3Enable Pennsylvania Local Earned Income Taxes on Your Organization

To enable Pennsylvania local Earned Income Tax (EIT) calculation:

1. Use the Locations task to set the Pennsylvania subdivision (PSD) code for each Pennsylvania location.

2. Configure the withholding of Pennsylvania local taxes for any employees working out-of-state.

3. Set the PSD codes on each Pennsylvania employees' Residency Certificate.

   For new Pennsylvania employees, the employee tax card inherits both the work and resident PSD codes from their work location and home address. The default resident PSD code might not be accurate. This is because Pennsylvania addresses often have varying taxation districts.

   To ensure proper taxation:

   1. Obtain the correct PSD code and school district for the employee's resident address from the PA Municipal Statistics website.

   2. Correct these entries on the employee's tax card.

   Here are some other situations where you must manually update the PSD codes on the employee's Residency Certificate.

   • The employee's work location has changed from a state other than Pennsylvania to Pennsylvania, and the employee resides in Pennsylvania. In this case, you must set the work PSD code.

   • The employee changes from one work Pennsylvania location to a different work Pennsylvania location. In this case, you must update the work PSD code.

   • When you change a person's Pennsylvania residential address.

   Note:

   Confirm that the PA Residency Certificate has the proper resident and work PSD codes and school districts anytime you make a location change to a Pennsylvania employee. Such as changes to the home address or work location.

4. If you're registered as a combined filer for Pennsylvania Act 32 taxes, provide your Tax Collection District (TCD) combined-filing proxy.