Pennsylvania Pennsylvania Personal Income Tax Return Instructions

Pennsylvania Personal Income Tax Return Instructions
2023 Pennsylvania Personal Income Tax Return Instructions (PA-40IN)
23
2023
INSTRUCTIONS BOOKLET
NO FORMS INCLUDED
PA-40 IN 09-23

TAX RATE
The state income tax rate for 2023 is 3.07 percent (0.0307).
2023 TAX RETURN FILING DUE DATE
To remain consistent with the federal tax due date, the due date for filing
2023 Pennsylvania tax returns will be on or before midnight, Monday,
April 15, 2024.
TAX FORGIVENESS
Depending on your income and family size, you may qualify for a refund
or reduction of your Pennsylvania income tax liability with the state’s Tax
Forgiveness program. Read the instructions beginning on Page 37 to see
if you qualify.
SOCIAL SECURITY NUMBERS
When completing the PA-40 (Pennsylvania Personal Income Tax Return),
please provide the ENTIRE Social Security number for you and your
spouse (if applicable). If part of the Social Security numbers are not
provided, it can cause delays in processing your return.

Fed-State E-File: Taxpayers also have the option to electronically file
state and federal tax returns for a fee using software available from
reputable vendors.
BENEFITS OF ELECTRONICALLY FILING YOUR RETURN
SAFE: Regardless of the option you choose, the department protects
your information with the latest security safeguards.
EASY: The systems perform math calculations for you.
FAST: The department processes refunds in half of the time compared
to a paper return.
DIRECT DEPOSIT: You can have your refund deposited directly into your
checking or savings account. Direct deposit is not available with a paper
PA tax return.
CONFIRMATION: Upon filing electronically the department sends an
acknowledgement directly to you, your tax professional or Electronic
Return Originator (ERO).

2023 STATE TAX CHANGES
Beginning tax year 2023, taxpayers can now file married, filing jointly
when either taxpayer is claiming a credit on the PA-40 Schedule OC.

REMEMBER: When you use one of the electronic filing options, do
not mail a paper copy of your tax return; instead, keep it for your
records along with your confirmation number.

PA now follows the IRC guidelines regarding the Section 179 deduction.
Please see Bulletin 2023-02 for more information.

You may need to submit other information such as copies of military
orders (if on active duty outside Pennsylvania), Form(s) W-2 (if your
employer withheld additional PA income tax), and tax returns you filed in
other states (when requesting a PA Resident Credit). Read and follow the
instructions. The department reserves the right to request an explanation
or supporting information for any amount that a taxpayer reports on a
Pennsylvania tax return.

WHERE’S MY REFUND?
Taxpayers can check the status of their refunds 24/7 online or by phone.
Visit the department’s website at revenue.pa.gov and select the Where’s
My Income Tax Refund? link on the department’s homepage. Or call 1888-PATAXES to find out the status of your refund. Taxpayers will be
prompted to provide their Social Security number and Requested Refund
Amount to obtain the current status.
COMBAT ZONE AND HAZARDOUS DUTY SERVICE
Pennsylvanians serving in combat zones or qualified hazardous duty
areas have the same additional time to file their state income tax returns
and make payments as they have for federal income tax purposes. The
due date is automatically extended for 180 days from the last day of
service or the last day of continuous hospitalization for injuries incurred
in one of these areas. See Page 41 for more information.
FILE YOUR PA PERSONAL INCOME TAX RETURN ONLINE FOR FREE
Taxpayers can utilize an online filing system to file their 2023
Pennsylvania personal income tax returns for free. Visit mypath.pa.gov
to access the system, which also allows taxpayers to make payments,
view notices, update account information and find the answers to
frequently asked questions. You can also visit the department’s website,
revenue.pa.gov to find other information on filing your personal income
tax return.
E-filing offers advantages not available to taxpayers filing by paper,
including error-reducing automatic calculators; prompt confirmation of a
successful filing; faster refund processing and direct deposit options.

TAXPAYER SERVICES AND ASSISTANCE
ONLINE SERVICES
myPATH
• Request an extension of time to file; make payments, including
estimated payments; check the status of your return and refund;
update your address; calculate penalty and interest; pay tax due by
electronic funds withdrawal for PA personal income taxes; and pay
by credit/debit card.
Online Customer Service Center
• Find answers to commonly asked questions by using the
department’s Online Customer Service Center. Use the Frequently
Asked Questions feature to search the database of commonly asked
questions. If you do not find your answer in this area, you can submit
your question to a customer service representative.
PA Personal Income Tax Guide
• The recently updated PA Personal Income Tax Guide has information
that explains Pennsylvania’s income tax and many of its differences
from federal tax rules. You can only access the PA Personal Income
Tax Guide via the department’s website at revenue.pa.gov. The PA
Personal Income Tax Guide is divided into various sections with
topics related to many issues regarding filing personal, fiduciary and
S corporation/partnership tax returns. The PA Personal Income Tax
Guide is now internet searchable in addition to searchable within
each topic heading.
TELEPHONE SERVICES
Customer Experience Center
• Call 717-787-8201 for PA personal income tax help during normal
business hours: 8:00 AM - 5:00 PM.
1-888-PATAXES
Touch-tone service is required for this automated 24-hour toll-free line.
Call to order forms or check the status of a personal income tax account,
corporation tax account or property tax/rent rebate.
FORMS ORDERING SERVICES

Email Requests for Forms: [email protected]
Automated 24-hour Forms Ordering Message Service:
1-800-362-2050.
• This line serves taxpayers without touch-tone telephone service.
Written Requests:

PA DEPARTMENT OF REVENUE
TAX FORMS SERVICE UNIT
1854 BROOKWOOD ST
HARRISBURG PA 17104-2244
OTHER SERVICES

Free Income Tax Preparation Assistance
• You can receive free assistance in preparing uncomplicated, nonbusiness federal, state, and local income tax returns through the
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the
Elderly (TCE) programs. Visit the department’s website, contact the
department’s nearest district office, or call the Internal Revenue
Service’s toll-free number (1-800-829-1040) for the location of
assistance sites. Taxpayers with modest incomes and older
residents are urged to take advantage of these services.
Language Services
• Non-English-speaking taxpayers can receive assistance from the
department through an interpretation service. The service covers
more than 70 languages.
Español
• El Departamento de lmpuestos puede ayudar los contribuyentes que
no hablan inglés por medio de un servicio de traducción durante el
periodo de pago de impuestos.
Federal Tax Assistance
• Federal tax account or technical information and problem solving
are available by calling: 1-800-829-1040
• Recorded Tele-Tax Service on federal tax topics or tax refund
information is available by calling: 1-800-829-4477
• Federal tax forms and publications are available by calling:
1-800-829-FORM (3676)

To obtain forms, visit a Revenue district office or use one of the following
services:
Online: revenue.pa.gov
Pennsylvania income tax forms, schedules, brochures, electronic filing
options, and other information are available on the department’s website.
If you do not have Internet access, visit your local public library to obtain
copies of forms from the department’s website.

TAXPAYERS’ RIGHTS ADVOCATE
The Pennsylvania Department of Revenue has a Taxpayers’ Rights
Advocate who assists taxpayers with PA personal income tax and PA
inheritance tax problems and concerns that have not been resolved
through normal administrative procedures. It is the Advocate’s
responsibility to ensure that the department provides equitable treatment
with dignity and respect. For more information concerning taxpayers’
rights, visit the department’s website at revenue.pa.gov or request the
department’s Taxpayers’ Rights Advocate brochure (REV-527) from one
of the Forms Ordering Services above.
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PA-40

To contact the Taxpayers’ Rights Advocate:
• Email: [email protected]
• Call: 717-772-9347
• Write: PA DEPARTMENT OF REVENUE
TAXPAYERS RIGHTS ADVOCATE
LOBBY STRAWBERRY SQUARE
PO BOX 280101
HARRISBURG PA 17128-0101
www.revenue.pa.gov

PA DEPARTMENT OF REVENUE DISTRICT OFFICES
NOTE: Please call ahead to verify a district office’s address and its services or visit the department’s website at
revenue.pa.gov for information. Taxpayer assistance hours are from 8:30 AM to 5:00 PM.

ALLENTOWN
STE 6
555 UNION BLVD
ALLENTOWN PA 18109-3389
610-861-2000

PHILADELPHIA - CENTER CITY
STE 204A
110 N 8TH ST
PHILADELPHIA PA 19107-2412
215-560-2056

READING
STE 239
625 CHERRY ST
READING PA 19602-1186
610-378-4401

ERIE
448 W 11TH ST
ERIE PA 16501-1501
814-871-4491

PHILADELPHIA - NORTHEAST
ACDMY PLZ SHPG CTR
3240 RED LION RD
PHILADELPHIA PA 19114-1109
215-821-1860

SCRANTON
RM 207
BANK TOWERS
207 WYOMING AVE
SCRANTON PA 18503-1427
570-963-4585

HARRISBURG
LOBBY
STRAWBERRY SQ
HARRISBURG PA 17128-0101
717-783-1405
NORRISTOWN
SECOND FL
STONY CREEK OFFICE CENTER
151 W MARSHALL ST
NORRISTOWN PA 19401-4739
610-270-1780

www.revenue.pa.gov

PITTSBURGH - DOWNTOWN
411 7TH AVE - ROOM 420
PITTSBURGH PA 15219-1905
412-565-7540
PITTSBURGH - GREENTREE
11 PARKWAY CTR STE 175
875 GREENTREE RD
PITTSBURGH PA 15220-3623
412-929-0614

PA-40

3

BEFORE YOU BEGIN
Filing Due Date
You must file before midnight, Monday, April 15, 2024. The U.S. Postal
Service postmark date on your envelope is proof of timely filing. You must
report all taxable income received or accrued from Jan. 1, 2023, through
Dec. 31, 2023.
If you cannot file by the due date, request an extension of time to file.
Read the instructions on Page 41. If you do not file your return by the due
date, the department imposes late filing penalties and interest charges.
Who Must File a PA Tax Return?
If you are a PA resident, nonresident or a part-year PA resident, you must
file a 2023 PA tax return if:
• You received total PA gross taxable income in excess of $33 during
2023, even if no tax is due with your PA return; and/or
• You incurred a loss from any transaction as an individual, sole
proprietor, partner in a partnership or PA S corporation shareholder.

Minors. PA law does not exempt a minor from the previously described
requirements to file a PA tax return even if claimed as a dependent on a
federal return. A parent/guardian must file a return on behalf of the minor
child in such circumstances.
Decedents. The executor, administrator or other person responsible for
the affairs of a decedent must file a PA tax return if the decedent met the
previously described requirements.
Persons Not Required to File Federal Income Tax Returns. If you are
not required to file a federal income tax return, you may still be required
to file a PA personal income tax return because the requirements for filing
a return in Pennsylvania are different than federal requirements. You must
file a return in Pennsylvania if any of the situations previously described
apply. See the PA Personal Income Tax Guide – Brief Overview and Filing
Requirements for Pennsylvania Personal Income Tax Returns section
found on the department’s website, for more information.

REMINDERS FOR FILING YOUR 2023 PA-40
Supporting Schedules
An acceptable return has not been filed until all schedules required by
the department have been filed. Failing to provide required schedules
may not only delay the processing of your return, but also subject you to
late-filing penalties.
Assembling Your PA-40
Arrange your documents in the following order when submitting your 2023
PA tax return:
• Original PA-40. Do not mail a photocopy of your PA-40 or a copy of
your electronic PA tax return.
• Federal Forms, W-2, 1099-R, 1099-MISC, 1099-NEC. Photocopies
of your Form(s) W-2 (be sure the information is legible), or your
actual Form(s) W-2. Include a statement to list and total your other
taxable compensation. You must submit photocopies of your Form(s)
1099-R, 1099-MISC, 1099-NEC and other statements that show
other compensation and any PA tax withheld.
NOTE: Do not include copies of Form(s) 1099-DIV and 1099-INT,
unless the forms show PA income tax withheld.
• PA Schedule OC and the required supporting documents when
claiming any of the restricted tax credits that PA law allows.
• PA Schedule(s) RK-1, PA Schedule(s) NRK-1. If you did not
receive PA schedules, then submit federal Schedule(s) K-1. See
Partnership, Limited Liability Company and PA S Corporation
Partners, Members and Shareholders beginning on Page 16.
• PA Schedule(s) G-L. If you are claiming a resident credit for taxes
paid to other states, include each schedule followed by any required
supporting documents for the schedule.
• All other required PA schedules and forms, including any
additional sheets you prepared.
IMPORTANT: Please include your name(s), Social Security
number(s), tax year, and a brief line reference to the PA-40 or
PA-40 schedule for any additional sheets you include with your return.
• All other required documents, including federal schedules (where
the instructions allow the use of federal schedules), that explain the
information you entered.
4

PA-40

• Using PA Payment Voucher (Form PA-40 V) and payment. See
the instructions on Page 25.
IMPORTANT: Do not staple your check or money order to your
Form PA-40 V or your PA-40 form. If you do not use a Form
PA-40 V, see the instructions on Page 25.
Entering Information
• Social Security Number(s)
Carefully write your SSN, and your spouse’s SSN if married, in the
boxes provided on your PA-40 form. You must enter your entire SSN.
Please double-check your SSN.
• Rounding Numbers
On the PA-40 form and schedules, show money amounts in wholedollars. Eliminate any amount less than $0.50 and increase any
amount that is $0.50 or more to the next highest dollar.
• Your Address
Print your name and address on the form.
NOTE: If you are using a military address, please use your APO
or FPO address.
EXAMPLES:
KEVIN TAXPAYER
JOSEPH TAXPAYER
UNIT 2050 BOX 4190
USCGC HAMILTON
APO AP 96278-2050
FPO AP 96667-3931
Foreign Address Instructions
If you live outside of the U.S., it is important that you write your foreign
address on your PA-40 using the department's guidelines. Failure to use
these guidelines may delay any refunds you request or correspondence
necessary to complete the processing of your return. To comply with the
foreign address guidelines, use the following rules when completing the
address portion of your PA-40 form: write your name(s) in the spaces
provided; write the first and second line of your address in the First Line
of Address spaces; write the state/province, if one exists, and then the
foreign postal number (ZIP code equivalent), separated by a comma (do
not abbreviate on this line), in the Second Line of Address spaces; leave
www.revenue.pa.gov

the State and ZIP code spaces blank; write the two-character code for
the country in the Country Code spaces. Codes can be found at
irs.gov/e-file-providers/foreign-country-code-listing-for-modernizede-file.
Other important rules to follow include: using all capital letters to write all
lines of the address; initials, simple given names, fictitious names or
figures are not permitted; and addresses should not have more than five
lines.
Below are two examples of properly completed foreign addresses using
the department's guidelines. Providing your address in this format will
better ensure that the department is able to contact you in the event we
need additional information, or to send you your refund on a timely basis.
Name:
First Line of Address:
Second Line of Address:
City or Post Office:
State:
ZIP Code:
Country Code:

THOMAS CLARK
117 RUSSELL DRIVE
ENGLAND, WIP 6HQ
LONDON
GB

Name:
First Line of Address:
Second Line of Address:
City or Post Office:
State:
ZIP Code:
Country Code:

HELEN SAUNDERS
1010 CLEAR ST
ONTARIO, K1A OB1
OTTAWA
CA

Privacy Notification
By law (42 U.S.C. § 405(c)(2)(C)(i); 61 Pa. Code § 117.16), the
Pennsylvania Department of Revenue has the authority to use the SSN
to administer the Pennsylvania personal income tax and other
Commonwealth of Pennsylvania tax laws. The department uses the SSN
to identify individual taxpayers and verify their incomes. The department
also uses the SSN to administer tax-offset and child-support programs
required by federal and Pennsylvania laws. The commonwealth may also
use the SSN in exchange-of-tax-information agreements with
governmental authorities. Pennsylvania law prohibits the commonwealth
from disclosing information that individuals provide on income tax returns,
including the SSNs, except for official purposes.

WHEN ENTERING INFORMATION

DO:
•
•
•
•
•
•
•
•
•
•

Print in black ink
Use UPPER CASE (CAPITAL) letters
Print one number or letter in each box
Leave a blank box between whole words
Print your name – last, first, middle initial, and suffix
on the correct lines
Print your correct street address
Print your apartment number, suite number, room
number, rural route, floor, etc. on the first line
Print your PO Box on the second line
Fill in all appropriate ovals completely
Prepare a copy before submitting your return

DO NOT:

• Use red pen or pencil
• Use lower case letters or script
• Leave a blank box or use a punctuation mark if your
name, address, or city has Mc, Van, O, etc.
• Use dashes or other punctuation in boxes
• Print a PO Box number if the post office delivers to
your home
• Use a PO Box on any line of your address except
the line directly above your city and state
• Use an X or check mark (¸) in an oval
• Erase or use correction fluid/tape

GENERAL INSTRUCTIONS
PA-40 Tax Form
If you do not electronically file your tax return, use the PA-40 form. Please
read the instructions.

Do not enter the school district where you work. Using an incorrect code
may affect your school district’s funding. The lists of school district names
and codes are on Pages 46 and 47.

Keep Your Records
The department has the statutory authority to verify and audit all of the
amounts you report on your return and accompanying schedules.
Maintain your books and records for at least four years after filing, as
evidence of the information you reported on your PA return. Basis
documentation for any item reported or potentially reportable on current
or future tax returns must be kept indefinitely or at least four years after
the asset is sold, exchanged or disposed of by a taxpayer. For example,
books and records used to calculate basis for retirement plans, stocks,
bonds, mutual funds, business assets, business interests, tuition account
programs, principal residence, etc. must be kept indefinitely.

NOTE: If you do not know the name of the school district where
you resided on Dec. 31, 2023, you can obtain this information from
the Online Customer Service Center at revenue.pa.gov using the school
district address search tool on our website. School district names and
codes are on Pages 46 and 47.

Daytime Telephone Number
Enter the area code and telephone number where the department can
call you during business hours.
School Code and School District Name
You must enter the five-digit code and name of the school district where
you lived on Dec. 31, 2023, even if you moved after Dec. 31, 2023.
www.revenue.pa.gov

Some examples of what to consider when entering the school district
code on a return are as follows:
• Military personnel should use the school district code for the domicile
of their spouse (if the spouse lives in Pennsylvania), their parents (if
entering the military while they are domiciled in Pennsylvania), or
the code for the school district in which they live while on federal
active military duty while stationed in Pennsylvania (if a PA resident).
• Persons residing in a nursing home or other care facility who are
planning to return to their principal residence after a temporary stay
in such facilities should enter the school district code for the physical
address of their principal residence and not the nursing home or care
facility.
PA-40

5

• Persons who reside in a nursing home or care facility on a
permanent basis and have made the decision to do so (who are or
were mentally capable of making this decision) should use the
school district code for the physical address of the nursing home or
care facility.
• The residence of a person in a nursing home, long-term care facility
or similar facility is presumed to be the person’s residence prior to
becoming a patient in the home or facility, unless there is substantial
evidence that the person is legally competent and does not intend
to return to their previous home.
• PA residents who are students attending college inside or outside of
Pennsylvania should use the school district code for the physical
address of the domicile or principal residence of their parents.
• Nonresidents or part-year residents who did not reside in the state
as of Dec. 31, 2023, should enter 99999 in the school district code
field.
• Part-year residents who resided in Pennsylvania as of Dec. 31,
2023, should enter the school district code of the physical address
of their domicile or principal residence.
• Persons who use a mailing address other than the physical address
of the domicile or principal residence should enter the school district
code for the physical address of their domicile or principal residence.
• Persons who work outside of Pennsylvania, but maintain a permanent
place of abode inside Pennsylvania during their absence from
Pennsylvania or persons who plan to return to Pennsylvania after a
temporary relocation to another state or country who are still considered
PA residents should use the school district code for the physical address
of their permanent place of abode or the school district code of their
physical address prior to moving out of Pennsylvania.
Extension of Time to File Your 2023 Tax Return
Fill in this oval if you have an extension to file your 2023 PA income tax
return. Read the instructions on Page 41.
Amended Return
Fill in this oval only when you are amending your 2023 PA tax return.
Please read the instructions beginning on Page 42.
Residency Status
• (R) Resident
If you were a resident of Pennsylvania for all of 2023, fill in this oval.
You must report all income (losses) regardless of the source from
which you earned, received, or realized the income (loss).
Nonresidents and Part-Year Residents
Please read the instructions on Page 43. Nonresidents and part-year
residents use the same PA-40 form as PA residents.
• (N) Nonresident
If you were a nonresident of Pennsylvania for all of 2023, fill in this
oval. PA law taxes nonresidents on the income earned, received, or
realized from Pennsylvania sources during 2023. See the
instructions on Page 43 for more information.
• (P) Part-Year Resident
If you moved into Pennsylvania during 2023, fill in this oval even
though you were a PA resident at the end of 2023. If you moved from
Pennsylvania during 2023, fill in this oval even though you were not
a PA resident at the end of 2023.
PA law taxes part-year residents on all income from all sources while
a PA resident, and all income (loss) earned, received, and realized
from PA sources when not a resident of Pennsylvania. See the
instructions on Page 43 for more information.
6

PA-40

See the PA Personal Income Tax Guide – Brief Overview and Filing
Requirements for Pennsylvania Personal Income Tax Returns section
found on the department’s website for more information. For additional
information please visit the department’s website at revenue.pa.gov.
Students
If you are a PA resident college student attending school outside
Pennsylvania or a nonresident college student attending school within
Pennsylvania, request the brochure PA Personal Income Taxes for
College Students (REV-758) for more information.
Filing Status
Fill in the oval that describes your status on Dec. 31, 2023. You do not
have to file a PA tax return if you do not individually meet the requirements
described under Who Must File a PA Tax Return? on Page 4. If you do
not live in Pennsylvania and do not have any income (loss) from PA
sources, you do not have to file a PA tax return, even if married to
someone who must file a PA tax return. If you are a PA resident who does
not have any PA income (loss) to report, you do not have to file a PA tax
return, even if married to a person who must file a PA tax return.
(S) Single
You must file as single if on Dec. 31, 2023:
1. You were not married; or
2. During 2023, you divorced or became a widow or widower, did not
remarry and/or could not or did not elect to file a joint return with a
deceased spouse.
(J) Married, Filing Jointly
You and your spouse, even if living apart or one of you is deceased, can
file a joint return for convenience. The executor(s) of the estate(s) of the
taxpayer and spouse may also elect to file jointly. To file jointly, you must
meet ALL of the following conditions:
1. Your taxable years end on the same date (not including returns with
a deceased taxpayer and/or spouse); and
2. You and your spouse elect to have the same residency period
(earliest starting date if you moved into Pennsylvania and latest
ending date if you moved out of Pennsylvania) if you are part-year
residents; and
3. Your deceased spouse’s estate has not elected to file a separate
return on their behalf; and
4. Neither of you is individually liable for the payment of child or spousal
support, or another liability to the PA Department of Human Services;
and
5. Neither of you is individually liable for the payment of a court-ordered
obligation arising from a criminal prosecution or proceeding.
If you and your spouse made separate estimated payments, you
should file separate tax returns, each claiming only your own
payments. If you and your spouse made your estimated payments jointly, you
should file a joint tax return. However, if you and your spouse made estimated
payments jointly and because of PA guidelines you must file separate tax
returns, you must allocate the payments by completing Form REV-459B,
Consent to Transfer, Adjust or Correct PA Estimated Personal Income Tax
Account. The form must be completed in its entirety, showing the total number
of payments made for the year and the amount of the payments to be
transferred to the spouse. Both individuals must sign the form. This form can
be sent to the address shown on the form prior to filing the return or a copy
of the form can be submitted with both returns when filing. This avoids
processing delays and correspondence from the department.
www.revenue.pa.gov

Joint Income - Joint Returns
Married taxpayers can file a joint tax return for convenience only. If you
and your spouse jointly own income-producing property, you must each
report your share of the income (loss). Income-producing property
includes savings accounts, businesses, securities, and real estate.
Spouses usually equally divide income from jointly owned property.
CAUTION: On a joint return, you and your spouse are each
separately liable for the entire amount of PA tax due, even if only
one of you had taxable income, and even if one of you paid your own PA
tax through withholding or estimated payments. The income and losses
of a taxpayer and spouse must be determined separately. You may not
offset the income of the taxpayer with a loss from the spouse and vice
versa. See REPORTING NET INCOME, GAINS, AND LOSSES ON
LINES 4, 5, AND 6 on Page 15 and the requirements for the schedules
reporting the income and losses for each class of income for additional
information and reporting requirements.
(M) Married, Filing Separately
You and your spouse have the option to file separate returns. However,
you and your spouse must file separate returns if:
1. Your taxable years end on different dates; or
2. Your taxable years begin on different dates for part-year residents;
or
3. Either of you is individually liable for the payment of spousal/child
support, or another liability to the PA Department of Human Services;
or
4. Either of you is individually liable for a court-ordered obligation to
the Administrative Office of Pennsylvania Courts; or
5. One of you is a PA resident and the other is not. However, you can
file jointly if you both elect to file as PA residents and meet all other
requirements for filing jointly. See Married, Filing Jointly beginning
on the previous page.
CAUTION: You must include your spouse’s SSN even if filing
Married, Filing Separately.
(F) Final Return
Use this filing status if you lived in Pennsylvania during 2023, but
permanently moved away or if for any other reason, you will not have any
PA-taxable income (or loss) in 2024. Provide the reason, such as you
moved to another state.
REMEMBER: Even after you move from Pennsylvania, you must report
any PA-taxable income you earned, received, or realized from PA
sources.
(D) Deceased
Use this status if the taxpayer, spouse or both died in 2023. Enter the
date(s) of death.
A joint return can be filed by the surviving spouse and decedent when a
spouse or taxpayer dies during the tax year if:
1. The decedent did not previously file a return for the tax year; and
2. The personal representative, executor or administrator has not been
appointed by the time the return is made, signed and filed; or
3. The fiduciary of the decedent consents to the filing of and signs the
joint return.
www.revenue.pa.gov

Also the executor(s) of the estate(s) of the taxpayer and spouse (if both
die during the same tax year) may elect to file a joint return on behalf of
the taxpayer and spouse if:
1. The personal representatives, executors or administrators consent
to filing a joint return; and
2. The joint return is signed by both fiduciaries.
A surviving spouse must file a separate return if the fiduciary of the estate
does not agree to a joint return or if a fiduciary of the decedent is
appointed after the filing of the joint return and the fiduciary supersedes
the joint return filing by filing a separate return on behalf of the decedent.
In cases where a joint return has already been filed by the spouse and a
fiduciary has been appointed who wants to file a separate return on behalf
of the decedent, a separate return for the surviving spouse must be filed
within 90 days of the filing of the decedent’s separate return by the
fiduciary. If the surviving spouse’s separate return is filed within 90 days,
the separate return shall be considered to be filed on the date the original
joint return was filed. Otherwise, the surviving spouse’s return shall be
considered to be filed on the date the department receives it.
FILING TIPS:
• If a joint return is filed and the taxpayer, spouse or both are
deceased, complete the married filing joint oval, the deceased oval
and the spouse and/or taxpayer ovals as well as the date(s) of death.
The surviving spouse should complete the name and Social Security
number section of the return as the primary taxpayer on the return.
• If a separate return must be filed by the surviving spouse and a joint
return was not previously filed, the surviving spouse’s filing status
should be single and no information should be included in the
deceased filing status area.
• If a separate return must be filed by the surviving spouse after having
filed a joint return, the surviving spouse should also complete the
amended return oval and include Schedule PA-40 X.
• If a separate return is filed by the decedent’s fiduciary, the fiduciary
should complete the deceased and taxpayer ovals and include the
date of death.
• If both taxpayers die during the tax year and the fiduciaries do not
elect to file a joint return, complete the taxpayer deceased oval and
include the date of death on the separate returns for each.
• If a decedent was not married when they died, the fiduciary should
complete the deceased taxpayer oval and include the date of death.
CAUTION: Do not list the deceased taxpayer’s name and Social
Security number as the primary taxpayer unless both the taxpayer
and spouse die during the tax year and a joint return is filed on their
behalf.
The executor, or other person responsible for the affairs of the decedent
should also use this filing status to complete, sign, and file a separate
return for the decedent. The return must report all the decedent’s 2023
income, payments, and credits. The person signing the decedent’s return
must indicate their relationship to the decedent (executor or person
responsible for the affairs of the decedent).
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7

Surviving Spouse
If the decedent was married, the surviving spouse may be required to file
a separate return, and use the Single (S) filing status. If the decedent
made PA estimated payments, the surviving spouse may request Form
REV-459B to reconcile the estimated payments to the separate PA tax
returns. Request this form from the department’s website, or one of the
Forms Ordering Services on Page 2.
Farmers
Fill in this oval if you derived at least two-thirds of your 2023 gross income
from farming.
Pro-Forma Returns for Taxable Bankruptcy Estates
Please see the instructions for the PA-41 Fiduciary Income Tax Return
for additional information regarding the preparation of a pro-forma
PA-40 Personal Income Tax Return for a taxable bankruptcy estate.
PA INCOME CLASSES
You must report your income (loss) by applicable class, whether it is
received directly, as estate or trust income or as a distributive share of
the income of a partnership or PA S corporation. Read the instructions
for each income class.
Line 1. Compensation – Page 10
Line 2. Interest – Page 14
Line 3. Dividends and Capital Gains Distributions – Page 15
Line 4. Net Income or Loss from the Operation of a Business,
Profession, or Farm – Page 17
Line 5. Net Gain or Loss from the Sale, Exchange, or Disposition
of Property – Page 17
Line 6. Net Income or Loss from Rents, Royalties, Patents, or
Copyrights – Page 18
Line 7. Estate or Trust Income – Page 19
Line 8. Gambling and Lottery Winnings – Page 19
Federal income classifications are disregarded to the extent they are
inconsistent with PA classifications.
Generally, other or miscellaneous income is either compensation
on Line 1a, (see Page 10), or business income on Line 4, (see
Page 17). If you cannot determine the income class, contact the
department for assistance.
TAXABLE INCOME FOR PA PIT PURPOSES:
The PA-40 line number on which to report the income follows each item.
Classify means report the income in the appropriate PA income class
based on all facts and circumstances. See the PA Personal Income Tax
Guide for more information.
• Employer provided fringe benefits, unless excludable (Line 1a)
• Sick pay and disability benefits that represent regular wages, such
as sick leave pay (Line 1a)
• Allowances and reimbursements in excess of allowable employee
business expenses (Line 1a)
• The value of property received as payment for services (Line 1a)
• Delay damages received in connection with a court judgment or
settlement to the extent that the payments represent back wages
(Line 1a)
• Honoraria (Line 1a)
• Compensation as fees for performing services as an executor or an
administrator of an estate or a director of a corporation (Line 1a)
8

PA-40

• Severance pay (Line 1a)
• Incentive payments received for terminating employment before
reaching normal retirement age (Line 1a)
• Awards and gifts given in recognition for, or given as a transfer of
cash or property, in payment for past, present, or future service as
an inducement to perform future services (Line 1a)
• Jury fees (Line 1a)
• Expert witness fees (Line 1a)
• Cash reimbursements for personal expenses, such as commuting
and day care (Line 1a)
• A discharge of indebtedness, unless specifically excludable from
taxable income (Classify)
• Damage awards and settlements to the extent that the payments
represent back wages or another uncollected entitlement to PAtaxable income (Classify)
• Covenants not to compete, or for refraining from the performance of
services (Classify)
• Other income described in the PA income classes (Classify)
• Income for performing services as an executor or director when such
services are undertaken as part of your business or profession (Line
4)
INCOME NOT TAXABLE FOR PA PIT PURPOSES:
• Social Security benefits and/or Railroad Retirement benefits
• Commonly recognized pension, old age, or retirement benefits paid
after becoming eligible to retire, and retiring
• United Mine Workers Pension
• Military pension benefits
• Civil Service Annuity
• Unemployment compensation and public assistance
• Payments received under federal trade assistance, trade adjustment
allowances and alternative adjustment assistance.
• Payments received under workers' compensation acts, occupational
disease acts, or similar legislation; including Heart and Lung Pension
• Payments for injuries received while working, and damages
received, whether by suit or otherwise, for personal injuries
• Sick pay and disability benefits, including payments by third party
insurers for sickness or disability (does not include amounts paid as
sick leave)
NOTE: If your employer includes your payments for sickness,
disability, and/or on-the-job injuries in Box 16 of your Form
W-2, provide a statement from your employer verifying the amount
of these payments.
• Employer-paid group term life insurance premiums
• Damage awards and settlements from physical injury or sickness
such as pain and suffering or emotional distress
• Child support
• Alimony
• Inheritances, death benefits, and income in respect of a decedent
(IRD) as defined for federal income tax purpose for purposes of
compensation (NOTE: IRD may be subject to the PA PIT in a class
of income other than compensation)
• Active-duty pay received as a member of the U.S. Armed Forces
from the U.S. government for service outside Pennsylvania (see
Page 40)
• Awards and gifts made from detached or disinterested generosity
www.revenue.pa.gov

• Personal use of an employer’s owned or leased property and/or
services, at no cost or at a reduced cost
• Federally taxable punitive damages received for personal physical
injury or physical sickness, whether received by suit or by settlement
• Income from contracts of insurance for long-term care that do not
have accumulated refundable reserves payable upon lapse or
surrender
• Interest earned from an IRC Section 529 plan like the Pennsylvania
529 College and Career Savings Program when earned or used for
Qualified Higher Education Expenses as defined by IRC Section 529
(e)(3)(A)
• Federal economic impact or stimulus payments.
DIFFERENCES BETWEEN PA PIT AND IRS
For more information on differences between Pennsylvania and the IRS,
refer to the PA Personal Income Tax Guide and the specific topic sections
related to the income class for which you have a question. The following
differences are the result of recent Pennsylvania and federal legislation:
Depreciation - PA Limitations
• Bonus Depreciation
PA PIT law does not follow the federal allowances for additional
depreciation expenses. You may not use any of the bonus
depreciation elections enacted for federal purposes.
• ACRS and MACRS and IRC Section 179
Pennsylvania allows ACRS and MACRS and IRC Section 179 to the
extent allowable under the version of the Internal Revenue Code in
effect at the time the property was placed in service, or under Section
179 of the IRC of 1986, as amended to Jan. 1, 1997, whichever is
earlier, but not any other accelerated method. 72 PS § 7303(a.3)(Act
89 of 2002.)
• IRC Section 179
Please see Bulletin 2023-02 available on the department's website
at revenue.pa.gov.

• Intangible Drilling Costs
Per Act 52 of 2013, taxpayers that directly incur intangible drilling
and development costs (IDCs) may elect to currently expense up to
one-third of the IDCs in tax years beginning after Dec. 31, 2013. The
remainder of the IDCs may be amortized over 10 years. If a taxpayer
does not elect to currently expense their IDCs, they may amortize
the IDCs over 10 years. For tax years beginning prior to Jan. 1, 2014,
IDCs must be amortized over the life of the well.
CAUTION: Any election to expense up to one-third of the
IDCs must be made by the taxpayer incurring the IDCs. A
partner or shareholder may not make an election to expense IDCs
passed through from a partnership or S corporation.
• Other Differences
You must adjust your federal expense for the difference between
your federal depreciation and your depreciation for PA PIT purposes,
when you elect a different generally accepted method that you
consistently use.
IMPORTANT: The basis for property (where bonus
depreciation has been taken for federal income tax purposes)
will be different for federal and state tax purposes. As a result, PA
law requires straight-line depreciation to be taken on these assets.

PA-40 LINE INSTRUCTIONS
Deductions
PA law does not allow standard deductions, deductions for personal
exemptions, itemized deductions or deductions for personal expenses.
CAUTION: PA-taxable interest income (Line 2), dividend income
(Line 3) and gambling and lottery winnings (Line 8) are gross
taxable income classes. You may not deduct any expenses in computing
these classes of income. In computing compensation, only certain
expenses are deductible; see the PA Schedule UE instructions beginning
on Page 26. The remaining classes of income are net taxable - you may
deduct ordinary and necessary expenses paid or accrued during the
taxable year in their production. See the line instructions for each class
of income.
Cost Recovery
PA law does not permit deductions or exemptions for contributions to
retirement plans, investments in annuities, mutual funds, money market
funds, and other personal contributions, even when deducted or exempt
for federal purposes. Therefore, Pennsylvania will not tax your
distributions or the payments you receive until you have recovered an
amount equal to your contributions. Maintain your records of your
contributions. If you receive an early taxable distribution from a retirement
plan, and you do not have records of your contributions, consult your plan
administrator.
www.revenue.pa.gov

Education Savings Accounts - Qualified Tuition Programs under
IRC Section 529, like Pennsylvania 529 College and Career
Savings Program
Contributions to a Pennsylvania 529 College and Career Savings
Program account and other IRC Section 529-qualified tuition program
accounts are deductible. For additional information, see the instructions
for Line 10, Other Deductions, on Page 20 and the instructions for PA
Schedule O, Other Deductions, on Page 36.
NOTE: Certain withdrawals and distributions not used for
educational purposes are taxable. See the instructions for PA
Schedule A beginning on Page 30 for additional information.
Pennsylvania ABLE Savings Program Fund Accounts - Qualified
IRC Section 529A Accounts
Contributions to an account established under the Pennsylvania ABLE
(Achieving a Better Life Experience) Savings Program are deductible.
Earnings on a Pennsylvania ABLE account are also exempt from taxation
when used for qualified disability expenses of eligible individuals. Withdrawals for other than qualifying purposes are subject to tax as interest
income on Line 3 of PA Schedule A. Use the cost recovery method to determine the amount of any non-qualifying withdrawals subject to tax for
any contributions made prior to Jan. 1, 2017. For contributions made
after Dec. 31, 2016, the entire amount of any non-qualifying withdrawal
PA-40

9

is taxable. The department uses the FIFO method for determining when
contributions are withdrawn. For additional information regarding the deduction, see the instructions for Line 10, Other Deductions, on Page 20
and the instructions for PA Schedule O, Other Deductions, on Page 36.
LINE 1a. GROSS COMPENSATION
Overview: PA-taxable compensation includes, but is not limited to:
salaries; wages; tips; gratuities; commissions; bonuses; incentive
payments; vacation and holiday pay; employer student loan payments;
student loan debt forgiveness for entering certain fields or professions;
distributions from nonqualified deferred compensation plans; certain early
distributions from retirement plans; and termination pay. The amount your
employer reports in Box 16 of your Form W-2 usually shows your PAtaxable compensation if the W-2 includes PA withholding in Box 17. If you
are a PA resident and your W-2 does not include withholding from PA but
includes withholding from another state, you should also complete and
include the W-2 RW, Reconciliation Worksheet, with your return to
reconcile the compensation to PA-taxable compensation. If you receive
Forms 1099 or other statements, your PA-taxable compensation is the
gross amount that you received for performing services.
The amount in Box 16 of your Form W-2 may be different from the amount
in Box 1. PA law requires a PA employer to follow PA income tax rules to
determine Box 16. If you have any questions, contact your employer.
Taxable compensation for PA personal income tax purposes also includes
amounts received as:
• Executor or executrix fees from an estate;
• Fiduciary fees from a trust;
• Honorariums;
• Jury duty pay;
• Director’s fees;
• Covenant not to compete payments;
• Damages or settlements for lost wages;
• Early distributions from retirement plans or IRAs (traditional or Roth);
• Distributions from employee stock ownership plans (if not a PA
eligible plan); and
• Other non-employee compensation for services rendered.
If you have one or more of the above, you must include the amount in
your gross compensation amount reported on Line 1a and include a
statement that provides a description of the amount.
NOTE: See the W-2 Filing Tips beginning on this page and or the
1099-R Filing Tips beginning on Page 13 for additional information.
The method used to file a return will determine if copies of W-2s, 1099MISCs, 1099-NECs and 1099-Rs will need to be included with the filing
of the return in order for the department to verify the amount of taxable
compensation and/or to verify an amount received is not taxable for PA
personal income tax purposes. Taxpayers that file by submitting a copy
of a paper return will be required to submit additional documents not often
required by those who submit their return electronically. See the
instructions for When to Submit Forms W-2, 1099-MISC, 1099-NEC and
1099-R below.
IMPORTANT: Taxpayers with multiple W-2s and multiple types of
compensation should submit a statement that lists the amounts
and payors of the compensation along with the total amount reported on
Line 1a.
NOTE: If you do not have a Form W-2 or a federal substitute
W-2, Form 4852, you must submit evidence of your PA
10

PA-40

compensation and tax withheld by providing pay stubs and a statement
identifying your employer and the reason you do not have a Form W-2.
Please submit legible photocopies. Keep your original documents.
When to Submit Forms W-2, 1099-MISC, 1099-NEC and 1099-R
For Paper Filed Returns:
If you file your PA-40 return in paper format, you must include actual
copies or photocopies of all Forms W-2. You must submit actual copies
or photocopies of all Forms 1099-R for all types of distributions regardless
of whether the distribution is taxable and/or non-taxable for PA personal
income tax purposes. If the amounts on Forms 1099-MISC and/or 1099NEC are reported as compensation or include PA-tax withheld, you are
required to submit actual copies or photocopies of the forms.
For E-Filed Returns:
If you file your PA-40 electronically, you are not required to submit an
actual copy of your W-2, 1099-R, 1099-MISC or 1099-NEC forms unless
certain conditions exist with respect to those forms. For Forms 1099MISC, 1099-NEC and 1099-R, you are only required to submit actual
copies of these forms if there is PA tax withholding reported on the forms.
For Forms W-2, you must submit an actual state copy or a legible
photocopy of each state copy of Form W-2 and a written explanation only
if:
1. The PA compensation you enter on Line 1a of your PA-40 is not the
same as Box 16 on your Form W-2 (you believe that the PA
compensation or withholding is incorrect).
2. Your employer gave you a handwritten Form W-2.
3. Your employer reported an incorrect amount on your Form W-2. You
must also submit a written statement from your employer.
4. Your employer withheld PA income tax from your wages at a rate
that is more than the 2023 tax rate of 3.07 percent.
5. You are a resident of a reciprocal compensation agreement state
and your employer withheld PA income tax.
6. The Medicare wages in Box 5 on your Form W-2 are greater than
your PA wages in Box 16. In this case, complete and include with
your return the PA-40 W-2 Reconciliation Worksheet. To obtain the
worksheet, use one of the Forms Ordering Services on Page 2.
7. You are a PA resident working in another state or country and did
not have PA income tax withheld by your employer.
8. You have a distribution from a nonqualified deferred compensation
plan included in Box 1 of your Form W-2.
9. You are a PA resident and your Form W-2 shows income earned or
tax withheld for another state.
10. Your Form W-2 or W-2P includes no PA compensation amount and
is or is not taxable for PA personal income tax purposes. If the
amount is not taxable for PA personal income tax purposes, include
an explanation of why the amount is not taxable.
W-2 FILING TIPS:
1. Submit photocopies of all original Forms W-2 with your return. Some
original Form W-2 documents cannot be processed by the
department’s imaging equipment (onion skin paper printed in blue
ink, for example) and could delay the processing of a return. If
possible, submit a photocopy of the Form W-2 on standard size
paper instead of the actual Form W-2.
2. If the PA-taxable wages you are reporting are less than the amount
reported on your Form W-2, please include a brief explanation of the
difference with your return and/or a letter from your employer
documenting the difference in taxable amounts.
www.revenue.pa.gov

3. If your employer withholds excess PA personal income tax at your
request, include with your return a statement from your employer
verifying the rate and amount of tax withheld for the tax year.
4. If you worked outside of Pennsylvania and your employer did not
withhold PA personal income tax, your taxable PA wages may be
higher or lower than the state wages reported on your Form W-2 in
Box 16. Amounts paid to you as retirement plan contributions,
personal use of company automobile and/or group term life
insurance may require additional adjustments to the amount reported
to the other state or country. See the PA Personal Income Tax Guide
– Gross Compensation section for additional information. You should
also complete the PA-40 W-2 RW, Reconciliation Worksheet.
5. If you are a PA resident and your W-2 includes military pay for active
duty outside PA, the amount for active duty pay outside PA is not
taxable compensation for PA personal income tax purposes. In
addition, any military pay earned as a nonresident while on active
duty within in PA is not taxable for PA personal income tax purposes.
Do not include the amounts included in Box 16 of your W-2 for active
duty military pay earned outside PA or for nonresident military pay
earned in PA in Line 1a of the PA-40. If any PA income tax is withheld
from the military pay, include the amount of tax withheld on Line 13
of the PA-40. Copies of military orders are required to be included
with returns as proof of active duty status outside PA. See the Military
Pay – Members of the Armed Forces instructions on Page 40 for
more information.
6. If any military pay is earned by a PA resident while on active duty
status within PA, the amount is taxable for PA personal income tax
purposes. Include the amount from Box 16 of your W-2 on Line 1a
of the PA-40.
7. If your W-2 includes taxable and nontaxable military pay, include a
statement with your return that provides the amounts of taxable and
nontaxable military pay and how they were determined, along with
copies of military orders as proof of active duty status outside of PA.
PA-40 W-2 RW, Reconciliation Worksheet
If your W-2 does not contain sufficient information in Boxes 12 and 14 to
reconcile the federal and Medicare wages on your W-2 to the amount
reported as PA wages, complete and include the PA-40 W-2 RW,
Reconciliation Worksheet, with your return. The PA-40 W-2 RW, should
also be included if you received distributions of previously taxed
contributions from a nonqualified deferred compensation plan. To obtain
the worksheet, use one of the Forms Ordering Services on Page 2.
Reciprocal Compensation Agreement States
Pennsylvania has agreements with Indiana, Maryland, New Jersey, Ohio,
Virginia and West Virginia. Generally, under these agreements, one state
will not tax a resident of the other state on compensation that is subject
to employer withholding. These agreements apply to most types of W-2
compensation earned while a resident of the reciprocal compensation
agreement state. It does not apply to miscellaneous and non-employee
compensation, compensation earned while a PA resident and received
while a resident of the reciprocal compensation agreement state or
compensation paid to Ohio resident shareholder-employees with a 20
percent or greater interest in a PA S corporation who worked or performed
services in Pennsylvania in 2023.
If you are a PA resident working in one of these states, and your employer
withheld the other state’s income tax, you must file for a refund from that
state.
File early so you will have your refund before the due date for
paying your PA tax liability.
www.revenue.pa.gov

IMPORTANT: If you earned at least $8,000 in the other state, and
your employer didn’t withhold PA income tax, under PA law you
may have been required to make estimated payments if you didn't qualify
for a deduction on Line 10 of the PA-40, nor qualified for a credit on Lines
21 or 23 of the PA-40. Please read the information on Page 40 for the
income threshold for making estimated payments for tax year 2024. If this
is your situation, you are liable for Estimated Underpayment Penalty. See
the Line 27 instructions on Page 23.
Resident of a Reciprocal State Filing for a Refund
If you are a resident of a reciprocal state working in Pennsylvania and
your employer withheld PA income tax, you may request a refund of the
PA tax. You report zero taxable compensation on Line 1a, and the PA tax
withheld on Line 13. You must submit a legible photocopy of your Form
W-2, a copy of the resident income tax return that you filed with your
resident state (without the supporting forms and schedules), and a
statement explaining that you are a resident of a reciprocal state.
Reimbursable Expenses/Cash Reimbursements for Personal
Employee Expenses
PA-allowable employee expenses are not always the same as allowable
federal business expenses. Read the instructions beginning on Page 26.
You must be able to substantiate travel expenses as to time, place and
business purpose.
Report all reimbursements and allowances paid by your employer as
compensation unless you meet all three of the following requirements:
1. The expenses are PA-allowable employee business expenses; and
2. You must, and do, account for these expenses to your employer;
and
3. Your employer reimburses you in the exact amount of the allowable
business expenses.
If you receive a fixed-mileage allowance; a fixed expense reimbursement
amount; a daily, weekly, monthly or yearly expense allowance
reimbursement; or a per-diem living expense allowance that does not
exceed applicable federal limits, you meet these requirements. Do not
report these expenses on PA Schedule UE.
Retirement, Pensions, and Deferred Compensation
• Eligible Employer-Sponsored Retirement Plans
Pennsylvania does not impose income tax on payments you receive
that are commonly recognized retirement benefits distributed from
eligible employer-sponsored retirement plans. Eligible employersponsored retirement plans can, but do not necessarily, include
employer-sponsored deferred compensation plans; pension or profit
sharing plans; 401(k) plans; thrift plans; thrift savings plans; and
employee welfare plans. Ask your employer or plan administrator if
your employer’s retirement plan is an eligible plan for PA income tax
purposes. Eligible non-employer-sponsored retirement plans can,
but do not necessarily, include Individual Retirement Accounts (IRAs)
and Roth IRAs.
• Contributions
The contributions you make to your employer’s sponsored retirement
plan are PA-taxable compensation, even if your contributions are
not taxable for federal purposes or included in the state wages
shown on your W-2.
• Distributions from Eligible Employer-Sponsored
Retirement or Deferred Compensation Programs
All amounts you receive from your eligible employer-sponsored
retirement or old age benefit plan are taxable in the year you receive
the payments, except:
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11

1. Payments you receive after you qualify for retirement and retire.
2. Payments you receive that you rollover into another deferred
payment program or retirement IRA, but only when the
transferred amounts are not taxable income for federal
purposes.
3. Distributions from an employer-sponsored deferred
compensation plan that represent your previous contributions.
4. Payments paid to the estate or designated beneficiary upon an
employee’s death are not PA-taxable income on the employee's
final PA-40 or on the decedent’s estate or trust PA-41, PA
Fiduciary Income Tax Return or on the beneficiary’s PA-40.
5. All distributions (regardless of the distribution code reported in
Box 7 of the 1099-R) from the State Employees’ Retirement
System, the Pennsylvania School Employees’ Retirement
System, the Pennsylvania Municipal Employees’ Retirement
System, and the U.S. Civil Service Commission Retirement
Disability Plan.
6. Retired or retainer pay of a member or former member of a
uniform service computed under Chapter 71 of Title 10, U.S.
Code as amended.
Individual Retirement Accounts
• Contributions
PA law does not allow you to deduct your contributions to any IRA.
• Undistributed Income
You do not report the undistributed interest and other earnings on
the assets held in your IRA.
• Withdrawals
Distributions from an IRA, including a federal Roth IRA, are taxable
to the extent the distribution exceeds your previous contributions.
Distributions you receive after retiring but before age 591/2 are
taxable even if you receive substantially equal payments, and you
do not pay the federal penalty for an early withdrawal. PA law does
not have any exceptions similar to the federal exceptions for
withdrawal before age 591/2. However, distributions from an IRA are
not taxable if the payments are:
1. Received, including lump sum distributions, on or after reaching
the age of 591/2; or
2. Paid to the estate, or designated beneficiary, of the participant
because of the participant’s death.
• Traditional IRA Rollover
You do not have to pay PA tax on the difference between the amount
distributed from your traditional IRA and your previous contributions:
1. If you rolled over the entire withdrawal directly (trustee to trustee)
from one traditional IRA to another traditional IRA; or
2. If you withdrew from the traditional IRA and within 60 days
invested the entire (100 percent) amount you received into
another traditional IRA.
• Roth IRA Rollover
You do not have to pay PA tax on the difference between the amount
distributed from your traditional IRA and your previous contributions:
1. If you rolled over the entire withdrawal directly (trustee to trustee)
from the traditional IRA to the Roth IRA; or
2. If you withdrew from the traditional IRA and within 60 days
invested the entire (100 percent) amount you received into a
Roth IRA.
12

PA-40

CAUTION: If federal tax is withheld from a rollover distribution, the
amount of federal tax withheld must also be reimbursed into the
new IRA account in order for the rollover to be considered nontaxable for
PA PIT purposes. See 1099-R Filing Tips beginning on Page 13 for
additional information.
IMPORTANT: For detailed information on Pennsylvania taxation
of distributions from IRAs, please review Tax Bulletin 2008-01 on
the department’s website, revenue.pa.gov.
Early Retirement Incentive Plans
Payments you receive as an inducement to retire early are taxable
compensation. Such payments are not part of a PA-qualifying retirement
program. Your employer includes these incentive payments on your Form
W-2 and withholds PA tax. Even when you move out of Pennsylvania,
these incentive payments remain taxable to Pennsylvania.
• Distributions
If you withdrew from your retirement or pension plan, and received
a Form 1099-R, you may have PA-taxable compensation if:
1. Your retirement plan is not an eligible employer-sponsored
retirement plan; or
2. You have not reached the retirement age or years of service
requirements under such eligible, employer-sponsored
retirement plan.
Non-Qualified Deferred Compensation Programs
With certain exceptions, Pennsylvania’s constructive receipt rules are the
same as the federal constructive receipt rules to determine when
compensation is received by a cash basis taxpayer. Following the federal
constructive receipt rule, deferrals to nonqualified deferred compensation
plans are not included in compensation. However, compensation includes
distributions from nonqualified deferred compensation plans attributable
to an elective deferral of income, regardless of whether the distributions
are paid during employment or retirement. Also, distributions of previously
taxed contributions are not taxable. If you receive distributions of
previously taxed contributions, complete and include with your return the
PA-40 W-2 Reconciliation Worksheet. To obtain the worksheet, use one
of the Forms Ordering Services on Page 2.
Federal Form 1099-R (Qualified Plans and IRAs)
The PA Personal Income Tax Guide – Gross Compensation section
contains a table which cross-references the information on the Form
1099-R with its corresponding PA income tax treatment. PA law does not
follow federal law concerning early retirement options for Individual
Retirement Accounts, IRC Section 401 plans, 403 plans, and other
federally qualified plans. To determine if the amount you received is
taxable in Pennsylvania, review Boxes 1 through 3 (the amount you
received or your distributions) and the PA tax treatment of Box 7 (the
codes that will help determine the taxability of your distribution). The
federal codes contained in Box 7 of Form 1099-R include:
• Code 1 & 2 Early Distribution
This distribution is taxable for PA purposes, unless: (1) your pension
or retirement plan was an eligible employer-sponsored retirement
plan for PA tax purposes; and (2) you retired after meeting the age
conditions of the plan or years of service conditions of the plan. If
your plan was not an eligible employer-sponsored retirement plan,
or if you have not attained the age or years of service required under
the plan to retire, you must determine the PA-taxable amount of your
distribution. You must use the cost recovery method to determine
this amount. See Page 9 for additional information.
www.revenue.pa.gov

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IMPORTANT: If you are not sure whether your plan was an
eligible employer-sponsored retirement plan under PA tax law,
ask your plan administrator.
Code 3 or 4 Death/Disability Distribution
This is a distribution due to death and/or disability. Distributions
due to death or disability are generally not taxable for PA
purposes. However, if the distribution codes are Code 3D or Code
4D, these distributions are taxable to the extent they are taxable
for federal income tax purposes as interest income on Line 11 of
PA Schedule A.
Code 7 Normal Distribution
This distribution from an eligible employer-sponsored retirement plan
is not taxable if you met the plan requirements (the age and/or years
of service required by the plan) for retirement, and retired after
meeting those requirements.
CAUTION: Distributions from a commercial insurance or
mutual company annuity (Code D also included with Code 7)
purchased as a retirement annuity are not distributions from an
eligible employer-sponsored retirement plan and are taxable as
interest income to the extent they are included in federal gross
taxable income. 1099-R Code 7D distributions are taxable to the
extent they are taxable for federal income tax purposes as interest
income on Line 11 of PA Schedule A. See Annuities, Life Insurance
or Endowment Contracts beginning on Page 14 and the 1099-R
Filing Tips beginning below for additional informat