Wage Tax policy guidance for non-resident employees

June 17, 2020


March 26, 2020

Non-resident employees based in Philadelphia are not subject to Philadelphia Wage Tax during the time they have been ordered to work outside of Philadelphia.

The Philadelphia Department of Revenue has not changed the Wage Tax policy. Schedules to withhold and remit the tax to the City remain the same. We are publishing this guidance at a time when employees have been forced to perform their duties from home, many for the first time.

This is the policy:

The City of Philadelphia uses a “requirement of employment” standard that applies to all non- residents whose base of operation is the employer’s location within Philadelphia. Under this standard, a non-resident employee is not subject to the Wage Tax when the employer requires him or her to perform a job outside of Philadelphia (i.e. their home).

A non-resident who works from home for the sake of convenience is not exempt from the Wage Tax – even with his or her employer’s authorization. On the other hand, if a Philadelphia employer requires a non-resident to perform duties outside the city, he or she is exempt from the Wage Tax for the days spent fulfilling that work.

Non-resident employees who mistakenly had Wage Tax withheld during the time they were required to perform their duties from home in 2020, will have the opportunity to file for a refund with a Wage Tax reconciliation form in 2021.

The City requires an employer to withhold and remit Wage Tax for all its Philadelphia residents, regardless of where they perform their duties.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

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