Reducing state earned income

[ericawjafra4u]

Is there any way to reduce my state earned income? My federal earned income amount meets the guidelines to be given tax forgiveness in my state; however, my state income is slightly higher (not sure how or why) and I do not qualify for the forgiveness on my state return. 

[ErnieS0]

It depends on what state you are in. Each state has different rules.

Some states will tax income tax is not taxed by the IRS.

Other states will allow you to claim deductions that the IRS does not.

Some states include your non-taxable income such as state assistance for income forgiveness. We’d have to know what state you are filing to help you.

[ericawjafra4u]

Hi Ernie. Sorry. I should’ve mentioned the state from the get go. I’m in Pennsylvania. Also, I have an llc that is inactive, but I have been writing off a portion of the cost to incorporate for 2 years now. I’m not sure if that will affect my earned income this year or not. 

[Vanessa A]

PA is pretty cut and dry with the taxes.  PA has a flat tax rate of 3.07% with very limited deductions. If you have an employer, you can deduct the costs of work items such as tools, uniforms, etc.  

There is a Special Tax Forgiveness for low income families. If you qualify for this, you will be able to answer the questions in TurboTax.  It is based on your income and number of people in your family.

Here is a list of other Tax Credits in PA that may or may not apply to you. 

If your LLC is inactive, do you mean you filed forms to inactivate it or you are just not doing business?  If you did not officially make it inactive, you still do need to file a tax return for it every year.  Depending on if your setup (partnership or single member) you may need to file your PA 65 each year.