Since 1939, the City of Philadelphia has imposed a tax on the net profits of resident businesses as well as nonresident businesses to the extent their business was conducted in the city, and since 1940 the city has imposed a tax on the wages of Philadelphia residents and nonresidents to the extent they worked in the city. The City of Philadelphia has several municipal tax returns that an individual taxpayer may need to complete if they lived in and/or worked in the city. TaxSlayer Pro supports the following returns.
Business Income & Receipts Tax Return (BIRT)
Individuals engaged in any for-profit activity within the city of Philadelphia must file a BIRT return. Additionally, individuals who maintain a Commercial Activity License (CAL) must file a BIRT return, even if they didn't actively engage in any business.
Business activity does not include earning a wage or salary as an employee, activity that is considered a hobby, or the work of non-profit organizations.
A business has nexus in Philadelphia and is subject to BIRT if it has generated at least $100,000 in Philadelphia gross receipts during any twelve month period that ends in the current year.
The BIRT return must be filed and paid by April 15 of each year, and the filing must include payment for an estimate of the following year’s BIRT.
Click here for more information about completing a BIRT Return in TaxSlayer Pro.
Note: The Philadelphia Business Income & Receipts tax return can be electronically filed in the TaxSlayer Pro Desktop program with the PA state tax return, or by itself.
Employee Earnings Tax Return
The Employee Earnings Tax is paid by:
- Philadelphia residents, irrespective of where they work;
- Philadelphia nonresidents who work in Philadelphia.
The Earnings Tax and the Wage Tax refer to the same tax, and an employer with nexus in Philadelphia will normally withhold and remit the Philadelphia Wage Tax on its employees. Out-of-state employers aren't required to withhold this tax, thus the employee will need to file the Employee Earnings Tax Return to ensure the tax is paid on their wages earned within the city.
Note that the Employee Earnings Tax Return is only filed by individuals who are employees. It isn't filed by self-employed individuals or partners in a partnership, both of whom will file the Business Income & Receipts Tax Return and/or the Net Profits Tax Return.
The Employee Earnings Tax return is due by April 15 of each year.
Click here for more information about completing the Employee Earnings Tax Return in TaxSlayer Pro.
Note: The Philadelphia Employee Earnings Tax Return cannot be electronically filed.
Net Profits Tax Return (NPT)
The Net Profits Tax is imposed on the net profits from any business activity by any individual or entity that is:
- A resident of Philadelphia, irrespective of where they conduct their business;
- A nonresident of Philadelphia who conducts business in Philadelphia.
Only non-corporate entities are subject to the NPT, and the NPT return must be filed even if the business activity resulted in a net loss. The NPT return doesn't replace the BIRT return, although a credit for BIRT may be taken on the NPT return.
The NPT is paid in two installments during the year, on April 15 and June 15, and each installment must be at least 25% of the prior year's NPT.
Click here for more information about completing the Net Profits Tax Return in TaxSlayer Pro.
Note: The Philadelphia Net Profits tax return can be electronically filed in the TaxSlayer Pro Desktop program with the PA state tax return, or by itself.
School Income Tax Return (SIT)
The School Income Tax is imposed on certain types of unearned income of part-year and full-year residents of Philadelphia. The SIT return must be filed and paid by April 15 of each year.
Click here for more information about completing the School Income Tax Return in TaxSlayer Pro.
Note: The Philadelphia School Income tax return can be electronically filed in the TaxSlayer Pro Desktop program with the PA state tax return, or by itself.
Income-based Wage Tax Refund Petition
A taxpayer who has completed PA Schedule SP for Pennsylvania tax forgiveness may be entitled to a refund of Philadelphia city wage tax withheld by their employer. Complete the Wage Tax Refund Petition to see if any refund is due.
The Wage Tax Refund Petition is not e-filed with the tax return but can be mailed or faxed to the Philadelphia Department of Revenue.
Click here for more information about the Wage Tax Refund Petition.
Note: The Philadelphia Income-based Wage Tax Refund Petition cannot be electronically filed.
Additional Information: