PA state tax, SUI tax, Philadelphia wage tax and tax on insurance

[0028436768]

Hello everyone,

I was a Philadelphia resident for the last five months of 2023 before I moved to NJ. I have some questions on my W2 and refund.

1. This is my first time filing in a state that has a flat income tax rate. When I used TurboTax, it showed that I was getting no refund from PA. My state wage in box 16 of my W2 reads 22780. Box 17 is roughly 3.07% (flat state tax rate) and box 14 is roughly 0.07% (SUI tax rate) of the box 16 value. I am assuming that I am getting nothing back but I still wanted to confirm. Is this how it works for everyone? Does no one in PA get any state refunds? If so, what is the point of filing PA taxes?
2. My state wage in box 16 of my W2 reads 22780 (which had my insurance deducted from it already) but my local wage in box 18 reads 24320 (which is before insurance got deducted). The Philadelphia wage in box 19 is roughly 3.75% (Philadelphia wage tax rate) of the larger value of 24320 though. Is there any way I can get a partial refund on this since they taxed my insurance too? If so, how should I go about this?

Thanks,

UZ

[Vanessa A · Accepted solution]

When I used TurboTax, it showed that I was getting no refund from PA. My state wage in box 16 of my W2 reads 22780. Box 17 is roughly 3.07% (flat state tax rate) and box 14 is roughly 0.07% (SUI tax rate) of the box 16 value. I am assuming that I am getting nothing back but I still wanted to confirm. Is this how it works for everyone?  Yes, for most people in PA this is how it works. 

 Does no one in PA get any state refunds? If so, what is the point of filing PA taxes? For the most part, in PA, you wouldn't get a refund of your taxes paid because it is a flat rate state.  So if you earn $100,000, your state taxes will be $3,070 unless you have employee job expenses or are eligible for one of the very few state credits.  Then you may get a small refund.

If you were married filing jointly with 9 kids, then with your $100,000 in income, you would be eligible for 10% of that back or a $307 refund under PA Tax Forgiveness Schedule SP.  You can take a look at the chart in the previous link for the other income brackets and dependents, but for a single taxpayer with no dependents the tax forgiveness ends at $8,750.  Anything over that and you pay the full tax amount.  

Basically, if you walked through all the question in the PA return and you have no refund, this would likely be correct as it is common in PA to not have a refund.

My state wage in box 16 of my W2 reads 22780 (which had my insurance deducted from it already) PA does NOT allow a deduction for health insurance premiums.  This means, if the premiums were deducted from your wages, this is not correct and you will need to contact your employer to get a corrected W-2. PA allows deductions for HSA, MSA, 529 plans and PA ABLE savings accounts, but not health insurance.

 But my local wage in box 18 reads 24320 (which is before insurance got deducted).  This would be the correct number for PA as well, if it was insurance premiums being deducted.

 The Philadelphia wage in box 19 is roughly 3.75% (Philadelphia wage tax rate) of the larger value of 24320 though. Is there any way I can get a partial refund on this since they taxed my insurance too? If so, how should I go about this? No, there is not a way to get a refund for this, as this is the amount you should be taxed on.  You will however, need to file a return for Philadelphia but you will need to file through Philadelphia.  TurboTax does not support Philly returns.