If you normally work within Philadelphia and are not a resident, you are well aware of the Philadelphia City Wage Tax. What happens when your office building is closed due to COVID-19 but you are still working, only now from home – outside of Philadelphia?
Philadelphia based businesses with employees being required to work from their home outside the City should not be paying City Wage tax at this time. This also means they should not be withholding it from your pay. It’s an instant boost to the employees’ net pay as the suburban local taxes are less than Philadelphia’s; you will need to pay the Earned Income Tax that your municipality may have in place, usually around 1%.
If your employer is still withholding or stopped withholding city wage tax after you started working from home, you can request a refund after December 31, 2020. You will need to provide a breakdown of days worked both in and outside of the city.
Here is an excellent article by Laura McCrystal, from the Philadelphia Inquirer explaining the process.
We are happy to discuss any questions or comments you may have. We have a dedicated COVID19 resource team working to provide as much information as possible and respond to your questions and concerns. Please contact our office at 610-544-5900 or firstname.lastname@example.org .
We are in this together,
Brinker Simpson & Company, LLC
Source: Philadelphia Inquirer
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice & cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).