The Earned Income Tax is commonly referred to as the
wage tax, and it tax is applied to City and School District
residents who earn income and net profits. Nonresidents
of Pennsylvania who work within the City pay 1%. Here
are the specific regulations pertaining to Earned Income Tax:
Although wages are the most common source of income taxed,
wages are not the only source taxed.
As part of the Earned Income Tax, the Net Profits Tax applies
to the net income from business, professions and other self-employment
endeavors. This includes but is not limited to:
accountants, attorneys (both as sole proprietor or as a partner),
real estate sales representatives on commission, taxi drivers,
consultants, authors, and those receiving rental income even
if the taxpayers have another source of taxable income.
Who is taxed? The tax is applied to people who
earn income and net profits and are City and School District
residents. Non-Pennsylvania residents who work within
the City pay 1%. Mt.Oliver Borough residents pay the
School Income Tax to the City which acts as the tax collector
for the School District. Mt Oliver Borough residents pay the
School Earned Income Tax to the City which acts as the tax
collector for the School District. Mt. Oliver residents
must also file directly with the Mt. Oliver Borough tax office
to report the Borough Earned Income Tax.
What is taxed? Wages, salaries,tips, compensation
that is earned, bonuses, other incentives, net profit from
businesses or professions and net profit from rental.
Common Exclusions: Interest, dividends, active
duty pay from the Armed Forces, pensions, social security
and capital gains.
Common Deductions: Milage or overnight business trips
when required by an employer.
Common Credits: Up to 1% of income taxes paid to municipality
in another state and not claimed on the PA-40. This
credit applies to the city tax only,
(1) Annual filing of PGH-40 is due April 15.
Taxpayers may file joint returns at their options.
(2) Quarterly estimates are due as follows:
1st quarter - April 15
2nd quarter - June 15
3rd quarter - Sept. 15
4th quarter - Jan. 15
Quartterly filings are due when the source of income is not
subject to withholding of City and School earned income tax.
It is required that quarterly payments equal to or exceeding
75% of the ultimate tax liability be paid; unless the additional
tax due is less than $200 or where the sum of all prepayments
equals or exceed the previous year's tax liability.
If a person is employed for wages and has the EIT withheld
by his/her employer, but also has self-employment income,
estimates must be filed to cover the self-employment income.