Any PA preparers? I need a little help

[mrichman333]

So I have a Sch C customer from NJ with sch C gross of $41,943 of which $3,468 was a PA 1099MISC

Net income is $29,4449

PA tax is $898???? That seem rather high.

Any thoughts?

Thanks

[komtax]

first did you calculate the pa credit for taxes paid to other locality?

[SFA]

PA is a flat tax of 3.07% of profit. Take your 1099misc from PA, allocate appropriate expenses, multiply by 3.07%

[rfassett]

SFA is correct. You are calculating the PA tax on the total profit. Tax credits or income allocation is in order.

[jklcpa]

Or use PA Sch NRH, page 2 to allow the program to calc the net profit attributable to PA. I'm coming up with a tax of $75 based on your senario. PA % of gross receipts of total is 8.26% X net profit of $29449 would give a PA taxable profit of $2432 X PA rate of 3.07% = $75.

If ATX is like it was in prior years, it won't like if there's no employer name in PA on page 1 of the NRH.

[SFA]

ooops. PA and NJ are reciprocal states. I don't believe your client should pay any PA tax.

[rfassett]

ooops. PA and NJ are reciprocal states. I don't believe your client should pay any PA tax.

Correct me if I am wrong because I know more about the west border than the east and I do not have time to look, but Ohio and PA reciprocity applies only to employee compensation. Might not be the same with NJ.

[jklcpa]

I think the client still owes PA. The reciprocity agreements are for employees living in one state and working in the other. At least for a PA resident with SE income from NJ, the PA resident must file a nonresident return and report the income. I'd be surprised if it isn't the same for an NJ resident with SE income from PA sources.

[mrichman333]

Thanks Everyone!

So I adjusted the income/expenses accordingly and came up with a $75 tax and a $75 tax forgiveness. Why the program didn’t allocate correctly is beyond me and it’s to late in the season to try and figure it out.

I live close to NY so I don't do to many PA returns; they are reciprocal states but I think it is only on W-2 income.