A retired client has a W-2 soley from income from a non-qualified plan (in box 11). It is my understanding that this income is not taxale on the PA-40. Any comments on if this W-2 is taxable for the Local Earned Income Tax? Thanks for any input you may have here.
-
-
New Rules
Did you read the new rules regarding non-qualified deferred comp plans in the Chapter 7 of the PA Tax Guide? They start on page 53. It now appears that income from these plans will be taxed when disbursed and not tax when earned (which is opposite of how PA treats all other retirement income). Not sure if this applies in your case, but it makes for some interesting reading.
Anyway, since local earned tax is supposed to follow the PA rules - even though I am sure you have seen many cases where the local authority has it own rules - if you determine it is not taxable for PA purposes, I would not include it on the local return.
Comment