Act 32 For Employees/Self-Employed
Employers who maintain worksites in PA or employ individuals who may work from their homes are required to withhold applicable earned income tax from those employees.
Under Act 32, employers are required to withhold the higher of the employee's resident earned income tax amount (rate of total resident EIT where they reside) vs. the employee's municipal non-resident earned income tax amount (rate of total non-resident EIT where they are employed). All new employees are required by law to complete a Residency Certification Form. This form must also be completed with any name or address change. Failure to supply employer with this information may result in a higher tax rate being withheld than what an employee is responsible for.
Do you live and work in Philadelphia? - Current Philadelphia withholding rules apply.
Do you work in Philadelphia, but live outside of Philadelphia? - Current Philadelphia withholding rules apply.
Are you an employee that lives in Philadelphia, but works in PA outside of Philadelphia? - Act 32 (and the Residency Certification Form) does not apply. Act 48 of 1994 indicates that every employer, who has a place of business within the Commonwealth but outside of Philadelphia, shall withhold the Philadelphia resident Earned Income Tax from their employees (who are Philadelphia residents) and remit the withholdings directly to Philadelphia. (Updated 12/20/11)
Step 1. – Provide complete street address of residence, (PO boxes, Rural Routes or Rural Delivery box numbers are not acceptable) sign and date Residency Certification Form and file with Employer. The employee must provide updated information, sign and date a new form upon change of address.
Political Subdivison Codes are used to identify the municipalities and school districts for each tax collection district.
To determine EIT rates, PSD Codes, and tax collector/officer contact information, use the Address Search.
DO's and DON'Ts of the Address Search Application:
- DO use Microsoft Internet Explorer: System requirements are Microsoft Internet Explorer 6.0 or later: Pop-Up Blocker must be disabled.
- DO NOT enter P. O. Boxes or Rural Route Addresses: These will not work in the application.
- DO remember that all addresses may not be in the system: If your address doesn’t show up, FOLLOW the instructions noted at the bottom of the “Find Your Withholding Rates by Address” page. You must contact the Tax Collector/Officer to determine local tax rates and PSD Codes.
- DO remember that if you Live or Work out of state: Enter the PA address in both the work and home address fields. On the Residency Certificate Form enter only the relevant information for the PA address. For the out-of-state address enter the PSD code 880000 and the EIT rate 0.
How should employers withhold local EIT from employees who travel from site to site on a regular basis and do not maintain a place of employment in the areas where they work?
1. If an employee is working temporarily at a PA facility for a period of time that encompasses a “reporting quarter,” then the facility site would be the work location address used to determine the EIT rate and corresponding PSD code in the Address Search.
2. If an individual works for an employer who has a central business location in PA, but the employee “floats” or is transferred daily, weekly or monthly between other business sites, then the central or main employer business location would be the work location address to determine the EIT rate and corresponding PSD code in the Address Search.
3. If an employee is hired by an employer and receives work orders or instructions at home in PA but physically reports to other business sites on a daily, weekly or monthly basis, then the employee’s home address should be used as both the home and work location address used to determine the EIT rates and corresponding PSD codes in the Address Search.
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