More than most other American states, Pennsylvania taxes are more likely to be assessed by individual towns or boroughs. Local income tax requirements for employers change depending on PSD, or Political Subdivision, code. However, figuring out your PA local tax withholding isn’t as simple as typing your address into a search engine. We’ll walk you through the steps of figuring out your tax requirements and point you toward the appropriate PA local tax withholding forms.
Figuring Out Your PSD Code
The Pennsylvania Department of Community and Economic Development has a search tool to help you assess your withholding rates by address. Use this site to figure out your PSD Code. Be warned, however, that the state provides a disclaimer about the accuracy of the information obtained from the site. The geo-coding system used is outside the control of the State government, so we also recommend checking the U.S. Census Bureau’s AmericanFactFinder to determine your municipality. You can also contact the local Tax Collector/Officer to figure out local tax rates and PSD codes.
Once you have your PSD Codes, EIT (Earned Income Tax) Rates, and LST (Local Services Tax) Rates, you’ll want to print or save the report generated to reference in the future. This is the first and most important step to understanding PA local tax withholding.
Fill Out PA Local Tax Withholding Forms
Now that you’ve collected the necessary information, you can complete the Residency Certification Form for each employee. This allows the employee to verify that the employer is withholding the correct tax rates for the municipality. Employers should save a copy of this form in each employee’s file. If you have AMS Payroll ($129), you can do this digitally.
Work with Local Income Taxes
You’ve secured your PSD code, figured out your local tax rates, and confirmed those rates with employees. Now, you have to actually file. In Pennsylvania, quarterly filings and remittances are due within 30 days after the end of each calendar quarter, and they can most often be made directly through your local tax collector’s website. This is where we can help.
If you work with AMS Payroll, our semi-automated payroll software, this step is fast and easy. Our software will automatically calculate local, state, and federal withholding and print or facilitate a direct deposit of the correct payment amount. Great for small businesses, this tool also has a back-end data hosting feature, easy data transferability, and an intuitive, user-friendly interface. PA local tax withholding is much easier with software tools at your disposal.
Finally, Complete Your W2-R Form
Following the close of the calendar year, employers must complete and submit the W2-R, also known as the Annual Reconciliation Earned Income Tax Withheld from Wages form. Again, you will likely need your PSD Code, EIT, and LST information on-hand while doing this.
W2 - 1099 Forms Filer Pricing
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While Pennsylvania has a few local tax idiosyncrasies, employers can easily address them with a useful software tool. Advanced Micro Solutions has a catalogue of products designed to make this possible. See below for additional software offerings.
- W2/1099 Forms Filer (required platform)—$79
- Payroll Software—$129
- Software-Generated Forms—$79
- E-File Direct—$109
- Affordable Care Act Filer—$79
- Forms Filer Plus—$49