PA Local Tax Knowledge
Earned Income Tax
City taxes and School District taxes are called Earned Income Taxes (EIT). EIT tax rates are calculated from the resident geocode and worksite geocode. The EIT rate owed and to be withheld is always the higher of the two rates in Vertex (Vertex will automatically do this). Please note that Philadelphia taxes are the exception and these residents do not pay any other Pennsylvania municipality taxes.
Local Services Tax
Occupational Privilege Tax (OPT) or Local Services Tax (LST) are withheld from the employment location (worksite geocode), regardless of the residence location, for both Pennsylvania residents and nonresidents working in Pennsylvania. Pennsylvania residents working in other states are exempt from these taxes.
Political Subdivision Codes
PSD Codes are six-digit numbers that uniquely identify each municipality—township, borough, city—in Pennsylvania. PSD Codes play an integral role in assisting employers and Local Tax Collectors to remit and distribute the correct amount of local Earned Income Tax to the appropriate taxing jurisdictions. PSD Code Breakdown:
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Residency Certification Form
(Pennsylvania) Employees are required to complete a Residency Certification Form upon hire (and with any subsequent change in address) in order to confirm the PSD Codes and EIT Rates being used by the employer for the employees’ local taxing purposes. Employers maintain this form in the employees’ personnel files. (Source:http://dced.pa.gov/local-g
Set Up PA Local Taxes in Avionte
Pennsylvania Local Taxes are calculated through Vertex from the Employee Geocode/School District settings and the Order Address Geocode.
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How to Determine Resident PSD Codes and Tax Rates
Determining a Resident PSD
Pennsylvania employees are required to complete a Residency Certification Formupon hire (and with any subsequent change in address) in order to confirm the PSD Codes and EIT Rates being used by the employer for the employees’ local taxing purposes. Employers maintain this form in the employees’ personnel files. This is an extension of the Federal W4. When the employee’s Resident PSD code is given to the Residency Certification Form; the PSD code’s corresponding County, School District, and Mu
Avionte Tax Reports
Reports where PA Local Taxes can be found are: Taxes Summary Lite, Taxes Summary AQ, Taxes Remittance EE, Taxes Remittance ER, and the Get PA EIT Details AQ. 1. To calculate Pennsylvania Local EIT Taxes, add up all the Pennsylvania city taxes and school district (SD, ASD, MSD) taxes for a given tax period. 2. To calculate Pennsylvania Local LST Tax
Electronic Filings
The current exports that Avionte has available to submit Pennsylvania locals electronically are for bulk electronic filing with a singleLocal Income Tax Collector, which will then distribute taxes accordingly to the correctTax Collection Districtsbased on employee and worksite PSD codes set up inthe above section. Avionte presently has the below ex
Other Pennsylvania Local Taxes Information
ACT 32 Video Pennsylvania local Information webpage: 1. http://dced.pa.gov/local-government/local-income-tax-information/ Pennsylvania local FAQ: 1. http://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/ Pennsylvania Local Legislature: 1. http://dced.pa.gov/download/act-32-of-2008-procedure-manual/?wpdmdl=56767