Philly Workers Who Stayed Home May Be Due a Wage Tax Refund

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Has your home turned into an office in the last year? With the pandemic forcing many people to work from home, thousands in our area are no longer commuting to work like they used to. For those who used to commute to work in Philadelphia, there is yet another benefit to working from home besides saving time, gas, and tolls: a tax refund.

Anyone who works in Philadelphia and lives in Middletown Township is subject to pay the non-resident Philadelphia Wage Tax, which stands at a hefty 3.4481%, as of July 1, 2021, of gross wages. Middletown Township levies an Earned Income Tax (EIT) of only 0.5%. Residents living in the suburbs are subject to this lower rate EIT where they live-unless they work in Philadelphia. However, with many required to work from their homes in the last year, they may no longer be subject to the Philadelphia Wage Tax for the time worked at home.

Is it worth the effort to pursue a refund? The simple answer is yes! Someone working from home in Middletown Township during the pandemic making $60,000 per year would be subject to Middletown Stay Connected! Township EIT, which is only 0.5%. In the span of one year, this would equal a savings of nearly $1,800! Plus, the 0.5% you are contributing in your local EIT stays in your home community, getting reinvested in your own back yard toward things like public safety and infrastructure improvements.

How do you take advantage of this? For any time a Philadelphia job was worked at home outside of the City of Philadelphia, they may request a Wage Tax refund from the City of Philadelphia. When submitting a tax return to Keystone Collections, the tax officer for all EIT in Bucks County, use the Out-Of-State Tax Credit Worksheet on Line 12 of the tax return form, if you need to receive tax credit for the time you did work in Philadelphia.

For anyone who continues working from home outside of the City of Philadelphia, they 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. Middletown Township's political subdivision (PSD) code will be needed for the form, which is 090665.