PA Business Losses and W-2

[tjh5122]

I am a W-2 employee but also run a sole proprietorship on the side in Pennsylvania.  This year, the business experienced a loss through the sale of business property, which I recorded on my federal return with Form 4797, which translated back to Schedule 1 (Line 4) and ultimately my Form 1040 Line 8.  On a federal level, I was able to use that negative "additional/other income" to offset W-2 wages.

However, for my PA return it is not giving me this option.  The reading I've done suggest that PA does not allow offsetting different "income classes" against each other.  For additional background, this business is a trading business.  It doesn't seem appropriate that I'm unable to realize any tax benefit from a loss through my business but in years of gains will have a tax liability.  Am I doing something wrong in turbo tax and should show those business losses somewhere else?

[Vanessa A]

No, you are not doing something wrong, PA does not allow one class of income to offset another class of income.  

In PA, basically a business loss just means that you are not including business income on your return for the year.  There is no carryforward allowed either. 

REMEMBER: You may not offset income in one PA income class with a loss in any other PA income class. You cannot carry forward or carry back gains or losses to other tax years. . You cannot carry forward or carry back gains or losses to other tax years PA 40 Instructions page 15