Pennsylvania Tips For Successfully Filing PA Schedule UE

Tips For Successfully Filing PA Schedule UE
Tips for Successfully Filing PA Schedule UE (REV-489)
REV-489

Tips for Successfully Filing PA Schedule UE

REV-489 (EX) 04-23

GENERAL INFORMATION
Although Pennsylvania permits allowable employee
business expenses for personal income tax purposes, the
rules for the expenses are similar to, but not the same as,
the rules for federal income tax purposes. Specifically,
Pennsylvania does not allow the use of federal per diem
rates for determining expenses and does not permit some
expenses that are allowable for federal purposes.
Pennsylvania only permits expenses which are required to
perform the duties of a job or profession.
PURPOSE
The Pennsylvania Department of Revenue routinely
conducts systemic reviews of PA-40 Schedule UE expenses
and deductions. Only unreimbursed expenses are allowable
and the expenses must be ordinary, necessary, reasonable,
actually incurred and directly related to the employee’s job.
This document is intended for filers of PA-40 Schedule UE,
Unreimbursed Business Employee Business Expenses, as
a supplement to the instructions and to help taxpayers when
responding to department notices requesting an explanation
or supporting information for any amount reported on the
PA-40, Schedule UE. The department makes requests for
additional information with the expectation that the taxpayer
can substantiate the information that they previously
provided on their return.

GENERAL TIPS
A. Determine if the expense is an unreimbursed
business expense.
PA does not follow IRS rules for per-diem expenses. If
an employee receives a reimbursement for any
expenses where the reimbursement is based upon a
per-diem rate or fixed dollar amount, the expenses is
not allowable and should not be included on PA
Schedule UE.
B. Provide the documentation when the return is
filed to avoid refund delays.
If a taxpayer’s expenses included on a PA-40 Schedule
UE are routinely examined by the department,
taxpayers or their preparers may wish to include
detailed documentation for each line item (including
copies and summary page) at the time the return is filed.
Examples of proper documentation supporting specific
line items can be found on the department’s website
under Online Services in the Frequently Asked
Questions section.
C. To prevent delays in processing, submit the
documentation in the proper format.
Submit the documentation as a .pdf file attachment
www.revenue.pa.gov

when the return is electronically filed. If unable to attach
the information, it may be submitted via these alternative
methods:
Fax:
717-772-4193
Email: [email protected] (must
be in .pdf format and cannot exceed 15MB)
Mail: PA DEPARTMENT OF REVENUE
ELECTRONIC FILING SECTION
PO BOX 280507
HARRISBURG PA 17128-0507
D. Employer letter documentation should clarify
unreimbursed expense responsibilities.
Letters from employers should identify:
• Whether or not an employee is required to incur
the expense(s) to perform the duties of the position;
• If there is any reimbursement of the expenses; and
• The method by which the reimbursement is determined.
In lieu of a letter from the employer, the department will
accept a copy of the employer’s employee expense
reimbursement policy or a signed affidavit. Employees
may provide the REV-757, Employer Letter Template,
to their employer or use the REV-775, Personal Income
Tax Employee Business Expense Affidavit, in lieu of a
letter from their employer.
E. A separate PA-40, Schedule UE, is necessary for
each taxpayer and each employer.
A taxpayer and spouse cannot file and report their
expenses on a single PA-40 Schedule UE. Taxpayers
working for multiple employers – except those working
out of a union hall – must also provide separate PA-40
Schedules UE to report expenses. Excess expenses for
one employer may not offset the wages or
compensation of any other employer.

SPECIFIC EXPENSE TIPS
A. Mileage expenses determined at the federal rate
in excess of the employer reimbursement rate are
not deductible.
If an employer reimburses an employee for mileage at
a rate less than the federal mileage rate, the difference
between the two rates is not a deductible expense. The
expense should not be reported on PA-40 Schedule UE.
B. Commuting expenses are not deductible in PA.
Commuting expenses, including mileage to and from
work and parking expenses, are not allowable. For
tradesmen, commuting expenses includes the mileage
REV-489

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expense to and from any job site not more than 35 miles
from the closer of the union hall or the taxpayer’s home
to the jobsite. Travel to a second job is considered
commuting.

Response to Request for Information –
Fax:
717-783-5823
Email: [email protected] (must
be in .pdf format and cannot exceed 15MB)

C. Cell phone expenses may be claimed but only
for business purposes.
Cell phone expenses claimed should be limited to calls
made for business purposes when required by an
employer. The employee should maintain the type of cell
phone coverage that is reasonably related to the needs
of the employer’s business, and the unreimbursed
expense amount claimed must be reasonably calculated
so as to not exceed expenses the employee actually
incurred in maintaining the cell phone. Monthly phone
bills may be requested. Costs for family plans, bundles,
or for additional lines are not reimbursable. Cell phone
expenses not supported by a log or business and
personal calls and usage will be denied unless a
separate cell phone is maintained for personal use.

Response to Billing Notice –
Fax:
717-705-6236
Email: [email protected] (must
be in .pdf format and cannot exceed 15MB)

D. Miscellaneous expenses claimed on PA Schedule
UE must be broken down by expense type.
Many software vendor programs are not supplying a
breakdown of the miscellaneous expenses if there are
more than two items of expense. If software supports
pdf attachments, please include the breakdown via that
method. If software doesn’t support pdf attachments, fax
or email the information to the department using the
DEX-93, Personal Income Tax Correspondence Sheet.
NOTE: For additional information about allowable
employee business expenses, see the PA Personal
Income Tax Guide – Gross Compensation section for additional information.

RESPONDING TO DEPARTMENT
NOTICES TIPS
A. Submit the documentation to the department
using an electronic method.
To expedite processing of responses to department
notices, submit your response via myPATH at
myPATH.pa.gov. Correspondence submitted through
myPATH will post to the taxpayer's account immediately.
If submitted via fax or mail, please use the DEX-93,
Personal Income Tax Correspondence Sheet, and one
of the following formats for more efficient processing by
the department:

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REV-489

IMPORTANT: If the documentation the department
requests is voluminous, the taxpayer may submit a
detailed summary. A detailed summary should include the
amount of expenses claimed on a monthly basis with a further breakdown of the expenses for two of the months
being provided on a daily basis. The department will review
the summary and request specific items if further information is needed. Examples of proper documentation supporting specific line items can be found on the department’s
website under Online Services in the Frequently Asked
Questions section.
B. If not able to submit the information electronically,
mail the information to:
PA DEPARTMENT OF REVENUE
BUREAU OF INDIVIDUAL TAXES
PO BOX 280501
HARRISBURG PA 17128-0501
C. Submit the documentation in an organized and
logical format.
Submitting documentation using these tips will help the
department review the information more efficiently and
effectively.
• Provide a summary document listing individual
amounts along with totals by expense amounts
claimed.
• Circle the exact line item amount claimed as a
business expense to avoid additional questions.
• Group documentation by expense type when providing support for particular line items. If submitting
a large file electronically, send each line in a separate transmission if an email attachment is more
than 15MB.
• Use page separators to differentiate documentation between expenses.
• Include detailed calculations when allocating or
prorating expenses.

www.revenue.pa.gov