Frequently Asked Questions by Individual Taxpayers

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What is the Earned Income Tax?

This is the tax levied on earned income as defined by the Tax Reform Code of 1971 and the Pennsylvania Department of Revenue. Earned income includes compensation from a profession and/or net income from the operation of a business, minus the allowable deductions for business expenses. Find more detailed information: Earned Income Tax Explained In-Depth

How is Earned Income Tax collected?

Quarterly and final return forms are mailed together to individual taxpayers. If available, the individual's social security number acts as the account number. If not, an account number is assigned. For security purposes, only the last four digits of an account number are printed on the tax forms. Returns are processed when received. Automated year-end discrepancy letters are sent to individual taxpayers after the final return is filed and the account cannot be reconciled. When proper reconciliation is met, the computer system closes that tax year on the account.

What income is exempt from the Earned Income Tax?

Investment income such as dividends, interest, income from trusts, bonds, insurance proceeds and stocks are exempt. Other income such as disability benefits, retirement pay, pensions, social security payments, public assistance or unemployment payments are also exempt.

For a complete list of non-taxable income, download our Taxable Income and Deduction Reference Guide.

Tax Forms & Instructions

Do all taxpayers have to file a final return?

Yes. A local Earned Income Tax return must be filed each year no later than April 15. If the 15th falls on a Saturday or Sunday, the due date becomes the next business day. If you had no earned income, you must explain the reason why on your final return.

How do I determine what municipality I live in?

Simply enter your home address in the Find Your Municipality chart on the Pennsylvania Department of Community and Economic Development's web site.

What is my local earned income tax rate?

To find your local earned income tax rate, enter the county or municipality where you live in the Municipal Tax Information chart found on the Pennsylvania Department of Community and Economic Development's web site.

What if I lived in a municipality for only part of the year?

You must file a return for the period of time you were a resident in a municipality for which PAMS is the tax administrator. Prorate your income, expenses and withholdings by using the simple formula below:

Total year income ÷12 months (or 365 days) x length of time living in municipality = income taxable by that jurisdiction

(The same formula can be used to calculate withholdings and expenses.)

You must also complete the change of address section on the top front of your final return.

What documentation do I need to submit with the final return?

You will need to support the amount reported on each line of your return. Therefore, you should include documents such as W-2s, state business reporting schedules and expense schedules. Each line of your tax return and instructions will specify the form or schedule required. Photocopies of documents are acceptable.

Where is my earned income reported on my W-2?

Report your local earned income in the box labeled "State Wages, Tips, Etc."

What is the Local Services Tax (LST)?

The Local Services Tax is a tax levied on persons who are employed in municipalities or school districts that have enacted the tax

How, and when, is the tax deducted from my pay?

If the LST rate is more than $10, the tax must be withheld on a prorated basis determined by the number of pay periods in your employer's calendar year. If the LST rate is $10 or less, you are required to pay the tax in a lump sum.

What if I am self-employed?

If the tax rate exceeds $10, it must be withheld on a prorated basis determined by the number of pay periods and paid on a quarterly basis. If the tax rate is $10 or less, you are required to pay the tax in a lump sum.

What if I have more than one job?

If you work in more than one occupation or taxing district, the district in which you are principally employed will collect the tax.

Will I have to pay up to $52 per each employer?

The total LST paid by an individual in a calendar year is limited to $52, regardless of the number of taxing districts in which that person works during the year.

How can I request a refund?

If you were employed in more than one taxing district and more than $52 was deducted from your pay, you can request a refund. Send a completed copy of the LST Refund Request Form and supporting documentation to your local tax office. Download the LST Refund Request Form now.

Is there a low-income exemption?

Yes. There is an exemption for taxpayers who earn less than $12,000 when the tax rate exceeds $10. The same income exemption may not apply for the school district portion of the tax and may result in a reduced refund. For taxing jurisdictions with tax rates of $10 or less, a different income limit may apply. If you meet the exemption requirement, complete an Exemption Form and return it to us. Download an Exemption Form now.