Warning to PA tax preparers re: SP Credit

[John of PA]

The SP credit is a PA state credit for low income persons that can elminate all or part of thier tax liablilty if there total income is under the threshold test. PA now requires that this elegibility income test include 1099-R income that is code 4 income (on account of death). So a widow collecting her suvivors pension who used to get this credit now probably will not get the credit. Normal pension coded 7 do not have to be included but now code 4 pensions do. My software package (Drake) has already made this change.

[Bert73]

Now I am thinking back on all the clients I have done so far, Thanks for the scoop!

[BP.]

Thanks for the heads up and timely message!

[John of PA]

And thanks to Drake for bringing it to my attention.

[Dusty2004]

Pro Series has this fix also.

One other thing that many do not know about "Utilities deducted as a business-use-of-home expense are subject to use tax. The amount of use tax must be calculated and entered on PA-40 line 25."

So if you have a home office or your business is in the home and you deduct Utilities you have to pay Use tax on those utilities.

Dusty

[John of PA]

Thank you Duslty, I assume if the utility bill is a commercail account, the sales tax is charged in the bill, it's just personal accounts where the salses tax is not charged.

[Dusty2004]

Thank you Dusty, I assume if the utility bill is a commercail account, the sales tax is charged in the bill, it's just personal accounts where the salses tax is not charged.

Would a commercial account be located in a home office situation?

Dusty

[Gary2]

Would that use tax also apply to utilities for a rental? Is there a difference between utilities deducted because they're included in rent versus utilities not included in rent, but paid by landlord because the unit sat vacant for some period?

[BP.]

Would that use tax also apply to utilities for a rental? Is there a difference between utilities deducted because they're included in rent versus utilities not included in rent, but paid by landlord because the unit sat vacant for some period?

Yes on the first question. For the second questions, doesn't look like any differerence.

http://www.revenue.state.pa.us/portal/server.pt/community/use_tax_for_individuals/20576

"Certain utilities, which are not subject to
sales and use tax when purchased exclusively for residential
use, become subject to sales and use tax when
used for commercial purposes. Commercial purposes includes
rental property owned by an individual and held
out for rent by another individual or business.

If you are including electricity,
natural gas, fuel oil, or kerosene in your calculation
of utilities expense and the property is not listed as commercial
property with the utility company or as a commercial
entity with the fuel oil or kerosene supplier, you should
report use tax due on the related expense amounts."

Thanks for the info, Dusty2004. I didn't locate this info in prior year instructions or worksheets.

[Dusty2004]

Glad to help

Thanks for the info, Dusty2004. I didn't locate this info in prior year instructions or worksheets.

That is what makes this forum so useful. People trying to help one another solve tax pains.

Dusty