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Basic understanding of Pennsylvania Local Taxes in Sage HRMS (Setup, Calculating and Reporting)

Setup:

There are many Pennsylvania local taxes that are supported and they are stored in a Repository table that is updated by the Sage HRMS product updates. These local taxes must be setup and added before they can be available to be added to any employee. When setting up an employee with Pennsylvania local tax, usually a Resident (R) and Non-Resident (NR) tax code is required. These usually references the Home (R) and Work (NR) locations. Else, the employee may not be using the correct tax code to withhold and the tax amount may be incorrect. 

Calculating:

There are 3 scenarios where different local tax code are used to withhold tax:

1. The rates are different in the R and NR locations.

  • The system is designed to withhold tax using the higher rate code. 

2. The rates are the same and the R and NR are in different counties.

  • The system is designed to withhold tax using the NR code. 

3. The rates are the same and the R and NR are in the same county.

  • The system is designed to withhold tax using the R code.

For more details, refer the Pennsylvania government website for more details.

https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/

Reporting:

The PA Act 32 Report in Sage HRMS is used to report the different tax amounts withheld from employees and to pay this PA Earned Income Tax (EIT) through Aatrix.