How do I determine the taxable amount of distributions from IRC Section 529 Qualified Tuition Account programs?
Only include amounts received from your 529 plan that were not used for qualified tuition and fees. For example: amounts used to pay for room and board do not count as qualified fees and should be included here.
Check the Pennsylvania Department of Revenue
website for more information on how to determine the taxable portion of any distributions for noneducational purposes.
website for more information on how to determine the taxable portion of any distributions for noneducational purposes.Do I owe taxes on distributions from life insurance, annuity, or endowment contracts?
If you invested in an annuity, including a retirement annuity that is not part of an employer-sponsored retirement program, you may have Pennsylvania taxable income when you begin receiving annuity payments. If you're required to report an amount from an annuity for federal income tax purposes, you're required to report the amount as interest income for Pennsylvania Personal Income Tax (PIT) purposes. Also, if you're required to report an amount from a life insurance and endowment contract for federal income tax purposes, you're required to report the amount as interest income for Pennsylvania PIT purposes.
Do I owe taxes on distributions from charitable gift annuities?
If you established a gift annuity to a charitable organization from which you're receiving periodic payments, you have Pennsylvania taxable income. Charitable gift annuities report their income as interest income on Line 4 of Pennsylvania Schedule A using the amounts reported or included in gross income for federal income tax purposes (ordinary income and capital gains income), regardless of when they began reporting the income from that charitable gift annuity. If a charitable gift annuity is exchanged or sold in the future, the Pennsylvania basis in a charitable gift annuity will be different from the federal basis for charitable gift annuities from which payments began prior to January 1, 2005. Income from the sale or exchange of a charitable gift annuity is reported on Pennsylvania Schedule D.
Should I report Gambling and Lottery Winnings?
Pennsylvania law imposes income tax on Pennsylvania residents on all gambling and lottery winnings from any source, except prizes from playing the Pennsylvania State Lottery. As a Pennsylvania resident, you must include lottery winnings from other states and countries.
Gambling and lottery winnings include cash, the value of property (automobiles, jewelry, electronic devices, appliances, clothes, etc.), the value of the use of property (trips, vacations, airline tickets, cruises, etc.), and other items of value. You may only deduct your costs of gambling, wagering, betting, and playing lotteries from your winnings. You may not deduct any expenses (programs, tip sheets, travel, meals, lodging, etc.) that you incurred to take part in gambling, wagering, betting, and lottery activities.
IMPORTANT: You may not deduct the cost of PA State Lottery tickets from other PA taxable gambling and lottery winnings.
For more information, see the PA-40 instructions.
Gambling and lottery winnings include cash, the value of property (automobiles, jewelry, electronic devices, appliances, clothes, etc.), the value of the use of property (trips, vacations, airline tickets, cruises, etc.), and other items of value. You may only deduct your costs of gambling, wagering, betting, and playing lotteries from your winnings. You may not deduct any expenses (programs, tip sheets, travel, meals, lodging, etc.) that you incurred to take part in gambling, wagering, betting, and lottery activities.
IMPORTANT: You may not deduct the cost of PA State Lottery tickets from other PA taxable gambling and lottery winnings.
For more information, see the PA-40 instructions.
Do I need to report Partnership Distributions?
Report any gain you realize from other partnership distributions that exceed your ownership basis in the partnership. You must obtain, complete and submit Form REV-999, Partner PA Outside Tax Basis in a Partnership Worksheet.
Do I need to report Pennsylvania S Corporation Distributions?
Report any gain you realize from other Pennsylvania S corporation
distributions that exceed your ownership basis in the
Pennsylvania S corporation. You must obtain, complete and
submit Form REV-998, Shareholder Tax Basis in PA
S Corporation Stock Worksheet.
Should I report Gains from Exchange of Insurance Contracts?
If you have a sale, exchange, or disposition of an insurance contract that does not qualify as tax exempt under IRC Section 1035, report the taxable exchange of any insurance contracts you reported for federal income tax purposes. If you have more than one taxable exchange of contracts, report the total gain you realized. See the PA-40 instructions for a description of the tax exempt exchanges covered under IRC Section 1035.
What is tax forgiveness?
Tax Forgiveness is a credit that allows eligible taxpayers to
reduce all or part of their Pennsylvania tax liability. Tax Forgiveness gives a state tax refund to some taxpayers and forgives some taxpayers of their liabilities even if they have not paid their Pennsylvania Personal Income Tax.
Who is eligible for tax forgiveness?
You, and your spouse if applicable, are eligible if all of the following apply:
NOTE: A dependent child may be eligible if he or she is a dependent on the Pennsylvania Schedule SP of his or her parents, grandparents, or foster parents. For more information, see the PA-40 instructions.
- You are subject to Pennsylvania personal income tax. You and/or your spouse are liable for Pennsylvania tax on your income (or would be liable if you earned, received, or realized Pennsylvania taxable income).
- You are not a dependent on another person's federal tax return.
- Your total eligibility income (which includes some nontaxable income) must be below certain thresholds for the filing status you've chosen.
NOTE: A dependent child may be eligible if he or she is a dependent on the Pennsylvania Schedule SP of his or her parents, grandparents, or foster parents. For more information, see the PA-40 instructions.
How are contributions to the Wild Resource Conservation Fund used?
Contributions to this nonprofit fund help Pennsylvania's resource agencies protect and restore Pennsylvania's non-game wildlife and native wild plants.
You can also send a direct, tax-deductible contribution to:
Wild Resource Conservation Fund
PO Box 8764
Harrisburg, PA 17105-8764
For more information, visit: www.dcnr.state.pa.us/wrcp/
You can also send a direct, tax-deductible contribution to:
Wild Resource Conservation Fund
PO Box 8764
Harrisburg, PA 17105-8764
For more information, visit: www.dcnr.state.pa.us/wrcp/
How are contributions to the Military Family Relief Assistance Program used?
Contributions to this fund help Pennsylvania service members and their families by providing financial assistance to those with a direct and immediate financial need as a result of military service.
You can also send a direct, tax-deductible gift to:
Military Family Relief Assistance Program
c/o Department of Military and Veterans Affairs
Fort Indiantown Gap
Annville, PA 17003-5002
For more information visit: www.dmva.state.pa.us or call toll free 1-866-292-7201
You can also send a direct, tax-deductible gift to:
Military Family Relief Assistance Program
c/o Department of Military and Veterans Affairs
Fort Indiantown Gap
Annville, PA 17003-5002
For more information visit: www.dmva.state.pa.us
or call toll free 1-866-292-7201How are contributions to the Memorial Organ and Tissue Donation Awareness Trust Fund used?
Money from this fund will support educational programs that encourage people to become organ and tissue donors.
You can also send a direct contribution. Make your check or money order payable to:
Governor Robert P. Casey Memorial Trust Fund
Mail to: Department of Health, Bureau of Administrative and Financial Services, Division of Budget, 625 Forster Street, Health & Welfare Building, Room 832
Harrisburg, PA 17120
You can also send a direct contribution. Make your check or money order payable to:
Governor Robert P. Casey Memorial Trust Fund
Mail to: Department of Health, Bureau of Administrative and Financial Services, Division of Budget, 625 Forster Street, Health & Welfare Building, Room 832
Harrisburg, PA 17120
How are contributions to the Juvenile Diabetes Cure Research Fund used?
Contributions to this fund are used to try to find a cure to Type 1 diabetes. Type 1 diabetes is a condition where the body does not produce insulin, the hormone needed to convert sugar (glucose), starches, and other food into energy needed for living. Type 1 diabetes usually strikes children and young adults. Persons with Type 1 diabetes are required to give themselves insulin every day.
You can also send a direct contribution. Make your check or money order payable to:
PA Department of Health, Juvenile (Type 1) Diabetes Cure Research Fund
Bureau of Administrative and Financial Services, Division of Budget
625 Forster Street, Health and Welfare Building, Room 832
Harrisburg, PA 17120
You can also send a direct contribution. Make your check or money order payable to:
PA Department of Health, Juvenile (Type 1) Diabetes Cure Research Fund
Bureau of Administrative and Financial Services, Division of Budget
625 Forster Street, Health and Welfare Building, Room 832
Harrisburg, PA 17120
How are contributions to the Breast and Cervical Cancer Research Fund used?
Contributions are used to fund breast and cervical cancer research conducted by Pennsylvania researchers.
You can also send a direct contribution. Make your check or money order payable to:
PBCC's Refunds for Research fund
c/o PA Breast Cancer Coalition
344 N Reading Road
Ephrata, PA 17522
You can also send a direct contribution. Make your check or money order payable to:
PBCC's Refunds for Research fund
c/o PA Breast Cancer Coalition
344 N Reading Road
Ephrata, PA 17522
What are eligible Employer-Sponsored Retirement Plans?
Pennsylvania doesn't impose income tax on payments you receive that are commonly recognized retirement benefits distributed from eligible employer-sponsored retirement plans. Eligible employer-sponsored retirement plans can, but do not necessarily, include employer-sponsored deferred compensation plans, pension or profit sharing plans, 401(k) plans, thrift plans, thrift savings plans, or employee welfare plans. Ask your employer or plan administrator if your employer's retirement plan is an eligible plan for Pennsylvania income tax purposes. Eligible nonemployer-sponsored retirement plans can, but do not necessarily, include Individual Retirement Accounts (IRAs) or Roth IRAs.
Are withdrawals from Individual Retirement Account (IRAs) taxable?
Distributions from an IRA, including a federal Roth IRA, are taxable to the extent the distribution exceeds your previously taxed contributions. Distributions you receive after retiring but before age 59 1/2 are taxable even if you receive substantially equal payments and you do not pay the federal penalty for an early withdrawal. Pennsylvania law does not have any exceptions similar to the federal exceptions for withdrawal before age 59 1/2. However, distributions from an IRA are not taxable if one or both of the following is true:
- The payments are received, including lump sum distributions, on or after reaching the age of 59 1/2.
- The payments are paid to the estate or designated beneficiary of the participant because of the participant's death.
Is a rollover of a Pension or IRA Distribution taxable?
If you roll over your retirement account distribution or IRA distribution into another qualified fund, the distribution is not taxable for Pennsylvania purposes.
What are Code 1 & 2 Early Distributions?
If Box 7 of your 1099-R shows a 1 or 2 in it, that distribution is taxable for Pennsylvania purposes unless both of the following are true:
- Your pension or retirement plan was an eligible plan for PA tax purposes.
- You retired after meeting the age conditions of the plan or years of service conditions of the plan.
What is a Code 3 or 4 Death or Disability Distribution?
If Box 7 of your 1099-R shows a 3 or 4 in it, this is a distribution due to death or disability. A distribution due to death is not taxable for Pennsylvania purposes. A distribution due to disability generally is not taxable for Pennsylvania purposes.
What is a Code 7 Normal Distribution?
If Box 7 of your 1099-R shows a 7 in it, this distribution is not taxable if you met the plan requirements (the age and/or years of service required by the plan) for retirement, and you retired after meeting those requirements.
CAUTION: If the distribution is from an annuity, it may be taxable. See the PA-40 form instructions.
CAUTION: If the distribution is from an annuity, it may be taxable. See the PA-40 form instructions.
What union dues are deductible?
Union dues, assessments, and initiation fees are allowable business expenses if one or both of the following is true:
- Such payments are a condition of continued membership in a union, and membership is related directly to your present job.
- Such payments are a required wage deduction under an agency shop agreement.
What work clothes or uniforms are deductible?
The costs of purchasing and maintaining uniforms and work clothing to protect you from bodily injury are allowable business expenses if both of the following apply:
- The uniforms and clothing are of a type specifically required by the employer to be purchased as a condition of continued employment
- The uniforms and clothing are not adaptable to general usage.
What small tools and supplies are deductible?
Expenditures for small tools and supplies that your employer does not provide are allowable business expenses if you must have those tools and supplies to perform the duties of your job.
What license or insurance fees are deductible?
Trade, professional, or occupational licenses or fees required as a condition of employment are allowable business expenses. Include malpractice insurance and fidelity bond premiums where required by law or by your employer.
What are parking fees, overnight expense, and meals and entertainment?
Enter the same amounts for parking fees, travel expenses away from home, and meals and entertainment expense as you would enter on the federal Form 2106. See the instructions for the federal Form 2106 for the rules regarding the deductibility of these expenses. However, meals and entertainment expenses are 100 percent deductible for Pennsylvania, whereas they are only 50 percent deductible on the federal Form 2106.
Meals while not in overnight traveling status (e.g. meals while working late) and federal per diem rates for meals and incidental expenses are not allowable.
What are miscellaneous expenses?
Include any expenses that you would report on your federal Form 2106, such as business gifts. See the federal Form 2106 instructions for more details on deductible miscellaneous expenses.
How can I find out my school district code?
If your school district isn't listed, and you don't know your code, you can find it listed in the school district chart as shown on the Pennsylvania Department of Revenue Website: School District Codes.
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