Form 1306 - Local Earned Income Tax Return (Page 3 of 5) in pdf

I301-2

LINE 10:MISCELLANEOUS CREDITS

GENERAL RULES APPLICABLE TO ALL LINE 10 CREDITS: (1) Credits for income taxes paid to other states must first be used

against your Pennsylvania state income tax liability; any credit remaining thereafter may be used against your local earned income tax

liability. (2) Credits for income taxes paid to political subdivisions located outside of Pennsylvania or for wage taxes paid to Philadelphia

may be taken directly against your local earned income tax liability. (3) In calculating your credit for income taxes paid to another state

or to a political subdivision, note that the same items of income must be subject to both your local earned income tax and the out-of-

state tax. (4) No credit for income taxes paid to another state or political subdivision may exceed your total local earned income

tax liability.

CREDIT FOR TAXES PAID TO OTHER STATES: You may take a credit based upon the gross earnings taxed both in another state

and in Pennsylvania that is in excess of Pennsylvania state personal income tax rate. THIS CREDIT WILL BE DISALLOWED IF THE

FOREIGN STATE RETURN AND YOUR W-2 FORM SHOWING STATE INCOME TAX WITHHELD IS NOT PROVIDED. No

credits are given for state income taxes paid to states that reciprocate with the Commonwealth of Pennsylvania. These states

are: Maryland, New Jersey, Ohio, Virginia, West Virginia, and Indiana.

EXAMPLE: Taxpayer earned wages of $10,000.00 in Delaware and paid an income tax liability to that state of $317.00. Assuming the

current Pennsylvania state tax rate is 3.07% for the tax year in question, since the $317.00 exceeds 3.07% (PA Tax) amount of $307.00

by $10.00, the $10.00 may be credited against your local income tax.

Gross Income

(1)

$10,000.00

Local Tax 1%

x .01

(2)

100.00

Tax paid to Delaware

(3)

317.00

PA Income Tax (3.07% x $10,000.00)

(4)

307.00

Credit to be used against Local Tax

(Line 3 minus Line 4)

On Line 12 of the tax return, enter this amount

or the amount on Line 2 of worksheet,

whichever is less

(5)

10.00

If all your wages or gross earnings are subject to Delaware State Income Tax (not PA), use the above example to complete your tax

obligation on Worksheet located on the reverse side of the tax return.

If you had earned income NOT taxed by Delaware, this income would be subject to the earned income tax effective in your district and

must be shown separately on the Local Earned Income Tax Return. You may not use any tax paid to another state as credit on earnings

outside the other state.

CREDIT FOR TAXES PAID TO POLITICAL SUBDIVISIONS OUTSIDE OF PENNSYLVANIA: You may take a credit based

upon the gross earnings taxed in both another political subdivision and in your home taxing district in Pennsylvania. THIS CREDIT

W ILL BE DISALLOWED IF THE FOREIGN CITY RETURN AND OR YOUR W-2 FORM SHOWING CITY INCOME TAX

WITHHELD IS NOT PROVIDED.

CREDIT FOR TAXES TO PHILADELPHIA: You may use any wage tax paid to Philadelphia as a credit on wages, salaries and

commissions, etc., or net profits earned outside Philadelphia. You are not liable for duplicate payment of a Wage Tax to your resident

district. You must complete the Local Earned Income Tax Return. A COPY OF YOUR W-2 AND/OR VERIFICATION OF TAXES

PAID MUST BE ENCLOSED WITH THE FORM OR CREDIT WILL BE DISALLOWED. No refunds or credits will be allowed for

any overpayment made to Philadelphia. On line 10 of the tax return, enter the amount of Philadelphia wage tax paid.

CREDIT FOR TAXES PAID TO PITTSBURGH: If you work in the City of Pittsburgh and the Pittsburgh Earned Income Tax was

withheld by your employer for the City of Pittsburgh, you must apply for a refund directly from the City. Earned Income Taxes are due

to the municipality/school district in which you reside, not where you work.

To obtain refund forms from the City of Pittsburgh, you

may call 412-255-2524. You can download the form from their website at The City tax office will

supply you with the proper forms to be filed with them for a refund. Before these refund forms can be filed with the City, they must be

signed by the tax collector in your municipality/school district verifying that taxes for the year in question have been paid to the proper

taxing authority. You may come into our office to have this form signed or mail it with a self-addressed, stamped envelope. We will

return it to you as soon as possible.

LINE 11: TOTAL: Enter the sum of lines 7+8+9+10.

LINE 12: OVERPAYMENT OF TAX: If tax (line 6) is less than your credits (line 11), enter amount of overpayment. If you have an

overpayment of taxes in excess of $1.00, you may elect to receive a refund or take same as credit against the next year's tax liability.

A 1099 will be issued to the Federal Government for any credit or refund in excess of $10.00. Refunds: If you fail to check either box

under line 12 to indicate either a credit or a refund, a refund will be issued to you. If you elect to take a credit against next year’s

liability, a Federal 1099 for the amount of the credit given for the next tax year will be issued to you and to the Federal Government.

LINE 13: AMOUNT OF TAX DUE: If tax (line 6) is larger than your credits (line 11), enter amount of tax due. If less than $1.00, ENTER

ZERO.

LINE 14: INTEREST AND PENALTIES: If for any reason the tax is not paid when due, interest at the rate of six percent per annum on the

amount of said tax, and an additional penalty of one-half of one percent of the amount of the unpaid tax for each month or fraction

thereof during which the tax remains unpaid, shall be added and collected. Additional costs will be charged for any return received

after the due date.

LINE 15: TOTAL AMOUNT DUE: The sum of lines 13 + 14. OMIT IF LESS THAN $1.00.

LINE 16: Write each account’s total Earned Income Tax (figures from line 5 on front of form) on line 16.

BOX 17: Write each account’s total amount due on line 17.

BOX 18: Write total amount of enclosed check in line 18.

NOTE: All accounts are subject to audit and review. Local or city copy of W-2 and/or supporting schedules must be enclosed with tax return.

(Photocopies of W-2s and schedules are accepted).

Form 1306 - Local Earned Income Tax Return Page 3

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