General Information For Filing Local Earned Income And Net Profits Tax Return

LINE BY LINE INSTRUCTIONS FOR COMPLETING LOCAL EARNED INCOME TAX RETURN

(General instructions are printed on the reverse side of this sheet)

LINE 1 Enter total of W-2 wages earned while a resident of Greencastle

LINE 8 On Line 6 enter the total of any net profits incurred from business, profession

SCHOOL DISTRICT. One copy of all W-2’s must be submitted with your

and/or farm: including limited liability companies and limited liability partnerships.

return. W-2 income should be prorated to where taxpayer lived when the income

On Line 7 enter net losses you incurred from your business, profession, and/or farm,

was earned. If you moved into our out of our taxing jurisdiction during the tax

including limited liability companies and limited liability partnerships. For other gen-

year, complete Sections “A” and “C” on the reverse of the TAX OFFICE’S

eral instructions concerning business, profession, or farm reporting see Line 7 instruc-

COPY of the return. This will help correctly prorate your income.

tions. Subtract Line 7 from Line 6 to arrive at the amount of net profits to report for

If the employer completed your W-2 form correctly, you should use the

each taxpayer. If the result is negative, enter 0. Use Line 8a to report any non-passive

“Local Wages” shown in Box 18 of the W-2 form. If your local wage box does

sub-chapter “S” profits or losses reported on your state tax return. This is needed when

not include your 401(k), 403(b) contributions, bonuses or other incentive pay-

we compare local and state income reporting and for auditing purposes. If you did not

ments, reimbursed moving expenses, or unaccounted for or excess business

receive a W-2 form representing fair compensation for the services you provided to a

expense reimbursements, they should be added to arrive at your correct local

sub-chapter “S” corporation, you may be taxed on the amount of the pass-thru profit.

wages. Due to a change in law, if you participated in a Section 125 Plan (a.k.a.

LINE 9 Enter the total of Lines 5 and 8. This is your total taxable earned income and

Flexible Spending or Cafeteria Plan) with your employer, or if you had imputed

net profits.

income for personal use of employer property, the “State Wages” on your W-2

form may be more accurate than the “Local Wages.” If these items account for

LINE 10 Enter 1% of line 9 (Line 9 multiplied by .01). This is your tax liability.

the only difference between your state and local wages, we will accept the lower

state wage figure.

LINE 11 Enter the total (or pro-rated portion if partial year resident) of all Pennsylva-

If the wages shown in the federal and/or Medicare wage boxes are higher

nia local tax withheld on your W-2’s. Some employers erroneously include unemploy-

and cannot be accounted for and reconciled by Box 12 and/or 14 as non-taxable

ment tax and occupational privilege tax. If the amount appears to be more than 1% of

items for state and/or local tax, the higher figure should be used. (Some items

your wages, contact your employer or our office for the correct withholding amount.

that may account for legitimate differences are the cost of group term life insur-

ance for coverage in excess of $50,000, 3rd Party Sick Pay, or prorated local

LINE 12 Enter the total of all quarterly tax payments for the filing tax year only. Also

and/or state wages if you moved during the tax year.) If you cannot account

add in any overpayment from the previous tax year credited to this tax year.

for differences in the various wage boxes on your W-2, you should ask your

LINE 13 Enter the total of Lines 11 and 12. This is the total of your withholdings,

employer to explain the differences and provide you with a statement to attach

credits and direct payments to be applied against your tax liability.

with your return.

LINE 2 (Note: Report any excess reimbursement of allowable employee busi-

LINE 14 If Line 10 is larger than line 13, subtract Line 13 from Line 10 and enter the

ness expenses on Line 4.) Per Act 166, we will accept the Pennsylvania Indi-

result. In all other cases, enter zero (0). If Line 14 is less than $1.00 you need not make

vidual Income Tax regulations for allowable employee business expenses.

any payment. However, you still must file a return.

Expenses claimed must be explained in detail giving as a minimum the infor-

LINE 15 If you are filing your return after the April 15 due date and you did not file

mation requested on the appropriate PA UE Schedule and the IRS Form 2106

for a local extension, enter $10.00. If both spouses file on this form, each would owe

when used to back up figures on the PA UE. Copies of these supporting sched-

the late fee.

ules are sufficient. A separate schedule must be used for each spouse and for

each job. Expense from one job may not be used to reduce compensation from

LINE 16 If for any reason the tax is not paid when due, interest at the rate of 1% for

another job. EXPENSES TAKEN WITHOUT PROPER SUPPORTING

each month during which the tax remains unpaid shall be added and collected. If you

DOCUMENTATION WILL BE SYSTEMATICALLY DENIED WITH-

are unsure of the amount of interest and penalty, if any, that applies to you, contact

OUT NOTIFICATION TO THE TAXPAYER. Records must be available

our office.

for verification. Estimates will not be accepted.

Example of expenses that can be deducted are union dues when the contact

LINE 17 Enter the total of Lines 14, 15 and 16. This is your total balance due. This

between the employer and the union requires membership in the union or a fair-

balance due must be paid in full when filing your return. Make checks payable to

share contribution in lieu of union membership, professional fees and licenses

Greencastle-Antrim Tax Bureau. Place your social security number on your check.

required as a condition of employment, cost and upkeep of work clothing pro-

Your cancelled check is your receipt. If receipt is requested, a self addressed stamped

vided they are not suitable for every day use and they are required as a condi-

envelope is required.

tion of employment, cost of small tools required but not provided by employer,

non-commuting business transportation, away from home over-night expense,

LINE 18 If Line 13 is larger than Line 10, subtract Line 10 from Line 13 and enter the

and office-in-home, moving, and education expenses. (Moving expenses only

result if $1.00 or more. This is your overpayment amount.

allowed for required transfer from one duty station to another for the same

LINE 19 Enter the portion of your Line 18 overpayment (minimum of $1.00) that you

employer.)

wish to be refunded.

Examples of expenses that cannot be deducted are non-required union dues,

“on call” telephone, travel to and from work, travel from union hall to work

LINE 20 Enter the portion of your Line 18 overpayment (minimum of $1.00) that you

assignments, child care, medical expenses, charitable contributions, personal

wish to be credited to your next year’s return.

expenses, taxes, interest, subscriptions to publications, dues to professional or

fraternal societies, Chambers of Commerce, or recreational club memberships,

and insurance, IRA, annuity and pension plan payments. For additional infor-

mation on employee business expenses, see the “Allowable Business Expense”

section of the PA 40 instructions.

LINE 3 Subtract Line 2 from Line 1 to arrive at taxable W-2 earnings.

LINE 4 Enter the total of other taxable earned income as detailed on back

of TAX OFFICE COPY of return (Section B). Use this line to report tips not

included in W-2 wages, excess reimbursements of employee business expenses,

fees (eg., director’s, executor’s, and trustee’s fees), taxable premature distribu-

tions from retirement plans, and any other earned income not reported elsewhere

on the return.

LINE 5 Enter the total of Lines 3 and 4. This is your total taxable earned income.

LINE 6 Enter the total of any net profits you incurred from your business,

profession and/or farm.

LINE 7 Enter the total of any net losses you incurred from your business,

profession, and/or farm. As we interpret Act 166, subchapter “S” pass-thru profits

continue to remain non-taxable locally, therefore, subchapter “S” pass -thru losses

are not deductible. Any profits from a business, profession, or farm should be

entered on Line 6. Use and submit copies of your PA state schedules C, F or

RK-1. The taxable portion of a partnership for earned income tax purposes is

usually the net earnings from self-employment less any Section 179 expense. If

a personal retirement plan (Keogh or IRA) has been used as an expense it must

be added to net profit/loss for local tax reporting.

General Information For Filing Local Earned Income And Net Profits Tax Return - Greencastle-Antrim Page 2

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