Registration Requirements in Pennsylvania
Your business may be required to register with the Pennsylvania Department of State. Some businesses may be required to re-register annually. More information can be found on their website below.
Certain business types may also be required to register with the Pennsylvania Department of Revenue. More information can be found on their website below.
S Corporation Tax
Pennsylvania recognizes the federal S-election, and Pennsylvania S corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income. S corporations file PA-20S/PA-65 S corporation/partnership information return.
LLCs and partnerships are not required to pay income tax to Pennsylvania. Instead, income from the business is distributed to individual LLC members or partners, who then pay Pennsylvania income tax on that amount with their personal return. Partnerships file PA-20S/PA-65 S corporation/partnership information return.
Pennsylvania s corporations, partnerships and LLC’s may file a composite return on behalf of their qualified nonresident individual owners who elect to be included in the composite filing. This composite income tax is filed on form PA-40NRC - Nonresident Consolidated Income Tax Return. This form can be found here:
Individual Income Tax
Pennsylvania has a selective conformity with the Internal Revenue Code and adopts only certain IRC provisions, certain provisions as of a specific date, or makes certain material changes to key IRC provisions. Many federal deductions and exemptions are not allowed.
The starting point for computing Pennsylvania's personal income tax liability is the federal adjusted gross income and allows their own state defined additions and subtractions to arrive at Pennsylvania's adjusted gross income.
They offer neither standard nor itemized deductions, however, individuals are able to reduce taxable income through allowable credits, deductions and exclusions.
Pennsylvania does not conform to the IRC section 199A, also known as the QBI deduction.
Shareholders and partners with income assignable to Pennsylvania may need to file an individual income tax return that reflects their portion of Pennsylvania income.
Individual income is taxed at a flat rate of 3.07%. Individual income tax is filed using Form PA-40 found here:
CARES Act Guidance
Pennsylvania does not conform to the IRC Section 172 of the CARES Act regarding business net operating loss (NOL) provisions. Instead, Pennsylvania will retain its treatment of business NOLs, not allowing any carryback and allowing only a 20-year carryforward.
S corporation and partnership returns are due on the 15th day of the 4th month following the end of the tax year. For calendar year filers, the date is April 15th.
Individual income and composite returns are due on the 15th of April.
If the due date falls on a weekend or holiday, the due date is extended to the following business day.
Filing An Extension
Any party requesting an extension to file a tax return in Pennsylvania is required to use form REV 276 - Application for automatic extension of time to file. Taxpayers using form PA-20S/PA-65 may be allowed up to a five month extension. Individual and composite return filers may receive up to a six month extension. The extension request must be filed by the due date of the original return.
Resident owners must declare and make quarterly estimated Pennsylvania tax payments if they reasonably expect income which has no Pennsylvania tax withheld to exceed $8,000.
Entities must withhold and pay Pennsylvania income tax for nonresident partners and shareholders that are individuals.
Pass through entities use form PA-40ESR to declare estimated payment:
Individuals use form PA-40ESR(i):
Failure to file a pass through entity return may result in a $250 penalty.
Individuals who do not file or file a late return may be subject to a 5% penalty on the unpaid balance due per month, up to a maximum of 25%.
PA law also imposes a 5% underpayment penalty. If you do not report taxable income you may face an additional penalty up to 25% of the tax due on unreported income.
If your business was formed or is located in another state, but generates income in Pennsylvania, it may be subject to Pennsylvania taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Pennsylvania Department of State
Pennsylvania Department of Revenue