Philadelphia: The city’s Department of Revenue issued revised wage tax policy guidance [PDF 134 KB] for non-resident employees and reiterated that non-resident employees who work for Philadelphia-based employers are not subject to wage tax during the time they are required to work outside of Philadelphia, including working from home. Municipaility EIT rates are available on the In addition, the election should only be made in the month when the payment is received. My w2 has no state tax info, but a Philadelphia wage tax. I will have to send city taxes to Philadelphia (3.8%). My company deducts Delaware (non-resident) wage taxes from my paycheck. Answer: Nonresident employees of Philadelphia are eligible for a Philadelphia wage tax refund on work performed outside of Philadelphia. How to Obtain an Exemption from Philadelphia Wage Tax Withholding ... to this payment is performed entirely outside of the City of Philadelphia. For starters, there’s no getting around the Wage Tax on Philadelphia residents. Solved: If I live outside of Philadelphia, but work in Philadelphia do I pay the slightly lower non- resident city wage tax rate? Philadelphia updates Wage Tax guidance for employees ordered to work from home outside of the city for the employer's convenience On May 4, 2020, the Philadelphia Department of Revenue updated its guidance for withholding the Wage Tax from nonresident employees who are working in the city temporarily due to COVID-19; the previous guidance was published on March 26,2020. Philadelphia City Wage Tax Refund Petition . Here is a link to four examples of how Philadelphia residents working outside of PA may be affected. For instance, New Jersey and Pennsylvania have a reciprocal personal income tax agreement, which means Garden State residents working in Pennsylvania won't face the Keystone State's income … By FY22, those living in Philadelphia and nonresidents working in Philadelphia can expect the Wage Tax rate to decline to 3.6997% for residents and 3.2953% for nonresidents. The city’s wage tax, currently 3.8712% for residents and 3.4481% for nonresidents, is the largest source of revenue to the general fund, raising about $2 billion per year. Non-resident employees based on work performed outside Philadelphia – Eligible taxpayers may file a Wage Tax Refund Petition to claim a refund. Employers can stop withholding the tax from the paychecks of non-Philadelphia residents who are now required to work remotely, city spokesperson Mike Dunn said. Philadelphia has a 3.924% wage tax on residents and a 3.495% tax on non-residents for wages earned in the city as of August 2013. Those same non-resident workers are exempt from the tax when their employer requires them to work outside … Non-Pennsylvania residents who work in Philadelphia but do not file a Pennsylvania income tax return must include a signed copy of their state income tax return to be eligible for the income … Washington, D.C., has sought to enact a commuter tax to recover costs of providing city services to the approximately 300,000 people who commute to the city from suburban Maryland and Virginia. Philadelphia resident with taxable income who doesn’t have the City Wage Tax withheld from your paycheck. I also work in Delaware and live in Philadelphia. The wage tax rate for residents of Philadelphia was not increased and remains at 3.8712% (.038712). the wage tax from their employees. Guidance for Supervisors . For New Jersey residents who currently elect … City officials increased the non-resident wage tax rate this year from 3.4481% to 3.5019% for fiscal year 2021 to try to make up for some of the expected revenue losses. A non-resident who works in Philadelphia and doesn’t have the City Wage Tax withheld from your paycheck. The city wage tax rate in Philadelphia is a flat 3.93% for residents and 3.50% for nonresidents who work in the city. City officials argue that wage taxes go toward expenses such as road maintenance and public safety, and commuters use those services. This recently reduced wage tax of 3.8907% (effective July 1, 2017) is assessed on a Philadelphia resident no matter where their employer is located. outside of Philadelphia, and to non-residents for services performed within Philadelphia. Philadelphia levies a 3.4481% wage tax on people who work but don't live in the city. Dubow said the proposed refunds would cost as much as $25 million. While the examples show the effect of one tax year, four tax years remain open for refunds (2013-2016). The rates are expected to decrease by a quarter of a percent, beginning July 1. Employees who are required to work at various times outside of Philadelphia within a calendar year and who are nonresidents of Philadelphia, may file for a wage tax refund claim directly with the City of Philadelphia. For example, the city of Philadelphia imposes a wage tax on all resident and non-resident individuals working in the city. I have a small withholding of Income Taxes for Philadelphia as the majority of my W-2 income is from New Jersey. General Tax Information. The tax rate, currently 3.8809 percent for Philadelphia residents and 3.4567 percent for nonresidents who work in the city, gets reduced a little bit every year. Is that what is meant by The Philadelphia City Wage Tax applies to all taxable compensation to residents of Philadelphia, even if earned. City of Philadelphia residents and non-residents working in Philadelphia are urged to check their paychecks after July 1, 2018, to ensure the new rate is applied. Philadelphia does allow residents employees working in a Pennsylvania local earned income tax (EIT) jurisdiction to take a credit. The guidance was published to address the situation that many employees have been forced to work from home, many for the first time. It has long been a source of ire for businesses and workers. Harper could save millions, however, if he lived outside the city, paying just $5.1 million in Philadelphia wage taxes in the next 13 years, the Inquirer estimated. But they don't receive that money from residents who work in Philadelphia, or from workers who live in the city. The City of Philadelphia Department of Revenue announced on March 26, 2020, that nonresident employees based in Philadelphia are not subject to the Philadelphia Wage Tax during the time they are ordered to work outside of Philadelphia. But don’t expect big savings — for someone with a $50,000 salary, the reductions planned for fiscal year 2020 would mean about $5 less in wage taxes. If it is not deducted by the employer, as is common for Philadelphia residents who work in other states, it is the responsibility of the employee to register for an Earnings Tax Account. Is this normal, and how does this affect my nj state return? Employees working in the City of Philadelphia shall be covered under the Sterling Act. Even More Taxes. Is this normal, and how does this affect my nj state return? Effective April 1, 2020 for employees paid monthly and March 28, 2020 for employees paid biweekly, the Philadelphia Non-Resident Wage Tax payroll deduction will be turned off for the applicable employee population. Be certain your payroll systems are updated to reflect the increased non-resident tax rate. All Philadelphia residents owe the City Wage Tax, regardless of where they work. Read More. There is a high likelihood you are due a refund if you lived in Philadelphia and worked in DE or NY during any of these years. … If a non-resident of Philadelphia works for an employer within the city limits, 3.4654% Wage Tax (effective July 1, 2017) will be due. 3 To the extent a Philadelphia non-resident works at an employer in the city, the non-resident must pay the wage tax if the employee works at the office, or the employer allows the non-resident to work from home for the sake of convenience. The tax applies to payments that a person receives from an employer in return for work or services. exemption from withholding of Philadelphia Wage Tax: Q: Can the university stop withholding Wage Taxes from the pay of non-resident employees who are working outside of the City at the direction of the university? The employees also provide assistance to callers concerning their City of New Philadelphia income tax issues. It does not deduct city (Philadelphia) wage taxes from my paycheck. At its height, the Philadelphia Wage Tax reached 4.96% in 1985. But officials outside the city say they have to pay the same bills in their own backyards. The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.4567% (.034567). Procedures: 1. Since the mid-1990s, Philadelphia mayors have worked to lower the rate. The July 1 st city wage tax increase will take effect the same week that Philadelphia moves into the green phase for businesses to reopen. Salaried and commission employees should file a Philadelphia Wage Tax Refund Petition to claim the refund. Other interesting taxes a resident may come across include state taxes on cigarettes, beer, and spirits. The Earnings Tax, Net Profits Tax and School Income Tax are also part of the rate change. Therefore, the wages of employees who are working remotely outside the City of Philadelphia are not applicable to City Wage Tax. Tax Refund Opportunity for Philadelphia Residents Working Outside PA. Posted … The City Wage Tax is a tax on salaries, wages, commissions, and other compensation. This reduction is part of . A: Yes. Philadelphia’s wage tax, long among the highest in the nation, claims close to 4 percent of income earned by Philadelphia residents, and just under 3.5 percent for those who live elsewhere but work in the city. Employees working for 90 or more consecutive days at a job location, the greater of the employee’s resident tax or the employee’s nonresident tax based on the job location. Non-residents who work in Philadelphia must also pay the Wage Tax. Residents of Philadelphia pay a flat city income tax of 3.93% on earned income, in addition to the Pennsylvania income tax and the Federal income tax.. Nonresidents who work in Philadelphia pay a local income tax of 3.50%, which is 0.43% lower than the local income tax paid by residents. Philadelphia Wage Tax Refund Request Form for 2020 January 8, 2021 / in Client News Alerts / by Adrienne Straccione If your employer asked you to work from home in 2020, instead of physically working at their location within the Philadelphia city limits, you may be eligible for a tax refund if your employer withheld the Philadelphia wage tax from your pay. Referred to as 'sin taxes', the rates are $1.60 per pack, $.08 per gallon (beer), and $7.23 per gallon (spirits). Yes. But still they expect a … Philadelphia residents working outside of Pennsylvania are now eligible to claim a credit against their Philadelphia Wage Tax for taxes paid to localities outside of Pennsylvania. The only way to escape this tax would be to work just outside the city lines in a co-working office. Lost Revenue Stream. Rate: 3.9102% (Resident) 3.4828% (Non-Resident) City of Philadelphia Business Tax Basics Does this affect my nj state return residents of Philadelphia who are working remotely outside City. Taxable income who doesn ’ t have the City of Philadelphia imposes a Tax. Month when the payment is performed entirely outside of Philadelphia Business Tax only made... Quarter of a percent, beginning July 1 reflect the increased non-resident Tax rate for of. 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