Part- and full-year residents of the School District of Philadelphia are subject to the School Income Tax (SIT) on certain types of unearned income. The income subject to SIT includes, but isn’t limited to, the following:
- Distribution from an S corporation Accumulated Adjustment Account;
- Dividends, except for dividends related to tax-exempt income and from certain sources (see below);
- Income to a limited partner of a partnership, except that reported on the NPT return;
- Interest, except from certain sources (see below);
- Interest on bonds issued by a government-sponsored agency unless the Act that created the agency specifically exempts such bonds from state and local taxes.
- Insurance policy annuities, except those that are part of a retirement or pension plan;
- Gains from the sale, exchange, or disposition of real property, tangible property, and intangible property, owned for six months or less (for property received by gift or inheritance, six months begins on the date of acquisition);
- Rental income, except that reported on the NPT return;
- Royalty income, except that reported on the NPT return;
- Prizes and awards, except for cash prizes from the Pennsylvania State Lottery;
- Punitive damages;
The income subject to the tax can be reduced by the ordinary and reasonable expenses incurred to produce the income. Taxes can be deducted only to the extent they were incurred in the production of income, e.g., property tax. The taxes levied on the income itself, such as the BIRT, NPT, SIT, or foreign taxes, cannot be deducted.
Interest and dividends are not subject to SIT if they are related to a:
| Certificate of Depositchecking accountMoney Market accountsavings certificatesavings deposit | … issued by a: | BankBuilding & Loan AssociationSavings & Loan AssociationCredit UnionSavings BankTrust Company |
Note: The savings certificates must be originally issued to either an individual or a nonprofit and be nonnegotiable.
Additionally, the following sources of income are statutorily excluded from the SIT:
- Interest on loans and bonds of the Commonwealth of Pennsylvania, its political subdivisions and municipalities, and the Southeastern Pennsylvania Transportation Authority, along with the U.S. government;
- Dividends paid by a National Bank to common stock holders;
- Income from funds and trusts to the extent it comes from sources in the preceding paragraph;
- Gains from the sale of property held for more than six months;
- Business income reported on the NPT return;
- Old age, pension, and retirement payments received by an individual who has retired due to reaching a certain age or period of employment;
- Periodic payments made under a sickness or disability plan;
- Worker’s compensation or unemployment benefits;
- Active military service pay, as well as state or federal bonuses to active military ;
- Death benefits paid by an employer or union to the beneficiaries of a deceased employee;
- Insurance policy proceeds;
- Gifts and bequests;
- Compensatory damages received by settlement or court action related to personal injury or property damage;
- Income from IRA’s, tax-deferred annuities, profit sharing, Keogh plans, et.al.
See the regulations if in doubt about a particular source of income.
To access the Philadelphia School Income Tax Return, from the Pennsylvania Resident or Part-Year Resident Tax Return Menu select:
- Miscellaneous Forms
- PA City Tax Return
- Philadelphia School Income Tax Return
Personal Information –
- Residency Information – If the taxpayer was a part-year resident of the Philadelphia School District, enter the dates of residency;
- Amended Return – Answer YES if amending the SIT;
- Generate Extension – Answer YES to generate an SIT extension payment coupon. If the coupon is printed after the income and expenses are entered into the return it will print with the tax due.
Net Taxable Dividends
Taxable Interest
S-Corporation Income
Partnership Income
Estate or Trust Income
Estate or Trust Income
Net Short Term Capital Gains
Net Rental Income
Other Taxable Income – Enter income onto each income line as appropriate. Only income is reported, not losses. (No income flows into the return from either the federal return or the PA state return.)
Deductible Expenses – Enter the total of the ordinary and reasonable expenses directly incurred in the production of taxable income if they were paid solely for the production of that income. Examples:
- safe deposit box rental;
- margin account interest;
- property tax;
- SIT tax return preparation fee.
Credit from Overpayment or Extension – Enter here the total of prior year credits and payments made on extension, if any.
Interest and Penalties – If tax is owed and the return is being filed late, this menu line will be visible. Calculate interest and penalty and include the total on this line. For rates and instructions, click here.
Applied to 20xx School Income Tax – If a refund is due, part or all of it can be applied to the following year’s return.
Electronic Filing Type – If desired, mark the return for electronic filing and indicate how the balance due will be paid or refund received, whether by check or by direct debit or deposit.
Note: This is a guide on creating the Philadelphia School Income Tax Return in Keystone Tax Solutions Pro. It is not intended as tax advice. You are encouraged to review the information from the City of Philadelphia, as it is both complete and authoritative.
Additional Information: