Pennsylvania PA Schedule UE - Allowable Employee Business Expenses

PA Schedule UE - Allowable Employee Business Expenses
2023 PA Schedule UE - Allowable Employee Business Expenses (Form and Instructions) (PA-40 UE)
IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING
2301710055

PA SCHEDULE UE

Allowable Employee Business Expenses

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➜

2023

PA-40 UE (EX) MOD 03-23 (FI)
PA Department of Revenue

OFFICIAL USE ONLY

Name of taxpayer claiming expenses
Employer’s Name

Social Security Number (shown first)
Employer’s Address

Employer Identification Number

Employer’s Telephone Number

Describe the duties of the job in which you incurred these expenses

CAUTION: You must complete a separate schedule for each job or position. Spouses may not file joint PA Schedule(s) UE.
SECTION I – Direct Employee Business Expenses.
1. Union dues. List union name(s) and amount(s) paid. Enter the total. Submit additional sheets, if needed.
Name of union(s) and amount(s).
2. Work clothes and uniforms. Needed for your employment and not suitable for everyday use.

1.

Description:
3. Small tools and supplies. Needed for your employment and not provided by your employer.

2.

Description:
4. Professional license fees, malpractice insurance, and fidelity bond premiums. Required as a
condition of your employment.
Description:

3.

4.

5. Total Direct Employee Business Expenses. Add Lines 1 through 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
SECTION II – Business Travel Expenses.
Vehicle Expenses: Standard Mileage Rate.
6. Enter your total business miles
and multiply by the federal standard mileage rate. . . . 6.
Vehicle Expenses: Actual Vehicle Expenses.
7a. Total vehicle miles driven in 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7a.
7b. Total business miles driven in 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b.
7c. Business use ratio. Divide Line 7b by Line 7a. See the Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..7c.
8a. Gasoline, oil, repairs, vehicle insurance, vehicle rentals, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a.
8b. Depreciation. See the Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8b.
9. Total vehicle expenses. Add Lines 8a and 8b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Allowable Actual Vehicle Expenses. Multiply Line 9 by Line 7c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Other Business Travel Expenses.
11. Parking fees, tolls, and transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
12. Travel expenses while away from home overnight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Meals expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14. Entertainment expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Total Business Travel Expenses. Add Lines 6 or 10 and Lines 11, 12, 13, and 14. . . . . . . . . . . . . . . . . . . . 15.
SECTION III – Miscellaneous Expenses. Itemize your additional expenses.
16. Total Miscellaneous Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
Total Allowable PA Employee Business Expenses. You must account for reimbursements, if any.
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.

Direct Expenses from Line 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Travel Expenses from Line 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous Expenses from Line 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office or Work Area Expenses from Line 17, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Moving Expenses from Line 20, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Education Expenses from Line 24, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Depreciation Expenses from Line 25, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Allowable Employee Business Expenses. Add Lines A through G. . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursements. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net expense or reimbursement. Subtract Line I from Line H. Enter the difference and: . . . . . . . . . . . . . . .
If Line H is MORE than Line I, include on Line 1b, on your PA-40.
If Line I is MORE than Line H, include the excess on Line 1a, on your PA-40.
Nonresidents and part-year residents may also need to complete PA Schedule NRH. See instructions.

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2301810053

PA SCHEDULE UE

Allowable Employee Business Expenses

START

➜

PA-40 UE (EX) MOD 03-23 (FI)
PA Department of Revenue

2023

OFFICIAL USE ONLY

Name of taxpayer claiming expenses

Social Security Number (shown first)

SECTION IV – Office or Work Area Expenses. You must answer ALL three questions or the Department will disallow your expenses.
D1. Does your employer require you to maintain a suitable work area away from the employer’s premises?
YES
NO
D2. Is this work area the principal place where you perform the duties of your employment?
YES
NO
D3. Do you use this work area regularly and exclusively to perform the duties of your employment?
YES
NO
If you answer YES to ALL three questions, continue. If you answer NO to ANY question, you may not claim office or work area expenses.
Actual Office or Work Area Expenses. Enter expenses for the entire year and then calculate the business portion.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.

Depreciation expense (homeowners only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage interest (homeowners only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sales Tax License Number:
Property insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property maintenance expenses from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other apportionable expenses from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent (renters only). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. Add Lines a through h. Enter the total here. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business percentage of property. Divide the total square footage of your work area by the total square
footage of your entire property. Round to 2 decimal places. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
k. Apportioned expenses. Multiply Line i by the percentage on Line j. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
l. Total office supplies from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a.
b.
c.
d.
e.
f.
g.
h.
i.
%

j.
k.
l.

17. Total Office or Work Area Expenses. Add Lines k and l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
SECTION V – Moving Expenses.
Distance Test.
E1. Enter the number of miles from your old home to your new workplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E2. Enter the number of miles from your old home to your old workplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E3. Subtract Line E2 from Line E1 and enter the difference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If Line E3 is 35 miles or more, continue. If it is not at least 35 miles, you may not claim any moving expenses.
18. Transportation expenses in moving household goods and personal effects. . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Travel, meals, and lodging expenses during the actual move from your old home to your new home. . . . . . 19.
20. Total Moving Expenses. Add Lines 18 and 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
SECTION VI – Education Expenses. You must answer ALL three questions or the Department will disallow your expenses.
F1. Did your employer (or law) require that you obtain this education to retain your present position or job?
YES

miles
miles
miles

NO

If you answer YES, continue. If you answer NO, you may not claim education expenses.
F2. Did you need this education to meet the entry level or minimum requirements to obtain your job?

YES

NO

F3. Will this education, program, or course of study qualify you for a new business or profession?

YES

NO

If you answer NO to questions F2 and F3, continue. If you answer YES to either question, you may not claim education expenses.
Name of college, university, or educational institution:
Course of study:
21. Tuition or fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22. Course materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23 Travel expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24. Total Education Expenses. Add Lines 21 through 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
SECTION VII – Depreciation Expenses. PA law does not allow any federal bonus depreciation and follows the amount allowable by the IRC Section 179.
(a) Description of property

(b) Date acquired

(c) Cost or other basis

(d) Depreciation method

(e) Section 179 expense

(f) Depreciation expenses

25. Total Depreciation Expenses. Add the amounts from columns (e) and (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.

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2023
Instructions for PA-40 Schedule UE

Allowable Employee Business Expenses

PA-40 UE IN 03-23

GENERAL INFORMATION
PURPOSE OF SCHEDULE
Use PA-40 Schedule UE to report unreimbursed employee
business expenses incurred in the performance of the duties
of the taxpayer’s job or profession.
Refer to the PA Personal Income Tax Guide – Gross Compensation section for additional information.

RECORDING DOLLAR AMOUNTS
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.

WHO MUST COMPLETE
PA-40 Schedule UE must be completed and included with
an originally filed PA-40, Personal Income Tax Return, for
any taxpayer reporting unreimbursed employee business
expenses on Line 1b of the PA-40.
An amended PA Schedule UE must be included with Schedule PA-40 X to report any changes - increases or decreases
in business expense amounts on PA Schedule UE that are
discovered after an original or other amended return is filed
with the department. Section III on Page 2 of Schedule PA40 X must be completed to explain any increase or decrease
to the unreimbursed employee business expenses reported
on an amended PA-40, Personal Income Tax Return.

FORM INSTRUCTIONS
IDENTIFICATION INFORMATION
NAME OF TAXPAYER CLAIMING EXPENSES
Enter the name of the taxpayer claiming the expenses. If a
jointly filed return and the expenses are claimed for the
spouse, enter the spouse’s name.
SOCIAL SECURITY NUMBER
Enter the Social Security number (SSN) of the primary taxpayer (name shown first on the PA-40, Personal Income Tax
Return) even if the expenses are claimed for the spouse on
a jointly filed return.
EMPLOYER’S NAME
Enter the name of the employer for which the expenses
were incurred.
EMPLOYER’S ADDRESS
Enter the employer’s local address.
EMPLOYER’S IDENTIFICATION NUMBER
Enter the employer identification number from Box b of the
W-2 for the employer.
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DUTIES OF THE JOB
Describe the duties of the job in which the expenses were
incurred.
EMPLOYER’S TELEPHONE NUMBER
Enter the employer’s local telephone number.

GENERAL INSTRUCTIONS
Allowable employee business expenses for PA purposes are
similar to, but not the same as, expenses for federal purposes. PA law only permits expenses required to perform
the duties of a job or profession.
Allowable Pennsylvania employee business expenses must
be:
1. Ordinary, customary, and accepted in the industry or occupation;
2. Actually paid while performing the duties of the employment;
3. Reasonable in amount and not excessive;
4. Necessary to enable the proper performance of the duties of the employment; and
5. Directly related to performing the duties of the occupation or employment.
IMPORTANT: 100 percent of the Pennsylvania-allowable unreimbursed employee business expenses may
be deducted. Pennsylvania law does not have federal expense and percentage accounting limitations and thresholds.
An allowable business expense did not occur during the
year if:
● A fixed-mileage allowance; a fixed expense reimbursement amount; a daily, weekly, monthly or yearly expense
allowance reimbursement; or a per-diem allowance was
received for the allowable business expense, and the
employer did not include the allowance in compensation; or
● Allowable expenses were accounted to the employer
and the employer reimbursed the employee in the exact
amount of the expenses.
EXAMPLE: James is a regional manager for a chain of retail
stores and is required by his employer to drive his personal
vehicle and visit each retail location within his region at least
one time per month. James’ employer reimburses him at a
rate of $0.40 per mile and provides a lunch per diem of $8.00
per travel day. James is not permitted to deduct a mileage expense on his PA-40 Schedule UE for the difference between
the federal allowance and his employer’s reimbursement or
an expense for meals while traveling to visit the retail locations within his region unless his employer includes the reimbursements in his Pennsylvania compensation.
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CAUTION: If an employer reimburses at a rate less
than the federal rate for the mileage expense or provides a fixed or per-diem reimbursement for any expense,
do not include such reimbursements in gross compensation.
Do not claim such expenses on a PA-40 Schedule UE.
If an employer does not reimburse for expenses, compensation may be reduced by the allowable expenses. However, if a reimbursement is more than the allowable
expenses, the excess must be reported as taxable compensation on Line 1a.
EXAMPLE: Dave earned compensation of $30,000. He incurred allowable vehicle and travel employee business expenses of $3,000 and was reimbursed $3,500. He must
complete a PA-40 Schedule UE. He includes the excess
$500 as compensation. His total net taxable compensation
is $30,500.
IMPORTANT: Sole proprietors, partners, shareholders, or other self-employed individuals should not use
PA-40 Schedule UE to claim expenses.
CAUTION: Nonresidents must use PA Schedule NRH
to apportion expenses for PA personal income tax purposes. Part-year residents may only claim 100 percent of
unreimbursed business expenses if the expenses were incurred only while providing services in Pennsylvania or while
a PA resident. Include a statement indicating the method
used to determine the expenses for the period of residency
(PA Schedule NRH may also be used for this purpose).
NON-ALLOWABLE EXPENSES
Pennsylvania does not allow the following business expenses, even if allowed for federal purposes:
● Personal, living, or family expenses;
● Dues to fraternal organizations, professional societies,
Chambers of Commerce, or recreational club memberships;
● Dues and subscriptions to publications, including trade
and professional publications;
● Political candidate or campaign contributions;
● Charitable contributions;
● Commuting expenses – driving to and from work;
● Cost of meals while working late, unless while traveling
away from home overnight on business;
● Childcare or elderly care expenses;
● Life, disability income, and health insurance premiums;
● Contributions to deferred compensation plans or other
pension plans;
● Legal fees (except to recover back wages), fines, penalties, and bad debts;
● Bribes, kickbacks, or other illegal payments;
● Job hunting or other pursuit of employment expenses;
● Malpractice insurance premiums, except when allowed
in Section I;
● Moving expenses, except when allowed in Section V;
● Educational expenses, except as allowed in Section VI;
● Capital expenditures; and/or
● Expenses calculated at federal per-diem rates.
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PA-40 UE
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A separate PA-40 Schedule UE must be filed for each
employer and each taxpayer. Spouses may not report
joint expenses on a PA Schedule UE, even if filing jointly and
even from the same employer. An incomplete schedule may
result in delays in the processing of a return and/or denial
of the expenses.
KEEP YOUR RECORDS
The department has the legal authority to require evidence
that the expenses claimed on a PA Schedule UE are allowable for PA purposes. Keep all necessary documents, receipts, vouchers, and other records for at least four years.
PA-40 SCHEDULE UE - SIDE 1
Side 1 of the PA-40 Schedule UE is for the most common
expenses claimed on PA income tax returns.
PA-40 SCHEDULE UE - SIDE 2
Side 2 of the PA-40 Schedule UE is for reporting office or
work area expenses, moving expenses, education expenses, and/or depreciation expenses claimed as unreimbursed business expenses on PA income tax returns.
Taxpayers may wish to provide with the PA-40 Schedule UE a copy of a letter from the employer verifying
that expenses are required to be incurred to perform the duties of the position for which the expenses are claimed and
the method of any reimbursement by the employer for those
expenses. Form REV-757, Employer Letter Template,
should be completed by the employer for such purposes. In
lieu of an employer letter, a taxpayer may provide a copy of
the employer’s employee expense reimbursement policy or
Form REV-775, Personal Income Tax Employee Business
Expense Affidavit. Review the department’s Tips For Successfully Filing PA Schedule UE REV-489 prior to completing PA-40 Schedule UE.

LINE INSTRUCTIONS
PA-40 SCHEDULE UE, SIDE 1
SECTION I
DIRECT EMPLOYEE BUSINESS EXPENSES
Direct employee business expenses are those paid directly
or through a withholding arrangement with an employer.
These expenses are necessary to perform or maintain a job.
Itemize the nature and amount of the expenses claimed in
Section I.

LINE 1
Enter the amount of union dues, assessments, and initiation
fees paid if the amounts are:
● Paid as a condition of continued membership in the
union and membership is related directly to the job for
which the expense is claimed; or
● A required payment of a wage deduction under an
agency shop agreement.
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LINE 2
Enter the amount paid for purchasing and maintaining uniforms and work clothing used for the protection from bodily
injury if the uniforms and clothing are both:
● Of a type specifically required by the employer to be purchased as a condition of continued employment; and
● Not adaptable to general usage.

LINE 3
Enter the amount paid for small tools and supplies that the
employer does not provide, but are required to perform the
duties of the job. Depreciation is the annual deduction that
must be taken to recover the cost of business property having a useful life beyond the taxable year. If any of these tools
or supplies has a useful life of more than one year, depreciate or amortize the cost in Section VII.

LINE 4
Enter the amount of trade, professional, or occupational license fees required as a condition of employment as well
as any malpractice insurance and fidelity bond premiums
where required by law or by the employer.

LINE 5
Add Lines 1 through 4 and enter the result.

SECTION II
BUSINESS TRAVEL EXPENSES

LINE 6
Enter the total business miles and multiply by the federal
mileage allowance to calculate the allowable business
mileage expense.

used.

CAUTION: Depreciation may not be claimed on any
vehicle on which the standard mileage rate method is

COMMUTING EXPENSES
The costs of public transportation or driving a car between
a home and the main place of work may not be claimed.
These are personal commuting expenses. Commuting expenses may not be deducted no matter how far a home is
from the regular place of work. Commuting costs between
different jobs for different employers are also not allowable.
For tradesmen, commuting costs also include mileage for
any job 35 miles or fewer from the closer of the union hall or
personal residence to the jobsite.
ACTUAL VEHICLE EXPENSES
If using the actual vehicle expense method to calculate business travel expenses, Complete Lines 7a through 10.
IMPORTANT: If more than one vehicle was used for
business purposes, Lines 7a through 10 must be completed and included on a separate Schedule UE for each
vehicle driven. In place of separate Schedules UE, a statement may be included that shows the amounts for each vehicle for Lines 7a through 10. Add the Line 10 total expense
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amount from each vehicle and include the result in the
amount for Line 15, Total Business Travel Expenses.

LINE 7a
Enter the total vehicle miles driven in 2023 including any
miles driven for a vehicle that was rented during the time a
regular vehicle was being repaired.

LINE 7b
Enter the total business miles driven in 2023 including any
business miles driven for a vehicle that was rented during
the time a regular vehicle was being repaired. Do not include
commuting miles from home to workplace and workplace to
home in the total business miles driven.

LINE 7c
Divide Line 7b by Line 7a and enter the result rounded to
six decimal places.

LINE 8a
Enter the amount of the total expenses for gasoline, oil, repairs, insurance, tires, license plates, vehicle registration,
car washes, and other similar items. If the vehicle driven for
business purposes was rented or leased, enter the cost of
renting. Also enter the cost of temporary rentals for vehicles
rented during the time a regular vehicle was being repaired.
Do not enter temporary vehicle rentals included in Line 11.

LINE 8b
Enter the amount of depreciation expense for the vehicle.
Federal vehicle depreciation limits do not apply for PA personal income tax purposes. In addition, PA follows the
amount allowable by the IRC Section 179. You must include
a statement showing the description of the vehicle, date acquired, cost or other basis, depreciation method, Section
179 expense (if taken), accumulated depreciation previously
taken, and the depreciation expense for the year. Do not report the depreciation expense for vehicles in Section VII.
Refer to Personal Income Tax Bulletin 2023-02 - IRC Section 179 Expense Deductions for additional information.

LINE 9
Add the amounts on Lines 8a and 8b and enter the total
here.

LINE 10
Multiply Line 9 by the ratio on Line 7c and enter the result
here. If more than one vehicle was used for business
purposes, add the amounts from Line 10 for each vehicle
reported on separate Schedules UE (or separate statement)
and include the total from all vehicles in the amount reported
on Section II, Line 15, Total Business Travel Expenses.
OTHER BUSINESS TRAVEL EXPENSES
Enter the actual amount of these expenses that were incurred.
CAUTION: Deductible expenses may not be based
upon federal per-diem allowances. Only those
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expenses actually paid while performing the duties of the
employment may be deducted.

LINE 11
Enter the amount of parking fees, tolls, and transportation
expenses incurred while in an overnight or business travel
status.

CAUTION: Pennsylvania law does not contain statutory employee provisions. If a statutory employee for
federal purposes, the W-2 income must be claimed as compensation and the business expenses on PA-40 Schedule
UE. All other income and expenses should be reported on
PA-40 Schedule C and Line 4 of the PA-40, Personal Income Tax Return. If applicable, enclose the necessary PA
Schedule C.

LINE 12

For more information on statutory employees, see the PA
Personal Income Tax Guide – Gross Compensation Section.

Enter the amount of hotel or motel accommodation expenses incurred while in an overnight travel status.

A PA-40 Schedule C may be used to report the allocated business expenses of a statutory employee.
Enter “See PA Schedule C for expenses” in the Miscellaneous Expenses description line along with the total allocated expenses. Include a copy of the PA-40 Schedule C to
support the amount of expenses allocated to the PA-40
Schedule UE. The allocated expense PA-40 Schedule C
should include “Schedule UE Miscellaneous Expenses” as
the main business activity on Line A and should not include
income on Lines 1 through 5 of the schedule as the income
will be reported on PA-40 Line 1a. A separate PA-40 Schedule C for any other business income and expenses may also
need to be completed for any related non-statutory employee activity.

LINE 13
Enter only the actual expenses incurred for meals expense.
IMPORTANT: Meals expense is 100 percent allowable
for Pennsylvania purposes. However, meals while not
in overnight traveling status (e.g. meals while working late)
and federal per-diem rates for meals and incidental expenses are not allowable.

LINE 14
Enter only the actual expenses incurred for entertainment
expenses.
IMPORTANT: Entertainment expenses for business
purposes are 100 percent allowable for Pennsylvania
purposes. However, entertainment expenses calculated
using federal per-diem rates are not allowable.

LINE 15
Add Lines 6 or 10, and Lines 11, 12, 13, and 14 and enter
the result. If more than one vehicle was used for business
purposes and actual expenses were reported for those vehicles, add the amounts from Line 10 of the separate Schedules UE or the separate statement prepared for the
additional vehicles.

SECTION III
MISCELLANEOUS EXPENSES
Enter the description and amount of all Pennsylvania-allowable expenses incurred not required to be listed elsewhere
on PA-40 Schedule UE in the space provided. If there are
more than two miscellaneous expenses, a separate statement that itemizes and describes in detail these expenses
must be provided. Additional examples of expenses that
may be claimed include:
● Breakage fees or cash shortages required to be paid to
the employer;
● Fees or income included in Pennsylvania-taxable compensation on Form W-2 that is required to be paid to the
employer as a condition of employment;
● Costs incurred by blind employees to pay readers who
assist them in performing their job duties;
● Business gifts that are ordinary, necessary, reasonable,
and actually incurred for business purposes.
Pennsylvania does not follow federal percentage limits
on such expenses.
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LINE 16
Add the miscellaneous expenses listed and enter the result.
If there are no expenses for an office or work area
(Section IV), moving (Section V), education (Section
VI), or depreciation (Section VII), Skip Side 2 of the PA-40
Schedule UE and complete Lines H through J of the Schedule.
TOTAL ALLOWABLE PA EMPLOYEE
BUSINESS EXPENSES

LINES A THROUGH G
Complete Lines A through G by entering the amounts of allowable expenses from each completed section of PA-40
Schedule UE.

LINE H
Add Lines A through G and enter the result.
CAUTION: Nonresident or part-year residents who
earned income and incurred expenses within and outside Pennsylvania must complete PA Schedule NRH.

LINE I
If an employer included the reimbursement in PA-taxable
compensation on Form W-2, do not enter that reimbursement here. If the reimbursements from an employer exceeded the expenses, enter the reimbursement here.
Otherwise, if a reimbursement from an employer was received for any type of expense included on PA Schedule UE,
even though the amount was less than the total amount of
the expense incurred, do not include the reimbursements
for those expenses and do not include the expense on PA
Schedule UE. The expense is not an unreimbursed expense.
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LINE J

LINE d

Determine the net expense reimbursement by subtracting
Line I from Line H. Report the amount as:
● Unreimbursed employee business expenses on Line 1b
of the PA-40, Personal Income Tax Return, if Line H is
more than Line I; or
● Additional compensation on Line 1a of the PA-40, Personal Income Tax Return, if Line I is more than Line H.

Enter the total amount of utilities for gas, electric, fuel oil,
kerosene, steam, and/or telephone.

CAUTION: Nonresident or part-year residents who
earned income and incurred expenses within and outside Pennsylvania must complete PA Schedule NRH. Report the amount on Line H of the PA-40 Schedule UE on
Line 13 of Section D of the PA-40 Schedule NRH. Include
PA-40 Schedule NRH with the PA-40, Personal Income Tax
Return.

PA-40 SCHEDULE UE, SIDE 2
SECTION IV
OFFICE OR WORK AREA EXPENSES
Office or work area expenses may be claimed when an employer does not provide an employee with a suitable work
area and the answer to each of the following questions is
YES:
D1. Does your employer require you, as a condition of employment, to maintain a suitable work area away from
the employer's premises?
D2. Is this work area the principal place where you perform the duties of your employment?
D3. Do you use this work area regularly to perform the duties of your employment?

CAUTION: Certain utilities, which are not subject to
sales and use tax when purchased exclusively for residential use, become subject to sales and use tax when
used for commercial purposes. If including electricity, natural
gas, fuel oil, or kerosene in the calculation of home office
expense, use tax on the prorated expense amount should
be reported. The use tax on these utilities should be paid
via the online Use Tax Return or if you are required to file a
sales tax return as part of that return. Please visit the myPATH website at mypath.pa.gov to file the Use Tax Return
or to register for a use tax account if you have regular recurring use tax liability on utilities.

LINE e
Enter the amount paid for property insurance.

LINE f
Enter the amount paid for property maintenance expenses.
Include a statement listing the expenses by type and
amount. Do not include capital expenditures that improve
the useful life or value of the property.

LINE g

If an employer provides a suitable work area, or the answer
to one or more of the above questions is NO, office or work
area expenses cannot be claimed.

Enter the amount of other expenses related to the property.
Do not include personal living expenses. Include a statement listing the expenses by type and amount.

CAUTION: The department does not permit the use
of the federal safe harbor deduction for a home office
or work area. Actual expenses must be used to determine
the amount of the deduction.

LINE h

ACTUAL OFFICE OR WORK AREA EXPENSES
Enter the actual expenses incurred if claiming office or work
area expenses on this schedule. Include statements detailing property maintenance and other apportionable expenses
from Lines f and g.

LINE a
Enter the depreciation expense for a home only. Do not include depreciation for furniture and fixtures.

LINE b
Enter the total amount of real estate taxes paid.

LINE c
Enter the total amount of mortgage interest paid for a home
only.
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If a renter, enter the amount of rent paid for the dwelling.

LINE i
Add Lines a through h and enter the result.

LINE j
Calculate the percentage of the property used for business
by dividing the square footage of the property used for a
work area by the total square footage of the entire property
or dwelling. Enter the amount as a percentage and carry the
amount to two decimal places.

LINE k
Calculate the apportioned expenses. Multiply the amount on
Line i by the percentage on Line k and enter the result.
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LINE l
Enter the total amount paid for office supplies used exclusively for business purposes. Include a statement listing the
expenses by type and amount.

LINE 17
Add Lines k and l and enter the result here and on Line D
on Side 1 of this PA-40 Schedule UE.

SECTION V

EXAMPLE: If the old workplace was three miles from the
old residence, the new workplace must be at least 38 miles
from the old residence. Measure the distance using the
shortest of the most commonly traveled routes.
IMPORTANT: Persons in the military do not have to
meet the distance test if the move is a permanent
change of duty station. If a military family with dependents
are moving to the new duty station from different locations,
all the allowable expenses for each family member and dependent may be claimed.

LINE 18

MOVING EXPENSES
Moving expenses incurred to retain employment may be deducted. Moving expenses may also be deducted if the expenses are related to reporting to a new location after
obtaining employment. However, the Distance Test described below must be met.
Allowable expenses incurred in moving yourself, your immediate family, household goods, and personal belongings,
including the cost of transportation to the new home, using
actual out-of-pocket costs or the federal mileage allowance
may be deducted. Expenses for storing household goods,
for meals and lodging on the way, including such costs on
the day of arrival, and parking fees and tolls may be deducted.
The following expenses may not be deducted:
● selling or purchasing a house;
● breaking a lease;
● house hunting;
● temporary lodging prior to or after moving to the new location;
● seeking new employment;
● moving for your own convenience;
● relocating to a new job or workplace less than 35 miles
farther than the old commute to work; or
● moving anywhere other than within or into Pennsylvania.

Enter the amount of actual allowable transportation expenses paid directly by the taxpayer for moving the household goods and personal effects as well as any in-transit
storage fees.

LINE 19
Enter the amount of out-of-pocket costs paid for during the
move. Qualifying expenses include: travel, meals, lodging,
parking fees, and tolls.

LINE 20
Add Lines 18 and 19 and enter the result here and on Line
E on Side 1 of this PA-40 Schedule UE.

SECTION VI
EDUCATION EXPENSES
The federal and PA rules for educational expenses are similar, but not exactly the same. For PA purposes, costs for education expenses that are paid or incurred are allowable
only if:

DISTANCE TEST
The new workplace must be at least 35 miles farther from
the old residence than the old workplace was. To determine
if this test is met, complete Lines E1, E2, and E3.

● The education is specifically required by law or by the
employer to retain an established employment status or
rate of compensation; and

LINE E1

● The education is not part of a program that would qualify
an employee for a new occupation, trade, or business,
even if the employee does not intend to enter that new
occupation, trade, or business.

Enter the number of miles from the old home to the new
workplace by the shortest route.

LINE E2
Enter the number of miles from the old home to the old workplace by the shortest route.

LINE E3
Subtract Line E2 from Line E1. If less than 35 miles, moving
expenses may not be deducted. Do not complete Lines 18,
19, and 20.
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Unlike federal rules, education expenses incurred to maintain or improve skills may not be deducted.
EXAMPLE: Anthony is a licensed professional in a position
that, by law, requires a specific number of continuing education credits every other year. If Anthony fails to obtain
these credits, he will lose his license. Anthony also takes
courses in using a computer to improve his job performance.
Anthony may claim the cost of his continuing education
courses. He may not claim the computer courses.
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LINE F1
An answer must be provided for question F1 for all education expenses even if reporting the expense as a miscellaneous expense in Section III on Side 1 of this PA-40
Schedule UE. If the answer is YES, continue. If the answer
is NO, education expenses may not be claimed.

LINES F2 & F3
Answers to questions F2 and F3 must also be provided. If
the answer is NO to both questions, continue. If the answer
is YES to either question, no education expenses may be
claimed.
Enter the name of the college, university, or educational institution attended, and the specific course of study. All education
expenses must meet the requirements described above.

LINE 21
Enter the amount of tuition or fees actually paid.

LINE 22
Enter the costs of books and other materials required for the
courses.

LINE 23
Enter the cost of travel to and from the educational facility.
Pennsylvania follows the federal rules for travel expenses
for education.
CAUTION: Travel as educational expenses may not
be deducted even if claiming that the travel itself constitutes a form of education.

LINE 24
Add Lines 21, 22, and 23 and enter the result here and on
Line F on Side 1 of this PA-40 Schedule UE.

SECTION VII
DEPRECIATION EXPENSES
Depreciation is the amount of expense claimed over the
useful life of property used in performing the duties of employment. A depreciation expense is allowable if the property:
● Has a useful life exceeding one year; and
● Is required to be regularly and predominantly used to
perform the duties of employment; and

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● Is required and not provided or supplied by the employer.
PA law allows generally accepted depreciation methods and
current expensing. PA law does not allow federal bonus depreciation. PA follows the amount allowable by the IRC
Section 179. The department accepts most generally accepted methods of calculating depreciation used for federal
purposes.
Do not use Section VII to report all depreciation. Use
Section II for vehicles and Section IV for office or work
area depreciation of a home. Fair market value of property
is not an acceptable other basis. Section VII may be used
to report depreciation of office furniture, fixtures, and equipment used in the work or office area reported in Section IV.
Section VII should also be used to report depreciation for
any other equipment required to be purchased by an employee to perform the duties of the employment.
COLUMN (a)
Enter the description(s) of the property being depreciated.
COLUMN (b)
Enter the date the property being depreciated was acquired.
COLUMN (c)
Enter the cost or adjusted basis of the property being depreciated.
COLUMN (d)
Enter the depreciation method chosen for calculating the depreciation expense.
IMPORTANT: Once a depreciation method has been
selected, it must be consistently used and may not
change without permission from the PA Department of Revenue.
COLUMN (e)
Enter any IRC Section 179 expense claimed on the asset.
Refer to Personal Income Tax Bulletin 2023-02 - IRC Section 179 Expense Deductions for additional information.
COLUMN (f)
Enter the amount of depreciation expense for the year using
the depreciation method described in Column (d).

LINE 25
Add Columns (e) and (f) and enter the total here and on Line
G on Side 1 of this PA-40 Schedule UE.

PA-40 UE

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