Last year I filed and received a Philadelphia Wage Tax Refund. This year I received a 1099-G. Is this taxable? The input does not have my situation in the software

[BillM223 · Accepted solution]

The question is whether or not you used this Philadelphia city tax (I assume that's what it is) to deduct last year (2019) as a state or local tax on Schedule A on your federal return.

If you did not Itemize in 2019 (and less than 10% of tax payers did), then the 1099-G is not taxable to you in 2020.

In this case, don't enter the 1099-G, but put a note on it that you did not enter it because you did not itemize in 2019, and save it in your tax file.

If you in fact did itemize in 2019, come back and tell us because we will have to explain what to do.

[kingtoros]

Hi Bill,

Philadelphia charges a wage tax if you work in Philly, but live outside of Philly.  (also if you live in Philly and it doesn't matter where you work, but that doesn't apply to me)

This appears on my W2 in Box 18,19,20 as a locality tax. In this case let's assume $2,000.00 was paid to the City of Philadelphia in 2019 from my employer for this tax. 

Philadelphia allows you to request a reimbursement, verified through your employer for time worked outside the city, and will reimburse an amount based on a worksheet they provide.  In this case let's say this amount was for $900 they approved and sent back to me.

I took the standard deduction, but wasn't sure if this added information changes anything.

Thank you in advance for your help.

[AnnetteB6]

Thank you for the additional information to clarify your situation.  It does not change the original answer provided by BillM223.  Since you did not itemize your deductions on your 2019 tax return, you do not need to report this reimbursement as income.

Be sure to follow the advice regarding making a note for your files and keeping the form with your tax return papers.  

@kingtoros

[dgooty]

Following this thread, but my question relates to how it would impact my NJ tax return?  Following the example that BillM223 provided, in 2019 I received a tax credit in NJ for the Phila. wage tax I paid.  After I filed my return I received the refund from Phila. for a portion of the wage tax.  I am assuming I now have to file an amended NJ return for 2019 to correct the amount of the credit?  Also will there be penalties from NJ for not having paid the correct amount in 2019?  Thank you

[MaryM428]

You should only have to amend your 2019 federal return if you itemized deductions last year.  You can go through the amendment steps and see if there is an impact on your NJ return.  If there is any tax owed to NJ after you enter the 1099-G then print and mail the amended 2019 NJ return.  

However, it's only taxable to the extent that it's more than the refund you would have received by choosing the larger refund from these: Standard deduction. General sales tax.

[vinceneedshelp1]

I also received a Philly wage tax refund, I do itemize every year but since the tax laws limited deductions for state and local taxes paid (since 2018) I have not received a benefit for the Philly City wage tax when paid.  I think I am supposed to exclude the refund from my 2024 return.  I had to file amended returns for 2023 and prior years to show the amount on 1099-G as not taxable.  I don't see an option to input it as non-taxable in turbo tax so do I just exclude it?

[KrisD15]

Yes, You would just not report the 1099-G if it is not taxable. 

As you say, even if you itemized, if the amount of the refund is as much or less that the excluded state tax you were allowed to claim on your 2023 tax year federal return, the state refund (including Philly Wage Tax Refund) is not taxable.