  |
Andrea J. Scherer Your Bucks County Connection
|
 |
|
Yardley Office |
•
• |
|
Office: (215) 493-5600
X 708 Buying Standard and Poor's School Information Pennsbury School Redistricting Plan Selling Tips on Preparing Your Home For Sale Miscellaneous |
The following information is for informational purposes only and should be verified through a qualified accountant before making real estate decisions. Federal Income Tax Occupation Tax Pennsylvania Income Tax Per Capita/Head/Occupation Privilege Tax Local Earned Income Taxes Personal Property Taxes A taxpayer may exclude up to $250K ($500K if married filing jointly) of realized gains from the sale of a principal residence. In order to qualify for the exclusion, the taxpayer must have owned the residence for at least two of the last five years before the sale, the taxpayer must have occupied the residence as the principal residence adding up to at least two years of the last five years, and the exclusion must not have been used for any other residence sold or exchanged during the two year period ending on the date of the current sale or exchange. If the residence was used as a rental or business property during the ownership period, gain must be recognized to the extent of depreciation claimed after May 6, 1997, even if the property is no longer used for rental or business purposes at the time of sale. The loss on the sale of a personal residence is not a taxable transaction.
PA has a flat tax of 3.07% assessed against 8 classes of income (compensation, net profits from a business or profession, net gains from the sale of real or personal property, net gains or income from rents, royalties, patents or copyrights, dividends, interest, gambling/lottery winnings [other than from PA], and net gains from trust/estates). Losses from one type of income cannot be used to offset gains from another type of income (e.g. capital losses from earned income). A loss from one spouse cannot be used to offset the income of the other spouse. Gains on the sale of a personal residence are no longer taxable, however, if a portion of the residence was used for a trade or business, the gain must be prorated between business and personal tax is assessed against the business portion. PA residents who work in NJ are taxed in PA per a reciprocal agreement between the states. PA residents who work in NY must pay taxes there and take credit against their PA liability. Residents in this situation may have to pay estimated taxes to PA to avoid late payment penalties and interest on their liability.
Under PA law, local communities and school districts may assess a tax on earned income. The maximum tax allowed (except in Philadelphia [4.0112% for non-residents] and Pittsburgh) is 1%. The tax may be split between the school district and the community. You may be assessed the tax by your employer, if the location of your work has this type of tax enacted. You will receive credit for any payments made to another taxing district. Click here to see 2007 municipality Earned Income Tax/Occupation Privilege Tax schedule. If the employer is not in a district that has the tax, they may withhold the tax for you, or you may have to pay quarterly estimates. Taxable income is calculated the same as PA taxable income (as compared to Federal taxable income). Current school districts and towns in the surrounding area that assess the 1% tax are:
This tax is assessed against the valuation placed on the taxpayer’s job description (doctor, teacher, clerical worker, etc). Each job classification has a value assessed and the tax is based on the mileage rate versus the assigned value. Homemakers, students, and unemployed individuals are exempt from the tax. The Council Rock school district is the only local school district to assess this tax at the present time.
Per Capita/Head/Occupation Privilege Tax Almost all local communities have some form of per capita, head count, or occupation privilege tax. The rate ranges between $5-10 per adult resident. With the exception of the Occupational Privilege Tax, the taxes are based on residency, not income. Click here to see 2003 municipality Earned Income Tax/Occupation Privilege Tax schedule.
At present, there are no taxes of this type assessed in PA.
NJ & PA Income Tax Schedule (2006) New Jersey - Single
Pennsylvania Flat rate – 3.07% | |||||||||||||||||||||||||||||
