Do I need to file a Pennsylvania state return if I lived in another state but worked in Pennsylvania during part of the year?

[ColeenD3]

Maybe. Every state has their own rules. Please see this LINK for specific information on filing requirements for part-year residents and non-residents.

Nonresidents of Pennsylvania. PA law taxes the income you earn, receive and realize from PA sources.  Some exceptions apply; see below for additional detail.

Part-Year Residents of Pennsylvania. Part-year residents are subject to PA personal income tax on all income earned, received and realized from all sources when residents of PA. Part-year residents are also subject to PA tax on income earned, received and realized from sources within PA when they were not a PA residents. Part-year residents are not subject to PA tax on ordinary interest, dividends, gains, intangible property or gambling and lottery winnings from PA sources while a nonresident.  Some exceptions apply; see below for additional detail.

[DJS]

Yes. Every resident, part-year resident or nonresident individual must file a Pennsylvania Income Tax Return (PA-40) when he or she realizes income generating $1 or more in tax, even if no tax is due. Nonresidents are subject to tax only on income form the eight enumerated classes of income earned, received or acquired from Pennsylvania sources. The eight classes of income are: compensation; net income (loss) from the operation of a business, profession, or farm; net gains (loss) from the sale, exchange, or disposition of property; net income (loss) from rents, royalties, copyrights, and patents; interest; dividends; estate or trust income; and gambling or lottery winnings.

Refer to the Pennsylvania Personal Tax Guide : https://www.revenue.pa.gov/FormsandPublications/PAPersonalIncomeTaxGuide/Pages/default.aspx 

[jc12583]

What qualifies as income from a Pennsylvania source?  Does the fact that a company is headquartered in PA automatically mean income from that company comes from a PA source?  Is there a distinction for a nonresident who never worked in PA?  For instance, would a nonresident, who worked remote full time, that received wages from a PA based company, be required to pay tax and file with PA as well as their resident state?  If so, wouldn't that be double taxation? 

[JotikaT2]

Most likely, if the business is located in Pennsylvania, then yes, any income earned from them is considered to be from PA sources.

As a nonresident, you would need to file a nonresident state tax return to report the income from PA, but you will also be able to claim a credit for taxes paid to PA on your resident state return.  This eliminates the issue of double taxation as you will receive a credit on your resident state tax return for the income also taxed in PA.

[jc12583]

@JotikaT2 

Thanks for this quick reply, but some confusion still exists.  In a separate thread (linked below), another tax expert (Ernie) seems to indicate that the location of the main office is not a factor.  My employer has not withheld any PA taxes which seems to indicate they consider me not to have any PA sourced income.  Under this scenario, do you still feel that this remote work income is sourced from PA and requires filing a non-resident PA state return?

https://ttlc.intuit.com/community/state-taxes/discussion/re-i-live-in-missouri-and-work-remote-the-m...

[ErnieS0]

These cases are facts and circumstance based. There is no “one size fits all” answer.

You should speak with your payroll department and/or schedule a live call with a Tax Expert who can ask you specific questions about your employment.

Here is Pennsylvania’s telecommuting policy:

When determining the taxability of income for telecommuters, the Department of Revenue looks to the employment agreement between the employee and their company.

If the agreement provides the employee with a physical workspace at the employer’s PA location and the employee elects to perform their work outside of PA, then the income for that employee is allocated to PA.

If the employer does not have a physical work space in PA available for the employee to perform their duties and the work is performed outside of PA strictly for the benefit of the employer, the income for that employee is then allocated to the state in which those duties were performed.