Philadelphia Workers Who Worked from Home May Be Due a Wage Tax Refund

June 16th, 2021
 Upper Makefield residents who worked from home for a Philadelphia-based business during the Covid-19 Pandemic may receive yet another benefit to not commuting: A tax refund.     Nearly all municipalities in the Philadelphia area levy an Earned Income Tax (EIT), with most topping out at 1%. Anyone who works in Philadelphia and lives elsewhere must pay the non-resident Philadelphia Wage Tax, which is 3.5019% of gross wages. It is either/or: If you don’t need to pay the Philadelphia Wage Tax, you are subject to the Earned Income Tax.   Telecommuters, however, may no longer be subject to the Philadelphia Wage Tax when they work from home. In Upper Makefield Township, the Earned Income Tax is 1% tax on earned income, wages or net profits. Proceeds from this tax are split equally between Council Rock School District and Upper Makefield Township.

Is It Worth It?   Is it worth the effort to pursue a refund? Yes! An Upper Makefield resident who was employed for $60,000 by a Philadelphia-based business and required to work from home during the pandemic could save about $1,500 over one year. Plus, the 1% you contribute instead will be invested in local improvements. Here are links to what you need to apply for a Wage Tax Refund.
From the City of Philadelphia
– 2020 Wage Tax Refund. For any amount of time a Philadelphia job was required to be conducted at a home outside the city limits, the taxpayer may request a Wage Tax Refund from the City of Philadelphia. 

From Your Employer
Residency Certification Form. Anyone who continues working from their home outside of the City of Philadelphia should submit a Residency Certification Form to their employer and request that their local EIT be deducted from their wages instead of the City Wage tax. A political subdivision code (PSD) will be needed for the form.  
– Political Subdivision (PDS) Code. A PSD code will be needed to complete the Residency Certification Form. Use this Municipal Statistics tool to find PSD codes. The PSD code for Upper Makefield Township is 090604.  

From Keystone Collections
– Out-of-State Credit Worksheet. Upper Makefield residents pay the Earned Income Tax to Keystone Collections. When submitting a tax return to Keystone Collections, use the “Out-Of-State Tax Credit Worksheet” on Line 12  to determine whether you are eligible for a tax credit for the time you did not work in Philadelphia.  

Note: If you are new to Upper Makefield, find instructions for filing on the Keystone Collections website or by calling 1-866-539-1100. The EIT due date is April 15.
Keystone Collections