military service is performed. For example, all income received for inactive duty while attending weekend drills is taxable. Also, compensation earned by a PA resident for military service on active duty in Pennsylvania is subject to personal income tax. Under Act 182 of 2006, PA residents called to active military duty for disaster relief of emergency management assistance inside or outside of Pennsylvania are exempt from taxation on the compensation paid to them by either the U.S. government or the commonwealth. The taxpayer has the burden of establishing that income received for military service outside the commonwealth was earned while on federal active PERSONAL INCOME TAX PREPARATION GUIDE duty. The Department of Revenue will accept as proof the authority section of the military orders directing the taxpayer to federal active duty outside the commonwealth. If authority for the active duty is based upon a federal statute, such as 32 U.S.C. §§ 316, 502, 503, 504 or 505, federal active duty will be presumed and the income is excludable from taxable compensation. To exclude income from serving on active duty in the military outside of the commonwealth, residents must file a PA personal income tax return and include their military W-2 Forms and copies of their orders as evidence of active duty military pay earned outside Pennsylvania. If PA tax was withheld for active duty service outside the commonwealth, the taxpayer will be given a full refund of their withholding. If a portion of the military service is active and a portion inactive, the taxpayer should provide documentation that gives a detailed breakdown of active duty pay while outside of the commonwealth, combat zone pay (if applicable) and all other military compensation. The sum of these items must equal the reportable wages shown in Box 16 of the individual's military W-2 Form. In addition, the documentation must state the dates during which each component of compensation was received and must include a copy of the individual's military orders ordering him or her to a combat zone and/or placing him or her on active duty as a member of the U.S. armed forces at a military facility outside the commonwealth during the year. A W-2 Form that identifies income as active duty pay is not sufficient because it does not explain where the active duty occurred. The taxpayer may reduce the amount of reportable military compensation on Line 1a of his or her Form PA-40 by the sum of the compensation received as combat zone pay and/or active duty pay received as a member of the U.S. armed forces outside the commonwealth. If authority for active duty is based upon a PA statute, such as 51 P.S. §§ 508 or 3102, state active duty will be presumed and the income received is taxable. Nonresident Members of the Armed Forces Nonresident military personnel who are serving on federal active duty in Pennsylvania in compliance with military or naval orders are exempt from PA personal income tax on their military pay and housing allowances because of federal law. They and their family members are, however, subject to tax on any other PA-source income normally taxable to www.revenue.pa.gov nonresidents. This includes non-active duty pay such as weekend drills. National Guardsmen and U.S. Reservists National Guardsmen and U.S. Reservists ordered to active duty for training at a two-week summer encampment pursuant to Title 10 or Title 73 of the U.S. Code are presumed to be on federal active duty. Military pay received for such service is excludable from taxable compensation provided the active duty training is performed outside the commonwealth. In addition, scholarships or remuneration received by cadets and midshipmen at U.S. military academies is not taxable because none of these academies are within Pennsylvania and such individuals are on federal active duty. When a civilian employer either makes up the difference in a National Guard member's or U.S. Reservist's regular wages or continues full pay for the Guardsman or Reservist during the term of active duty, the differential or full pay continuation is considered taxable compensation. The Heroes Earnings Assistance and Relief Tax Act (HEART) of 2008 is an exception to this. If the differential pay is earned while in a combat zone or hazardous duty zone, the income is not taxable. A full-time member of the PA National Guard is taxed on all of the following components of military compensation: • Inactive state duty pay received for services both within and outside the commonwealth; • Inactive federal duty pay received for services as a member of the U.S. armed forces both within and outside the commonwealth; • Active federal duty pay received for services within the commonwealth, unless called to active military duty for disaster relief of emergency management assistance; and • Active state duty pay received for services both within and outside the commonwealth, unless called to active military duty for disaster relief of emergency management assistance. Nonmilitary Persons on Federal Active Service A PA resident on federal active duty outside Pennsylvania is subject to tax on his or her compensation. NOTE: A PA resident in the U.S. foreign service is not on active duty for PA purposes, and his or her compensation is subject to tax. Page 11 PERSONAL INCOME TAX PREPARATION GUIDE Members of the Merchant Marines, Employees of the U.S. Public Health Service and National Oceanic and Atmospheric Administration PA residents serving in the Merchant Marines, the U.S. Public Health Service, the National Oceanic and Atmospheric Administration or contractors working in foreign countries, are subject to tax on compensation whether earned within or outside PA unless the U.S. President declares them by Executive Order to be military service during times of war or national emergency. Also included in this category are those individuals who are employed by the Department of Defense as school teachers. They are not covered under the Soldiers’ and Sailors’ Civil Relief Act as they are civilian employees of the Department of Defense and not members of the armed forces. Servicemembers Civil Relief Act The Servicemembers Civil Relief Act (SCRA) affects the treatment of residency and income for spouses of military personnel for state and local tax purposes for tax year 2009 and after. The SCRA permits a service member’s nonmilitary spouse to retain status as an out-of-state resident and source any nonmilitary compensation to the state of residence under the following circumstances: • The service member must be in Pennsylvania in compliance with military orders. • The service member’s spouse must be in Pennsylvania solely to be with his/her spouse. • The service member’s spouse must have the same domicile (legal residence) as the service member. Conversely, if a Pennsylvania resident service member is serving outside Pennsylvania and his/her nonmilitary spouse earns income in that other state – and the spouse claims relief under the SCRA – the spouse’s income is only taxable to Pennsylvania. I. Domicile/Legal Residence A person generally does not acquire a new domicile or legal residence by entering the armed forces. Until a service member intentionally changes his/her domicile, a service member’s domicile is the state he/she called home when he/she entered the military. This is the state where the service member files income tax returns (if that state has an income Page 12 www.revenue.pa.gov tax) and where the service member intends to return upon leaving the military. Under SCRA, a service member’s spouse neither loses nor acquires domicile or residency by being absent or present in any U.S. tax jurisdiction solely to be with a service member complying with military orders. II. Nonmilitary Spouses and Pennsylvania Income Taxation For tax years beginning on or after Jan. 1, 2009, compensation or other income earned in Pennsylvania for services rendered by a service member’s nonmilitary spouse is not taxable by Pennsylvania, when: • The nonmilitary spouse and service member have the same out-of-state domicile; • The spouse is in Pennsylvania solely to be with the service member (see note below); and • The service member is in Pennsylvania complying with military orders. However, a nonmilitary spouse’s other income from Pennsylvania sources is subject to Pennsylvania personal income tax to the extent it is earned, received or acquired from sources within the commonwealth as follows: • By reason of ownership or disposition of an interest in real or tangible personal property in Pennsylvania; • In connection with a trade or business in Pennsylvania; and/or • From intangible personal property employed in a trade, profession, occupation or business carried on in Pennsylvania. A qualifying nonmilitary spouse must have moved to Pennsylvania from another state, be in Pennsylvania solely to accompany his/her active duty service member spouse stationed in Pennsylvania in accordance with military orders, and maintain another state of residency. Taxpayers claiming relief under SCRA and a refund of Pennsylvania income tax withheld, in addition to a standard personal income tax return and appropriate schedules, must provide the following: • A copy of the service member’s current military orders showing the order to serve in Pennsylvania; PERSONAL INCOME TAX PREPARATION GUIDE • A copy of the service member’s military identification card; • A copy of the nonmilitary spouse’s driver’s license from the resident state; • A copy of the nonmilitary spouse’s W-2, issued by the employer; • A copy of the nonmilitary spouse’s tax return filed for the resident state; • A copy of the nonmilitary spouse’s military ID card, identifying the card-holder as the spouse; and • A copy of the service member’s federal Department of Defense Form 2058, State of Legal Residence Certificate (see note below). Taxpayers filing electronically should attach these documents to their e-filed return as a PDF file or fax it into the department within two to three days of e-filing. If faxed, it is highly recommended that taxpayer use the DEX-93, Personal Income Tax Correspondence Sheet as the cover page. Those filing paper returns should write “SCRA” across the top of Page 1 of the PA-40. Spouses of service members who meet these requirements and who either had Pennsylvania income tax withheld from wages or made other Pennsylvania income tax payments for the tax year may receive refunds of such taxes paid by filing a Pennsylvania personal income tax return, PA-40. The nonmilitary spouse should report zero wages on Line 1 of his/her Pennsylvania personal income tax return, and include the total Pennsylvania taxes withheld (Box 17 of Form W-2) on Line 14. NOTE: A nonmilitary spouse working in Pennsylvania but living in a neighboring state in which the military spouse is stationed, may also be eligible if the military spouse is required to be there per military orders and all other requirements are met for state of domicile and reason for being in the location with the military service person. III. Discontinuation of Pennsylvania Income Tax Withholding The nonmilitary spouse of a service member whose wages/salary is exempt from Pennsylvania personal income tax under SCRA should file a Pennsylvania Form REV-419, Employee’s Nonwithholding Application Certificate, with his/her www.revenue.pa.gov Pennsylvania employer, claiming exemption from Pennsylvania income tax withholding. IV. Taxation of Service Members’ Military and Nonmilitary Pay SCRA does not exempt from Pennsylvania personal income tax nonmilitary income earned by a service member. However, a nonresident service member's active duty military income continues to be exempt from Pennsylvania personal income tax. Combat Zones Combat zone pay received by a U.S. service member is not taxable for PA personal income tax purposes (see Title 72 P.S. § 7301(d)(vii)), nor is it considered poverty income for purposes of the special tax forgiveness provisions (see Title 72 P.S. § 7301 (o.2)(vii)). For PA personal income tax purposes, combat zones are areas designated by the U.S. President. PA National Guard members and U.S. Reservists are U.S. service members while they are serving in a combat zone for purposes of this exclusion. The $500 combat zone pay exclusion limit for military officers contained in the Internal Revenue Code is not in the state taxing statute. Refer to www.irs.gov for a listing of current combat zones. PA residents serving in combat zones or qualified hazardous duty areas designated by the U.S. President are given the same additional time to file their PA personal income tax returns and make payments as allowed for federal income tax purposes. The deadline is automatically extended to 180 days from the last day of service or the last day of continuous hospitalization for injuries incurred in one of these areas. Print “Combat Zone” at the top of the return and mail it along with the military orders to: REGARDING COMBAT ZONE PA DEPARTMENT OF REVENUE BUREAU OF INDIVIDUAL TAXES PO BOX 280600 HARRISBURG PA 17128-0600 If the return is filed electronically, a copy of the military orders must still be submitted. The orders can be attached to the e-filed return as a PDF file, faxed into the department using the DEX-93, Personal Income Tax Correspondence Sheet, or mailed to the address below. If faxing or mailing, print "Combat Zone" at the top of the orders. Page 13 PERSONAL INCOME TAX PREPARATION GUIDE REGARDING COMBAT ZONE PA DEPARTMENT OF REVENUE ELECTRONIC FILING SECTION PO BOX 280507 HARRISBURG PA 17128-0507 Retirement Income Retired or retainer pay of a member or former member of a uniform service calculated under Chapter 71 of Title 10, U.S. Code (as amended) is not taxable for PA personal income tax purposes. Taxable Income Classes PA personal income tax is levied at a flat rate on eight separate classes of income: • Compensation • Interest • Dividends and Capital Gains Distributions • Net Income or Loss from the Operation of a Business, Profession or Farm • Net Gains or Loss from Sale, Exchange or Disposition of Property • Net Income or Loss from Rents, Royalties, Patents or Copyrights • Estate or Trust Income • Gambling and Lottery Winnings Gains and Losses A gain in one class of taxable income cannot be offset against a loss in any other class of taxable income, nor may gains or losses be carried back or forward to another tax year. If a taxpayer has a net loss in any income class, enter the amount of the loss on the appropriate line on Form PA-40; use the actual dollar figure and fill in the oval indicating loss for that category. A completed schedule must be submitted even if the taxpayer incurred a loss in a class of income. A spouse may only offset losses against his or her own profit/gain/income. A spouse may not offset a loss against the other spouse's profit or gain. However, if both spouses jointly own a business which incurred a loss, they may each take their share of the loss against their other business gains. Joint Income If two or more persons, such as a taxpayer and spouse, own income-producing property -including real estate, savings accounts or stock -as joint tenants, tenants by the entirety or tenants Page 14 www.revenue.pa.gov in common, each person must report his/her proportional share of income from the property, even if only one Social Security number and name appears on the statement. Generally, such income is divided equally between the owners. In the case where a taxpayer and spouse and a third party own real estate, such as parents and a son or daughter, the taxpayer and spouse are jointly liable for one-half of any gain on the sale, and the child is liable for the other half (unless the deed stipulates that the property is held as tenants in common). However, for any other property, such as bank accounts, each individual person is considered an equal owner. In the case of ownership by a taxpayer and spouse and a child appearing as owners on a bank account, each would be liable for one-third of the interest earned. INSTRUCTIONS FOR PREPARING FORM PA-40 If filling out a paper Form PA-40, be sure to fill in all requested information by typing or printing legibly. Only taxpayers who request a PA-40 book will have a book mailed to them. The Department of Revenue uses electronic data imaging to enter tax returns into its computer system. Follow these instructions for entering Social Security numbers, names, addresses and amounts to help ensure personal income tax returns are processed accurately and quickly. • Print in black ink. • Use UPPER CASE (CAPITAL) letters. • Print one number or letter in each box. • Leave a blank box between whole words. • Print the taxpayer’s name – last, first, middle initial and suffix on the correct lines. • Print the taxpayer’s correct address. • Print the taxpayer’s apartment number, suite number, room number, rural route, floor, etc on the first line. • Print the taxpayer’s PO Box on the second line. • Fill in all appropriate ovals completely. • Show money amounts in whole dollars. Eliminate any amount less than $0.50 and increase any amount between $0.50 and $0.99 to the next highest dollar. PERSONAL INCOME TAX PREPARATION GUIDE • Prepare a copy for the taxpayer’s records before submitting. If the name, address or city begins with Mc, Van, O’, etc, do not enter a space or a punctuation mark. There are two lines to enter the address. Use the postal format of apartment number, suite, room number, rural route, box number, floor, etc. on the first line and the street address on the second line. If there is only a street address, it may be entered on either line. There are ovals present for “Extension”, “Amended Return”, “Residency Status”, “Filing Status”, “Farmers” and losses in certain income categories. If any of these apply, the oval(s) must be filled in completely. Do not use an X or a check mark. Also note that Form PA-40 is two-sided. Do not forget to complete both sides. Social Security Number The taxpayer's correct Social Security number (SSN) must be verified and matched against the state copy of the Wage and Tax Statement, the W-2 Form. If a W-2 Form has an incorrect SSN, the taxpayer must obtain a corrected W-2 Form (Form W-2C) from his or her employer. Returns completed for married taxpayers, even if filing Married, Filing Separately, must include the SSN of both spouses. You must enter the entire SSN for the taxpayer and spouse (if applicable). If part of the SSNs are not provided, it can cause delays in the processing of the return. NOTE: By law (42 U.S.C. Sec. 405(c)(2)(C)(i); 61 Pa. Code Sec. 117.16) the PA Department of Revenue has the authority to use the SSN to administer PA tax laws to identify taxpayers and their incomes. PA law does prohibit the commonwealth from disclosing information individuals provide on income tax returns, including SSNs, except for official purposes. Name The complete name of the taxpayer must be entered. If completing a joint return, the spouse's first name www.revenue.pa.gov must also be included. If a taxpayer and spouse use different last names, the person entering his or her name as the spouse must enter the last name he or she is using in the blocks designated as “Spouse’s Last Name”. Do not enter anything in these blocks if the taxpayer and spouse use the same last name. If filing a joint return with a deceased taxpayer, the surviving spouse enters his/her name first. If both taxpayer and spouse are deceased and filing a joint return, enter the name of the primary taxpayer from the previous tax year first. Address The address must be the current mailing address of the taxpayer. If using a military address, the APO or FPO address should be used. To complete a foreign address for a taxpayer that is out of the country, use the following guidelines: enter the name(s) in the spaces provided; write the first and second line of the address in the First Line of Address spaces; write the state/province, if one exists, and then the foreign postal number (ZIP code equivalent), separated by a comma (do not abbreviate on this line), in the Second Line of Address spaces; leave the State and ZIP code spaces blank; write the two-character code for the country in the Country Code spaces. Codes can be found at https://www.irs.gov/e-file-providers/foreigncountry-code-listing-for-modernized-e-file. Country Code A taxpayer with an address within the U.S. is not required to complete this field. See the address instructions above to obtain a two-character country code. Daytime Telephone Number Provide a telephone number where the taxpayer can be reached during the day. School Code and School District Name The five-digit code and name of the school district where the taxpayer lived on Dec. 31 of the tax year must be entered. 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. This information must be entered. Using an incorrect school code may affect the school district’s funding. Failure to Page 15 PERSONAL INCOME TAX PREPARATION GUIDE www.revenue.pa.gov enter this information may delay the processing of the return and delay the issuance of any refund. the school code of his/her physical address prior to moving out of Pennsylvania. Some examples of what to consider when entering the school code on a return are as follows: • Any military personnel should use the school code for the domicile of his/her spouse (if the spouse lives in Pennsylvania), parents (if entering the military while domiciled in Pennsylvania), or the code for the school district in which he/she lives while on federal active military duty while stationed in Pennsylvania (if a PA resident). • A person residing in a nursing home or other care facility who plans to return to his/her principal residence after a temporary stay in such facilities should enter the school code for the physical address of his/her principal residence and not the nursing home or care facility. • A person who resides in a nursing home or care facility on a permanent basis and has made the decision to do so (assuming mentally capable to make this decision) should use the school code for the physical address of the nursing home or care facility. • A PA resident attending college inside or outside Pennsylvania should use the school code for the physical address of the domicile or primary residence of his/her parents. • A nonresident or part-year resident who did not reside in the state as of Dec. 31 of the tax year should enter 99999 in the school code field. • A part-year resident who resided in Pennsylvania as of Dec. 31 of the tax year should enter the school code of the physical address of his/her domicile or primary residence on Dec. 31. • A person who uses a mailing address other than the physical address of the domicile or principal residence should enter the school code for the physical address of his/her domicile or primary residence. • A person who works outside Pennsylvania, but maintains a permanent place of abode inside PA during absences from Pennsylvania or a person who plans to return to Pennsylvania after a temporary relocation to another state or country and is still considered a PA resident, should use the school code for the physical address of his/her permanent place of abode or Extension If an extension of time to file has been requested, this oval must be filled in. If tax is owed, a copy of the federal extension should be submitted with the taxpayer’s return if a PA extension was not filed. Page 16 An extension of time to file does not extend the payment deadline. Any tax reasonably expected to be due must be paid with Form REV-276, Application for Extension of Time to File, by the April 15 due date. If at least 90 percent of the total tax liability was paid in four quarterly estimated installment payments by the due date of each installment payment and all additional tax was paid with the extension on or before the April 15 due date, an underpayment of tax penalty will not be charged. However, interest will be imposed if the total tax balance is not paid by the April 15 due date. For federal extensions where additional money is due with the filing of the PA-40, enclose a copy of the extension granted by the Internal Revenue Service (IRS). Do not place this document in front of the return. No extension will be granted for more than six months unless the taxpayer continues to r
Extracted from PDF file 2023-pennsylvania-form-dfo-02.pdf, last modified January 2023

More about the Pennsylvania Form DFO-02 Individual Income Tax TY 2023

The Personal Income Tax Preparation Guideā€™s purpose is to provide volunteer preparers and Department of Revenue Field Office personnel with additional information and instructions for the preparation of the PA-40, Personal Income Tax Return.

We last updated the Personal Individual Tax Preparation Guide - For Form PA-40 in February 2024, so this is the latest version of Form DFO-02, fully updated for tax year 2023. You can download or print current or past-year PDFs of Form DFO-02 directly from TaxFormFinder. You can print other Pennsylvania tax forms here.


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Other Pennsylvania Individual Income Tax Forms:

TaxFormFinder has an additional 174 Pennsylvania income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form PA-40 Pennsylvania Income Tax Return
Form 40 Instruction Booklet Income Tax Return Instruction Booklet (PA-40)
Form PA-40 SP PA Schedule SP - Special Tax Forgiveness
Form PA-40 A PA Schedule A - Interest Income
Form PA-40 PA-V PA-40 Payment Voucher

Download all PA tax forms View all 175 Pennsylvania Income Tax Forms


Form Sources:

Pennsylvania usually releases forms for the current tax year between January and April. We last updated Pennsylvania Form DFO-02 from the Department of Revenue in February 2024.

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About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of Pennsylvania Form DFO-02

We have a total of three past-year versions of Form DFO-02 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2023 Form DFO-02

Personal Individual Tax Preparation Guide - For Personal Income Tax Returns PA-40 (DFO-02)

2022 Form DFO-02

Personal Individual Tax Preparation Guide - For Personal Income Tax Returns PA-40 (DFO-02)

2021 Form DFO-02

Personal Individual Tax Preparation Guide - For Personal Income Tax Returns PA-40 (DFO-02)


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