Pretty straightforward. I have lived in multiple locations (within same state) throughout 2020 and as a result find it a bit complicated to determine who I owe local taxes to? Do I prorate? Do I just go with the locality that my employer used to withhold from?
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It's relatively rare for US cities to have income taxes. Normally, city taxes are based on property taxes and sales taxes. Are you saying that you've lived in multiple cities in PA that each have income taxes?– Justin CaveCommented Apr 22, 2021 at 16:18
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@JustinCave I live currently in Philadelphia which has an income tax. And the other towns I've been in do as well.– Runeaway3Commented Apr 22, 2021 at 16:23
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@JustinCave 2,968 PA municipalities have a local income tax; it and Ohio are the states with the most widespread local income taxes. Philadelphia has precedence over other locations by state law for commuters and the highest local rate (making it the most known outside of PA); but Pittsburgh, Allentown, Reading, York, Lancaster, Erie, Conshohocken and 2900+ other towns have it.– user662852Commented Apr 22, 2021 at 16:26
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@Runeaway3 I recognize from other questions that you have real estate rental income in Philadelphia. Is your question including this component, or simply wage income? Have you had your employer update your address whenever you have changed your permanent abode, or are you attempting to correct for periods when you did not reside where your employer withheld? (Has your work site for wage income been within Philadelphia? If it has, all other municipalities should be credited by the amounts withheld by Philadelphia, leaving you owing the nothing to the other places)– user662852Commented Apr 22, 2021 at 16:42
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1 Answer
You must prorate your local income taxes based on the % of the year you spent in each municipality/taxing jurisdiction. See the FAQ for Keystone Collections, one of PA's larger local income tax collectors. See also This FAQ about moving midway through the year.
I've been in your shoes before, and I agree that the process is a bit complicated. You must file with each local income tax collector whose municipalities you resided in during the year. Some collectors handle multiple municipalities, and will help you correctly prorate between the municipalities they are in charge of. Otherwise, you will have to do so manually.
If your employer only withheld for one municipality throughout the year (for example because you didn't tell them you were moving), then you may want to contact your local income tax collector office or offices to let them know and ask them if they have any special way they wish to handle it. From personal experience, the individual local income tax collectors are sometimes able to reassign incorrectly withheld tax without you getting a refund in one municipality and having to pay in another. However, this may not be the case for your particular circumstance. Your best bet is to contact them and ask.
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1Your first link for Keystone collections does not say to prorate by percent; it says to pay what you earned during the specific time in question "For example, if you lived and worked in the municipality for only 4 months then you only pay on the income earned during those 4 months". If your income is consistent throughout the year, the end result is the same, but if you moved to pursue a higher salary, it is not the same. Commented Apr 22, 2021 at 18:29