Pennsylvania PA Schedule G-L - Resident Credit for Taxes Paid

PA Schedule G-L - Resident Credit for Taxes Paid
PA Schedule G-L - Resident Credit for Taxes Paid (PA-40/PA-41 G-L)
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2002610059
(EX) MOD 10-20 (FI)

PA SCHEDULE G-L
PA-40/PA-41 G-L

SECTION I

20

OFFICIAL USE ONLY

CALCULATION OF THE CREDIT
SSN/FEIN

Name of taxpayer claiming the credit
START ➜
1. Name of other state

Credit from a Pass-Through Entity (see the instructions)
A
Amount of income
subject to tax in
PA per PA return

2. Class of income subject to tax in the other state
a.
b.
c.
d.
e.
f.

3.
4.

5.
6.

B
Amount of income
subject to tax in
the other state

C
Lesser of
Column A or B

Compensation
Unreimbursed business expenses
Net compensation
Interest
Dividends
Net income or loss from business, profession or farm

g. Gain or loss from sale, exchange or disposition of property
h. Income or Loss from rents, royalties, patents and copyrights
i. Estate or trust income
j. Gambling and lottery winnings
Income subject to tax in the other state - Add Lines 2c thru 2j for Column C. Enter the result here.
a. Tax due or assessed in the other state
b. Tax paid in the other state
c. Enter the lesser of Line 4a or Line 4b
d. Less: adjustments - Enter the amount from Section III, Line 5.
e. Adjusted tax paid in the other state - Subtract Line 4d from Line 4c. Enter the result here.
Line 3 x 3.07 percent (0.0307)
PA Resident Credit. Enter the lesser of Line 4e or Line 5 here and on the appropriate form (see instructions).

SECTION II

SOURCES AND AMOUNTS OF INCOME SUBJECT TO TAX
A

B

C

D

E
TOTALS

1. Source entity name
2. Income by class
Compensation
Interest
Dividends
Net income or loss from
business, profession or farm
Gain or loss from sale, exchange
or disposition of property
Income or loss from rents,
royalties, patents and copyrights
Estate or trust income
Gambling and lottery winnings

SECTION III

ADJUSTED TAX PAID

1. Enter the amount from Section I, Column C, Line 3 here.
2. Add the amounts from Section I, Column B, Lines 2c through 2j. Enter the result here.
3. Divide the amount from Section III, Line 1 by Section III, Line 2. Enter the result here (calculate to six decimal places).
If the amount on Section III, Line 3 equals 1.000000, you may stop here and enter “0” on Section I, Line 4d.
4. If the amount on Section III, Line 3 is less than 1.000000, subtract the decimal from 1.000000.
Enter the result here (calculate to six decimal places).
5. Multiply the decimal on Section III, Line 4 by the amount on Section I, Line 4c.
Enter the result here and on Section I, Line 4d.

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Instructions for PA Schedule G-L
PA-40/PA-41 G-L IN (EX) 10-20

WHAT’S NEW
The instructions for PA Schedule G-L have been updated to
follow the department’s standard formatting and branding.
Additional section headings and instructions for Purpose of
the Schedule, Recording Dollar Amounts, Who Must
Complete, Definitions, and Examples have been added
while various other areas have been revised or reorganized
to provide additional information or clarity to the instructions.
In addition, the form is now divided into sections rather than
parts to conform to a new department standard required as
part of a branding initiative.

Resident Credit for Taxes Paid

multiplied by the Pennsylvania tax rate of 3.07 percent
(0.0307).
DOCUMENTATION REQUIRED TO SUPPORT
THE CREDIT
If including PA Schedule G-L with a PA-40 or PA-41 return,
some or all of the following documents are required to be
submitted with the PA-40 or PA-41 when filed:

Show money amounts in whole-dollars only. Eliminate any
amount less than $0.50 and increase any amount that is
$0.50 or more to the next highest dollar.

● Copies of Schedules G-L for each state where the credit is claimed.
● Copies of the income tax returns filed with the other
states.
● A copy of each Form W-2 (if available) that shows any
compensation that the other states taxed or a statement that shows how the compensation in the other
states was determined.
● Copies of PA Schedules RK-1 showing the amount of
resident credit or out-of-state credit passed through to
the shareholder along with the statement showing the
shareholder’s proportionate share of the income subject to tax by class of income, tax paid and resident
credit for each state. See the instructions for PA S corporations returns for additional information.
● A copy of a statement from the partnership or limited
liability company showing the amount of the partner or
member’s proportionate share of income subject to tax
by class of income, tax paid and resident credit for each
state. See the instructions for partnership returns for
additional information.
● Copies of the other state’s domicile rule, law or regulations if interest and/or dividend income is claimed as
income subject to tax in another state.

WHO MUST COMPLETE

See Examples 3, 4 and 6 in the EXAMPLES part of these
instructions for additional information.

GENERAL INFORMATION
PURPOSE OF SCHEDULE
Use PA Schedule G-L to calculate and report the amount of
resident credit claimed for income tax, wage tax or other tax
(measured by gross or net earned or unearned income) paid
to another state when the other state imposes its tax on income
also subject to PA personal income tax in the same taxable
year. Pennsylvania resident individuals, estates and trusts may
use PA Schedule G-L when they have income in any class of
income that is also subject to tax in any other state. However,
the same income cannot be taxable in more than one other
state.

RECORDING DOLLAR AMOUNTS

PA resident and part-year resident individual taxpayers and
PA resident estates and trusts must complete and include
PA Schedule G-L with an originally filed PA-40, Personal
Income Tax Return or PA-41, Fiduciary Income Tax Return,
when reporting a resident credit on Line 22 of the PA-40 or
Line 15 of the PA-41.

GENERAL INSTRUCTIONS
AMOUNT OF CREDIT
If claiming a resident credit or out-of-state credit, the credit
is the lesser amount of:
● The tax due to the other state (as may be adjusted), or
● The tax credit calculated using the PA classified taxable
income earned, received or realized in the other state
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PA S CORPORATIONS, PARTNERSHIPS AND LIMITED
LIABILITY COMPANIES
When a PA S corporation, partnership or limited liability company
(pass-through entity) files (a) composite return(s) (or other tax
returns) on behalf of its shareholders, partners or members
(owners) for other states, the pass-through entity should
determine the resident credit(s) and/or out-of-state credit(s) it
reports in the same manner as on PA Schedule G-L and should
include (a) copy(ies) of the tax return(s) it files in the other state(s)
with the PA-20S/PA-65, PA S Corporation/Partnership
Information Return. The proportionate share of each owners’
resident credit(s) or out-of-state credit(s) should then be reported
on Lines 8 and 9, respectively, of the PA-20S/PA-65 Schedule
RK-1, Resident Shareholder/Partner/Member Pass Through
Income, Loss and Credits.
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When a resident credit and/or an out-of-state credit is
passed through to an owner of a pass-through entity, the
pass-through entity should also provide a Statement of
Resident Credits for Owners of a Pass-Through Entity to
each resident owner. The statement should report the name
of each state and the resident owner’s proportionate share
of:

CLASS OF INCOME
The category of income as reported on Line 1c through Line
8 of the PA-40, Personal Income Tax Return, or Lines 1
through 6 of the PA-41, Fiduciary Income Tax Return, and
reflected on Lines 2c through 2j of PA Schedule G-L.

● The income subject to tax in each state by class of
income;
● The tax paid in each state; and
● The credit amount calculated for each state.

INCOME SOURCE
The name of the employer, partnership, S corporation,
limited liability company, estate or trust that has income
subject to tax in another state.

See the example Statement of Resident Credits for Owners
of a Pass-Through Entity found at the end of the Schedule
G-L instructions.

INCOME SUBJECT TO TAX
Income subject to tax refers to the income taxable in the
other state using the other states rules to calculate the
income. However, this amount does not utilize itemized
deductions or exemptions or mean taxable income of the
other state.

For PA S Corporations, include both the breakdown of
the resident credit and out-of-state credit information
(if applicable) on the same statement provided to resident
shareholders.
OTHER DOCUMENTATION
The department may also require additional documentation
at a later date to support the credit. Documents such as (but
not limited to) checks, money orders, composite or entity
returns for taxes paid on behalf of shareholders or partners
and other related documents to substantiate income taxes
paid or the amount of tax reported to the other states as due
or payable may be requested.
LIMITATIONS
Taxpayers with resident credits for more than one state must
file and calculate the resident credit for each state on a
separate Schedule G-L. Taxpayers may not add the income
subject to tax and tax paid for each state and report the
amounts on one Schedule G-L as each state’s credit must
be determined separately to verify the credit for each state
is the lesser of the tax paid or due in the other state or 3.07
percent of the income subject to tax in the other state.
The resident credit calculation on Schedule G-L limits the
amount of allowable credit when the income subject to tax in
a class of income in another state is greater than the income
subject to tax in Pennsylvania in the same class of income.
Taxpayers with multiple Schedules G-L must also perform a
secondary calculation outside of the calculation for each
individual state to make sure that the overall income subject
to tax in one or more classes of income for all the states is not
greater than the income subject to tax in Pennsylvania for the
same class or classes of income. See the Credit Limitations
Instructions after the instructions for Line 2j for additional
information. See Examples 1 and 2 in the EXAMPLES part of
these instructions for additional information.
An estate or trust may earn a resident credit for taxes paid
to other states. However, the resident credit earned by an
estate or trust may not be passed through by the estate or
trust to a Pennsylvania resident beneficiary. See Example 5
in the EXAMPLES part of these instructions for additional
information.
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DEFINITIONS

INCOME TAX RETURN FILED WITH THE OTHER STATE
An income tax return filed with the other state refers to an
actual tax return filed on behalf of the individual, estate or
trust, taxpayer in the other state. The return must show the
income subject to tax in the other state and the calculated
amount of income tax due on that income. Although
documents reflecting the income and tax paid to another
state may be required to be provided with the other state’s
return in order for the department to determine the correct
credit amount, an income tax return filed with the other state
does not include copies of W-2s, Schedule K-1s or other
documents showing income and tax withholding for the other
state.
OUT-OF-STATE CREDIT
The credit amount for income tax paid at the PA S
corporation entity level to another state. The credit amount
is reported to a PA resident shareholder on Line 9 of the PA20S/PA-65 Schedule RK-1. The PA resident shareholder
should also receive a Statement of Resident Credits for
Owners of a Pass-Through Entity. The statement shows the
shareholder’s proportionate share of the income subject to
tax by class of income, tax paid and out-of-state credit for
the state.
PASS-THROUGH ENTITY
A pass-through entity is a partnership, S corporation or
limited liability company. Estates and trusts are not passthrough entities for Pennsylvania personal income tax
purposes. Resident credits earned by an estate or trust from
taxes paid in another state by the trust or as a result of
ownership in a pass-through entity may not be distributed to
and claimed by beneficiaries of an estate or trust if the
income from the pass-through entities is distributed to them
by the estate or trust.
RESIDENT CREDIT
The credit amount for taxes paid to other states reported on:
● Line 22 of the PA-40, Personal Income Tax Return, on
behalf of an individual taxpayer; or
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● Line 15 of the PA-41, Fiduciary Income Tax Return, on
behalf of an estate or trust taxpayer.

LINE INSTRUCTIONS

● Line 8 of the PA-20S/PA-65 Schedule RK-1 on behalf of
a PA S corporation shareholder.

SECTION I

It also refers to the credit amount for taxes paid to other
states on composite returns filed on behalf of partners in a
partnership and reported to PA resident partners on the
Statement of Resident Credits for Owners of a PassThrough Entity. The statement shows the partner’s
proportionate share of the income subject to tax by class of
income, tax paid and resident credit for each state.
SPOUSE
The individual listed second on a PA-40, Personal Income
Tax Return.
STATE
For purposes of determining a resident credit, a state means
any state or commonwealth of the United States, the District
of Columbia, the Commonwealth of Puerto Rico and any
territory or possession of the United States. A resident credit
may not be obtained for taxes paid to any foreign
government or for any local tax subdivision within a state.
TAXPAYER
The primary taxpayer or spouse included on a PA-40,
Personal Income Tax Return or the estate or trust included
on a PA-41, Fiduciary Income Tax Return.

SCHEDULE INSTRUCTIONS
IDENTIFICATION INFORMATION
NAME
For PA-40, Personal Income Tax Returns, enter the name of
the taxpayer or spouse who is claiming the resident credit.
Taxpayers using the “Married Filing Jointly” status may not
claim the credit on a joint basis for any classes of income.
Separate PA Schedules G-L must be prepared to report the
income for a taxpayer and spouse for all classes of income
represented on PA Schedule G-L.
For PA-41, Fiduciary Income Tax Returns, enter the name
of the estate or trust.
SSN/FEIN
Enter the Social Security number (SSN) of the taxpayer if
the resident credit calculation is for the primary taxpayer.
Enter the spouse’s SSN if the resident credit calculation is
for the spouse.
Enter the federal Employer Identification Number (FEIN) of
the estate or trust.
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CALCULATION OF THE CREDIT
Complete Section I for each state where a resident credit for
taxes paid to another state is claimed or calculated for a
taxpayer, spouse, estate or trust.
Individual taxpayers with amounts reported for Line 10,
Other Deductions, of the PA-40, Personal Income Tax
Return, must follow the Special Instructions for Taxpayers
Reporting Amounts on PA-40 Line 10, Other Deductions, in
addition to the Column A instructions for Lines 2c through
Line 2j. See Example 2 in the Examples part of these
instructions for additional information.

LINE 1
NAME OF OTHER STATE
Enter the name of the other state to which the income tax
was owed or paid. A separate PA Schedule G-L should be
filed for each state in which a resident credit is claimed. Do
not enter Pennsylvania.
CREDIT FROM A PASS-THROUGH ENTITY
If the credit claimed for a state is listed as part of the credit
shown on Line 8 or Line 9 of a PA S corporation PA Schedule
RK-1, fill in the oval. Also fill in the oval if the credit being
claimed for a state is listed as part of the credit on a
Statement of Resident Credits for Owners of a PassThrough Entity from a partnership or limited liability
company. All other data as required by the instructions and
the name of the entity in Section II of the PA Schedule G-L
must be entered.

LINE 2a
COMPENSATION
COLUMN A
If a taxpayer or spouse has compensation subject to tax in
another state, enter only the amount included in the PA-40
Line 1a amount for the taxpayer or spouse. Although a
taxpayer and spouse may file a joint return, they must
complete separate PA Schedules G-L and report only the
income attributable to the name at the top of the PA
Schedule G-L.
COLUMN B
If there is compensation subject to tax in another state,
enter the amount of gross compensation subject to tax in
the other state from the other state’s return. Include a copy
of Form W-2 and/or other documentation supporting the
position that compensation is subject to tax in the other
state. In order to determine if the credit is allowable,
taxpayers and their spouses must complete the worksheet
in Section II to show the sources and amounts of income
subject to tax for each state and source, even if from only
one source. If Form W-2 shows an amount different than
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the amount of compensation reported on the return as
taxable to the other state, include a copy of the other
state’s apportionment schedule or a copy of a
supplementary
statement
illustrating
how
the
compensation subject to tax on the return for the other
state was determined. If the amount of compensation
shown on the W-2 is greater than the amount of
compensation reported as subject to tax on the return for
the other state, the amount reported on the return must be
used.
COLUMN C
No entry is required.

LINE 2b
UNREIMBURSED BUSINESS EXPENSES
COLUMN A
If Line 2a, Column A, is completed and the taxpayer or
spouse claimed unreimbursed business expenses, enter the
amount of the taxpayer or spouse’s unreimbursed business
expenses included in Line 1b of the PA-40. Enter only the
unreimbursed business expenses attributable to the name
at the top of the PA Schedule G-L.
COLUMN B
No entry is required.

LINE 2c
NET COMPENSATION
COLUMN A
Subtract Line 2b from Line 2a. Enter the result here.
COLUMN B
Enter the amount from Line 2a.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here. See the Credit Limitation instructions
following the instructions for Line 2j and Examples 1 and 2
in the EXAMPLES part of these instructions for additional
information.

LINE 2d & 2e
INTEREST AND DIVIDENDS
COLUMN A
For individual taxpayers, enter only the amount included in
the PA-40 Line 2 amount for the taxpayer or spouse on Line
2d and/or enter only the amount included in the PA-40 Line
3 amount for the taxpayer or spouse on Line 2e.
COLUMN B
Federal law prohibits states from taxing nonresidents on
intangible income such as interest and dividend income.
However, some states have a commercial domicile rule
which permits them to allocate intangible income to their
state if the business has operations located in the state.
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COLUMN C
Compare the amounts from Columns A and B. Enter the
lesser of the two amounts here.
ESTATES AND TRUSTS ONLY

COLUMN C
No entry is required.

4

Therefore, unless the state listed on Line 1 has the
commercial domicile rule, a resident credit for taxes paid to
another state for interest and dividend income cannot be
claimed. If there is interest or dividend income earned by a
business or rental property that is subject to tax in another
state, the interest or dividend income must be classified as
Net Income or Loss from the Operation of a Business,
Profession, or Farm or as Net Income or Loss from Rents,
Royalties, Patents and Copyrights in Pennsylvania in order
to claim a resident credit on that income. See the PA
Personal Income Tax Guide – Net Income (Loss) from the
Operation of a Business, Profession or Farm section for
additional information regarding Commercial Income
Generated by Investment of Working Capital. If the other
state has the commercial domicile rule, enter the amount of
interest and dividend income subject to tax in the other state.
Documentation supporting the other state’s regulations or
laws regarding the commercial domicile rule must be
provided in addition to the other state’s return.

COLUMN A
For estates and trusts, Line 1 of the PA-41, also includes
Gambling and Lottery Winnings. If an estate or trust has
interest or gambling and lottery winnings subject to tax in
another state, enter the amount of Interest Income and
Gambling and Lottery Winnings from PA-41 Line 1 on Line
2d. If an estate or trust has dividends subject to tax in
another state, enter the amount of dividends from PA-41 Line
2 on Line 2e.
COLUMN B
As noted above, federal law prohibits states from taxing
nonresidents on intangible income such as interest and
dividend income. However, some states have a commercial
domicile rule which permits them to allocate intangible
income to their state if the business has operations located
in the state. If the other state has the commercial domicile
rule, enter the amount of interest and dividend income
subject to tax in the other state on Line 2d or 2e, respectively.
Documentation supporting the other state’s regulations or
laws regarding the commercial domicile rule must be
provided in addition to the other state’s return. If there is
income from gambling and lottery winnings subject to tax in
another state, enter the amount of income from the other
state’s return. Do not reverse the other state’s adjustments
to income as a result of its allowance of additional
deductions or expenses. If the other state taxes gambling
and lottery winnings earned by the estate or trust, include
them in the amount for Line 2d.
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COLUMN C
Compare the amounts from Columns A and B. Enter the
lesser of the two amounts here.

LINE 2f
NET INCOME FROM THE OPERATION OF A
BUSINESS, PROFESSION OR FARM
COLUMN A
If a taxpayer or spouse has income from the operation of a
business, profession or farm subject to tax in another state,
enter only the amount included in the PA-40 Line 4 amount
for the taxpayer or spouse. Although a taxpayer and spouse
may file a joint return, they must complete separate PA
Schedules G-L and report only the income attributable to the
name at the top of the PA Schedule G-L. For an estate or
trust, enter the amount from PA-41 Line 3.
COLUMN B
If there is net income from the operation of a business,
profession or farm subject to tax in another state, enter the
amount of income from the other state’s return. Do not
reverse the other state’s adjustments to income as a result
of its allowance of additional deductions or expenses. In
order to determine if the credit is allowable, taxpayers and
their spouses must complete the worksheet in Section II to
show the sources and amounts of income subject to tax for
each state and source, even if from only one source. If any
entity (PA Schedule C, partnership, limited liability company,
PA S corporation, or joint venture) was jointly owned, enter
only the taxpayer or spouse’s portion of the income from the
operation of a business, profession or farm subject to tax in
the other state. To claim the credit for the spouse, a separate
PA Schedule G-L must be filed.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here. If either amount is a (loss), enter zero
in Column C. See the Credit Limitation instructions following
the instructions for Line 2j and Examples 1 and 2 in the
EXAMPLES part of these instructions for additional
information.

LINE 2g
GAIN FROM THE SALE, EXCHANGE OR DISPOSITION
OF PROPERTY
COLUMN A
If a taxpayer or spouse has a gain from the sale, exchange
or disposition of tangible property subject to tax in another
state, enter only the amount included in the PA-40 Line 5
amount for the taxpayer or spouse. Although a taxpayer and
spouse may file a joint return, they must complete separate
PA Schedules G-L and report only those gains attributable
to the name at the top of the PA Schedule G-L. For an estate
or trust, enter the amount from PA-41 Line 4.
COLUMN B
If there is a gain from the sale, exchange or disposition of
tangible property subject to tax in another state, enter the
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amount of gain from the other state’s return. Do not reverse
the other state’s adjustments to income as a result of its
allowance of additional deductions or expenses. In order to
determine if the credit is allowable, the worksheet in Section
II must be completed to show the sources and amounts of
the income subject to tax for each state and source, even if
from only one source. If the property sold was jointly owned,
enter only the taxpayer or spouse’s portion of the gain
subject to tax in the other state. To claim the credit for the
spouse, a separate PA Schedule G-L must be filed.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here. If either amount is a (loss), enter zero
in Column C. See the Credit Limitation instructions following
the instructions for Line 2j and Examples 1 and 2 in the
EXAMPLES part of these instructions for additional
information.

LINE 2h
INCOME FROM RENTS, ROYALTIES, PATENTS
OR COPYRIGHTS
COLUMN A
If a taxpayer or spouse has income from rents, royalties,
patents or copyrights subject to tax in another state, enter
only the amount included in the PA-40 Line 6 amount for the
taxpayer or spouse. Although a taxpayer and spouse may
file a joint return, they must complete separate Schedules
G-L and report only the income attributable to the name at
the top of the PA Schedule G-L. For an estate or trust, enter
the amount from PA-41 Line 5.
COLUMN B
If there is income from rents, royalties, patents or copyrights
subject to tax in another state, enter the amount of income
from the other state’s return. Do not reverse the other state’s
adjustments to income as a result of its allowance of
additional deductions or expenses. In order to determine if
the credit is allowable, taxpayers and their spouses must
complete the worksheet in Section II to show the sources
and amounts of the income subject to tax for each state and
source, even if from only one source. If the entity (rental
property, partnership, limited liability company, PA S
corporation, joint venture) from which the income is reported
was jointly owned, enter only the taxpayer’s or spouse’s
portion of the income subject to tax in the other state. To
claim the credit for the spouse, a separate PA Schedule GL. must be filed.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here. If either amount is a (loss), enter zero
in Column C. See the Credit Limitation instructions following
the instructions for Line 2j and Examples 1 and 2 in the
EXAMPLES part of these instructions for additional
information.
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LINE 2i
ESTATE OR TRUST INCOME
COLUMN A
If a taxpayer or spouse has estate or trust income subject to
tax in another state, enter the amount included in the PA-40
Line 7 amount for the taxpayer or spouse. Although a
taxpayer and spouse may file a joint return, they must
complete separate PA Schedules G-L and report only the
income attributable to the name at the top of the PA
Schedule G-L. For an estate or trust, enter the amount from
PA-41 Line 6.
COLUMN B
If there is estate or trust income subject to tax in another
state, enter the amount of income from the other state’s
return. Do not reverse the other state’s adjustments to
income as a result of its allowance of additional deductions
or expenses. In order to determine if the credit is allowable,
taxpayers and their spouses must complete the worksheet
in Section II to show the sources and amounts of the income
subject to tax for each state and trust, even if from only one
trust. If the trust from which the income is reported was jointly
owned, enter only the taxpayer or spouse’s portion of the
income subject to tax in the other state. To claim the credit
for the spouse, a separate PA Schedule G-L must be filed.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here.
CAUTIONS: If the trust in which the taxpayer or
spouse is a beneficiary is required to file a return for
another state and includes the income as the trust’s income
rather than the beneficiary’s income, the beneficiary cannot
claim a credit for the income taxes paid by the trust on his
or her PA-40. The credit can only be claimed on a PA resident trust tax return if the trust paid the tax on some or all
of the same income. In addition, a trust cannot claim a resident credit for taxes paid to another state on income it does
not distribute to a PA beneficiary when the income is considered to be distributed in the other state and tax is paid in
the other state on a return filed by the beneficiary. See
Example 5 in the EXAMPLES part of these instructions for
additional information.

LINE 2j
GAMBLING AND LOTTERY WINNINGS
COLUMN A
If a taxpayer or spouse has income from gambling and
lottery winnings subject to tax in another state, enter the
amount included in the PA-40 Line 8 amount for the taxpayer
or spouse. Although a taxpayer and spouse may file a joint
return, they must complete separate Schedules G-L and
report only the income attributable to the name at the top of
the PA Schedule G-L. For estates and trusts, see the
instructions for Lines 2d and 2e earlier.
COLUMN B
If there is income from gambling and lottery winnings subject
to tax in another state, enter the amount of income from the
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other state’s return. Do not reverse the other state’s
adjustments to income as a result of its allowance of
additional deductions or expenses. In order to determine if
the credit is allowable, taxpayers and their spouses must
complete the worksheet in Section II to show the sources
and amounts of the income subject to tax for each state and
source, even if from only one source. A taxpayer and spouse
must report their gambling and lottery winnings income and
taxes paid to other states on such income on separate PA
Schedule G-L forms. To claim the credit for a spouse, a
separate PA Schedule G-L must be filed.
COLUMN C
Compare Column A with Column B and enter the lesser of
the two amounts here. If either amount is a (loss), enter zero
in Column C. See the Credit Limitation instructions below for
additional information.
CREDIT LIMITATION INSTRUCTIONS
If the Pennsylvania income reported in Column A for
taxpayer or spouse reflects an amount that is smaller than
the amount reported in Column B for the other state, an
adjustment must be made to the tax paid amount on Line
4d.
In addition, if more than one PA Schedule G-L reports
income subject to tax in any class of income for more than
one other state, the amounts of income subject to tax for
each class of income in the other states must be added
together and compared to the income subject to tax in PA
for each class of income for the taxpayer and/or spouse. If
the total income subject to tax in all the states for any class
of income exceeds the amount included in any class of
income on the PA Schedule G-L for the taxpayer or spouse,
an adjustment to the amount of income subject to tax in the
class of income for one or more of the states must be made
so that the total income does not exceed the amount of
income subject to tax in PA for either the taxpayer or spouse.
If an adjustment to income is made as a result of excess
income in a class of income subject to tax in one or more
states, an adjustment must also be made to the tax paid
amount on Line 4d for the state(s).
For both limitations, see the instructions for and complete,
Line 4d.
See Examples 1 and 2 in the EXAMPLES part of these
instructions for additional information.
SPECIAL INSTRUCTIONS FOR TAXPAYERS
REPORTING AMOUNTS ON PA-40 LINE 10, OTHER
DEDUCTIONS
If a taxpayer or spouse claims a deduction on Line 10 of the
PA-40, Personal Income Tax Return, Column A amounts on
Lines 2c through 2j of PA Schedule G-L must be reduced by
a pro-rata amount of the deduction. The deduction is
determined separately for each class of income using the
formula contained in the following worksheet:
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a. Enter the taxpayer or spouse
amount included in one of the Lines
1c through 8 of the PA-40, Personal
Income Tax Return . . . . . . . . . . . .

LINE 4c
Enter the lesser of Line 4a or 4b.

b. Add only the positive amounts for
the taxpayer or spouse included in
Lines 1c through Line 8 as reported
on the PA-40, Personal Income Tax
Return . . . . . . . . . . . . . . . . . . . . . .
c. Divide the amount for Step a by the
amount for Step b and enter the
result here (calculate to six decimal
places) . . . . . . . . . . . . . . . . . . . . .

LINE 4d

.

d. Enter the taxpayer or spouse’s
Other Deduction amount Included
in Line 10 of the PA-40, Personal
Income Tax Return . . . . . . . . . . . .
e. Multiply the amount for Step d by
the ratio determined for Step c and
enter the result here . . . . . . . . . . .
f.

Subtract the amount determined for
Step e from the amount for Step a
and enter the result here and on the
appropriate Line 2c through 2j of PA
Schedule G-L . . . . . . . . . . . . . . . .

Repeat Steps a through f for each class of income with
positive income amounts included in Lines 1c through 8 of
the PA-40, Personal Income Tax Return, for the taxpayer or
spouse. See Example 2 in the EXAMPLES part of these
instructions for additional information.

LINE 3

If a taxpayer has more income subject to tax in the other
state than in one or more of the PA classes of income or the
combined income subject to tax in all the states in which
there is income subject to tax is greater than the income
subject to tax in one or more PA classes of income, an
adjustment to the amount of tax paid to the other state is
required. Also, if another state had income on which there
was no tax paid in Pennsylvania or on which the amount of
income subject to tax in Pennsylvania was reduced due to
other losses that were not permitted or attributable to the
other state, an adjustment must be made to reduce the
amount of tax paid to the other state to reflect the
proportionate tax paid on the income subject to tax in both
states. For example, if the income subject to tax in the other
state for net income from a business, profession or farm is
more than the amount of the PA-40 net income from a
business, profession, or farm (Line 2f, Column B is more
than Line 2f, Column A), an adjustment is required for Line
4c. Complete the Worksheet for Adjusted Tax Paid in the
Other State in Section III of the PA Schedule G-L to
determine the amount of adjustment required to taxes. Enter
the amount from Section III, Line 5.

LINE 4e
Subtract Line 4d from Line 4c. Enter the result here.

Add the amounts on Lines 2c thru 2j for Column C and enter
the result here.

LINE 5

LINE 4a

Multiply Line 3 by 3.07 percent (0.0307). Enter the result here.

Enter the amount of income tax reported to the other state
as due and payable before any credits for taxes withheld,
estimated tax payments or other payments are taken into
account. This amount is generally the tax liability as
determined on the other state’s return. However, any special
tax credits awarded or claimed must be used to reduce this
amount.

LINE 6

LINE 4b
Enter the amount of income tax actually paid to the other
state in the form of estimated taxes, withholding taxes,
extension payments and other payments (additional
assessments of taxes). Other payments include payments
intended to be made with the filing of the return if there is a
balance due after the application of estimated taxes,
withholding taxes and extension payments. If the payment
of taxes due with the return will not be made, do not include
the balance due on the return with this amount.
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Enter the lesser of Line 4e or Line 5 here. Report the amount
on the appropriate return as follows:
● Individual taxpayers must total the amount of allowable
credit from Line 6 of all PA Schedules G-L and enter the
amount on Line 22 of Form PA-40, Personal Income
Tax Return.
● Estates and trusts must total the allowable credit from
Line 6 of all PA Schedules G-L and enter the amount on
Line 15 of Form PA-41, Fiduciary Income Tax Return.

SECTION II
SOURCES AND AMOUNTS OF INCOME SUBJECT TO
TAX
Complete the worksheet for each state where income from
one or more sources is subject to tax.
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LINE 1

LINE 5

Enter the name of the company, partnership, limited liability
company, PA S corporation, rental property, trust, casino or
gambling operation (collectively henceforth known as
source) for each source having income or loss attributable
to the state shown in Section I, Line 1. Include the name of
a separate source in Columns A thru D. Include additional
worksheets if additional columns are needed to report the
income from additional sources.

Multiply the amount from Section III, Line 4 by the amount
from Section I, Line 4c. Enter the result here and on Section
I, Line 4d.

LINE 2
Enter the amount of income or loss for each class of income
attributable to each source shown on Line 1, Columns A thru
D. Add the amounts in Columns A thru D for each class of
income and enter the total for each class in Column E. The
amount listed in Section II, Line 2, Column E must agree with
the amounts shown for each corresponding class of income
in Section I, Lines 2c thru 2j, Column B. Include additional
worksheets if more columns are needed to report the income
from additional sources. Classes of income reported from
PA S corporations, partnerships or limited liability companies
(entities) should be provided to each shareholder, partner or
member.

SECTION III
ADJUSTED TAX PAID
Complete the worksheet if any state’s income subject to tax
has been adjusted due to a credit limitation as defined in the
Credit Limitation Instructions included in the Section I
instructions.
IMPORTANT: When using fractions or ratios to determine amounts for this worksheet, calculate out to six
decimal places.

LINE 1
Enter the amount from Section I, Column C, Line 3 here.

LINE 2
Add the amounts from Section I, Column B, Lines 2c through
2j. Enter the result here.

LINE 3
Divide the amount on Line 1 by the amount on Line 2. If the
result of dividing Line 1 by Line 2 equals 1.000000, no
adjustment to tax paid is required. Do not complete Lines 4 and
5 of this section. Stop here and enter “0” on Section I, Line 4d.

LINE 4
Subtract Line 3 from 1.000000.
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EXAMPLES
EXAMPLE 1
Joe owns multiple business entities and reports total income
for Pennsylvania purposes in the Net Income or Loss from
the Operation of a Business, Profession of Farm class of
income of $100,000. This amount is the net amount Joe
reports on Line 4 of his PA-40, Personal Income Tax Return,
because one or more of the entities he owns has a loss in
this class of income. One of the entities Joe owns operates
in Pennsylvania, New Jersey, New York and Maryland. The
total Line 4 income for the entity is $200,000 with $75,000
being PA-source income; with $50,000 subject to tax in New
Jersey; $40,000 subject to tax in New York; and $35,000
subject to tax in MD. He completes Schedule G-L for each
of these states and in each state, the income subject to tax
in the other states is business income and the amount of
income subject to tax in each state is less than the net
Pennsylvania Line 4 income of $100,000. However, the total
income subject to tax for the Line 4 class of income for all
the states is $125,000. Joe must limit his resident credit in
one of the states so that his total resident credit for taxes
paid to the other states does not exceed 3.07% of $100,000
or $3,070. Joe must also adjust the amount of tax paid in the
state where the income was adjusted to the proportionate
amount of tax related to the reduction in income.
Furthermore, Joe must provide a statement with his return
explaining why the credit was reduced for one of the states.
EXAMPLE 2
Andy has compensation of $80,000, reported on his PA-40
return. He did not claim any business expenses on PA
Schedule UE. Andy also reported $3,000 of interest income,
$5,000 of dividend income and $8,000 of gains from the
sale, exchange or disposition of property (gains) from a
vacation property in Delaware. In addition, Andy has $4,000
of income from a rental property he owns, which is also
located in Delaware. Furthermore, Andy’s work requires him
to spend 90 percent of his time in the Delaware office of his
employer. Andy has two children, and he contributes
$10,000 each to an IRC Section 529 plan on their behalf.
On his PA-40 return, Andy reports a total of $100,000 of PA
taxable income on Line 9 of the return and $20,000 on Line
10. Andy paid tax of $6,000 to Delaware on total income
subject to tax in Delaware of $84,000 (compensation of
$72,000, gains of $8,000 and rental income of $4,000).
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Andy would report the following amounts in Column A of his
PA Schedule G-L:
Line 2c - $64,000
Line 2d -$ 2,400
Line 2e - $4,000
Line 2g -$ 6,400
Line 2h -$ 3,200
The amounts reported on each line of Column A for Andy are
reduced by the pro-rat share of the Line 10 deduction using
the worksheet in the Special Instructions for Taxpayers
Reporting Amounts on PA-40 Line 10, Other Deductions. For
example the amount reported on Line 2c was determined by
taking the $80,000 he reported as compensation dividing it
by his total income of $100,000 and multiplying it by the
amount of his other deductions of $20,000 and subtracting
the result of $16,000 PA compensation amount to get
$64,000 ($80,000/$100,000 x $20,000 = $16,000 $80,000$16,000 = $64,000).
Although the total income Andy paid tax on to Delaware was
$84,000, he may only claim a resident credit on $73,600
($64,000 of compensation, $6,400 of gains and $3,200 of
rental income). Andy must also adjust his tax paid to the
other state to $5,257 by completing Section III and Section
II, Lines 4d and 4e of PA Schedule G-L.
EXAMPLE 3
Jeremy is a 50% shareholder of a PA S corporation that does
business in multiple states. The S corporation files composite
returns for all the states it does business in except two states.
In one of the states, the entity is not an S corporation and the
S corporation claims an out-of-state credit for that state.
Jeremy files an individual tax return on his own for the other
state where a composite return is not filed because he has
other income from other sources in that state. Jeremy
receives a PA Schedule RK-1 from the S corporation that
includes his income along with a Resident Credit amount on
Line 8 and an Other Credit amount on Line 9. He also
receives a Statement of Resident Credits for Owners of a
Pass-Through Entity from the S corporation that provides a
breakdown of the resident credit amount from Line 8 of his
PA Schedule RK-1. The statement also provides him with the
required class(es) of income, tax paid and out-of-state credit
amount for Line 9 of his PA Schedule RK-1. This example
summarizes Jeremy’s PA-40 filing requirements regarding
the resident credits and out-of-state credit.
The PA-40 for Jeremy should include the following:
● PA Schedules G-L for each state related to the resident
credit reported on Line 8 of Jeremy’s PA Schedule RK1. The PA Schedules G-L should be prepared using the
breakdown provided on the Statement of Resident
Credits for Owners of a Pass-Through Entity. The PA
Schedules G-L should also have the Credit from PassThrough Entity oval completed in the upper right corner
of the schedule;
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● A PA Schedule G-L for the out-of-state credit reported
on Line 9 of Jeremy’s PA Schedule RK-1. The PA
Schedule G-L should be prepared using the information
for the out-of-state credit provided on the Statement of
Resident Credits for Owners of a Pass-Through Entity.
The PA Schedules G-L should also have the Credit
from Pass-Through Entity oval completed in the upper
right corner of the schedule;
● A PA Schedule G-L for the state where Jeremy filed an
individual tax return separately for his tax liability in that
state;
● A copy of the Statement of Resident Credit for Owners
of a Pass-Through Entity;
● A copy of the separately filed state tax return; and
● A copy of the PA Schedule RK-1 showing amounts
reported on Lines 8 and 9.
EXAMPLE 4
Chansier is a partner in a partnership that does business in
multiple states. The partnership files composite returns for
all the states in which it does business except three states.
Chansier files separate individual income tax returns for the
additional three states in which the partnership does
business. Chansier receives a PA Schedule RK-1 from the
partnership along with a Statement of Resident Credits for
Owners of a Pass-Through Entity. This example summarizes
Chansier’s PA-40 filing requirements regarding his resident
credits.
The PA-40 for Chaniser should include the following:
● PA Schedules G-L for each state where composite
returns were filed related to the resident credit reported
to Chansier on the Statement of Resident Credits for
Owners of a Pass-Through Entity;
● A PA Schedule G-L for each state where Chansier filed
an individual tax return separately for his tax liability in
each state;
● A copy of the Statement of Resident Credits for Owners
of a Pass-Through Entity;
● A copy of the separately filed state tax returns for each
state where Chansier filed separately; and
● A copy of the PA Schedule RK-1 from the partnership.
EXAMPLE 5
The John Smith Grantor Retained Annuity Trust, a
Pennsylvania resident trust, is a shareholder in PA S
corporation that does business in multiple states. John
Smith, an individual, is also a shareholder in the PA S
corporation. The PA S corporation files composite returns on
behalf of its shareholders for every state. The trust
distributes all of its income to its one beneficiary, John Smith.
For this example, the trust is not permitted to claim a resident
credit for the taxes paid to the other states because it
distributes all of its income. The trust is not permitted to pass
the resident credits on to its beneficiary, John Smith, as it is
not considered to be a pass-through entity. In addition, John
Smith is not permitted to claim a resident credit on trust
income distributed to him by the trust.
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EXAMPLE 6
Rhonda is a Pennsylvania resident and a professional hair
and makeup artist for several celebrities and TV station
personalities. She is a single member limited liability
company reporting her income and expenses on PA
Schedule C. Rhonda operates her business in several
states. Rhonda files and pays income taxes in all the states
in which she conducts business.

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Rhonda’s PA-40 should include the following:
● PA Schedules G-L for all the states where individual
income tax returns are filed by Rhonda; and
● Copies of each state’s tax returns filed by Rhonda for
all the states in which she does business.

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PA S Corporation/Partnership/Limited Liability Company Name

SSN

EIN

Business

Gains

Share of State Income by Class of Income:
Dividends

Rental

Shareholder/Partner Name

Interest

Statement of Resident Credits for Owners of a Pass-Through Entity

State

TOTALS 1
TOTALS 2

Total Income
Subject to Tax

From:

To:

Resident Credit/
Out-of-State Credit
(lesser of 3.07%
or tax paid to
other state)

Tax or Fiscal Year

Share of State
Tax Liability

Additional states may be included on entity prepared statements or by including additional copies of this statement. Names of states must be included.
1 Enter a 1 in the last column if a resident credit.
2 Enter a 2 in the last column if an out-of-state credit.
Provide totals for each.

1/2

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PA SCHEDULE G-L

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