Pa Schedule Nrh - Compensation Apportionment Page 4
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4Line 14. If you used the working day apportionment method,
Line 19. If your employer reimbursed you for some of your
enter the percentage from Line 5.
expenses, but not in the exact amount or on a per diem
basis, and that reimbursement is not already included in
Line 15. If you used the business volume apportionment method,
your Form W-2, enter the amount of your reimburse-
enter the percentage from Line 8.
ments multiplied by the percentage from Line 5 or Line 8
Line 16. Calculate your apportioned unreimbursed employee
on this line.
business expenses by multiplying Line 13 by either Line
Line 20. Add all completed lines above and enter the total here.
14 or Line 15.
This is your apportioned PA gross taxable compensation.
If you complete Section D, you must complete Section E.
Line 21. Enter the amount of your apportioned unreimbursed
SECTION E. PA TAXABLE COMPENSATION
employee business expenses from Section D, Line 16.
Line 17. If your employer used the correct PA gross taxable com-
Line 22. Subtract Line 21 from Line 20. This is your net PA
pensation amount on your Form W-2, enter that amount.
taxable compensation. Transfer this amount to Line 1c of
your PA-40 and include it with any other PA taxable
Line 18. If you apportioned your PA gross taxable compensation,
enter the amount from Section C, Line 12.
compensation.
PART II. HOW TO APPORTION INCOME FROM BUSINESS OR FARMING DERIVED FROM
SOURCES WITHIN AND OUTSIDE PENNSYLVANIA
List all places within and outside Pennsylvania where you operate
not in any state in which some part of the service
your business, giving the street address, city and state. Also indicate
is performed, but the individual is a resident of
Pennsylvania.
the type of business.
Line 1.
Real Estate and Tangible Property - In Column (A),
Base of operations refers to the place or fixed center from which
the individual works. An individual’s base of operations may be a
TOTAL EVERYWHERE, enter the average value of the
business office or a place at which the employee is to receive
real and tangible personal property you owned or rented
directions and instructions if the contract of employment so
and used in your trade or business within and outside
specifies. In the absence of more controlling factors, an individual’s
Pennsylvania. In Column (B), WITHIN PENNSYLVANIA,
base of operations may be the place to which business mail,
enter the average value of the real and tangible personal
supplies and equipment are sent, or the place where business
property you owned or rented and used in your trade or
records are maintained.
business in Pennsylvania. In Column (C), enter the deci-
mal figure which results from dividing the dollar amount
Line 3.
Sales - In Column (A), TOTAL EVERYWHERE, enter your
in Column (B) by the dollar amount in Column (A).
total sales within and outside Pennsylvania during the
entire year. In Column (B), WITHIN PENNSYLVANIA,
Property you owned is valued at its original cost with no allowance
enter your total sales within Pennsylvania during the
for depreciation. The average value is determined by adding the
entire year. In Column (C), enter the decimal figure
total value at the beginning of the year to the total value at the end
which results from dividing the dollar amount in Column
of the year and dividing by two. The department may require
(B) by the dollar amount in Column (A).
averaging of monthly values to reflect the average value of property.
Property you rent is valued at eight times the gross annual rental
Sales of tangible personal property are in Pennsylvania if:
rate. Gross annual rental rate does not include property subleased
(1) the property is delivered or shipped from outside Pennsylvania
and not used to carry on the business.
to a purchaser in Pennsylvania, other than the U.S. government,
regardless of the free on board point or other conditions of the
Line 2.
Wages,
Salaries,
Commissions
and
Other
sale; or (2) the property is shipped from Pennsylvania to any place
Compensations - In Column (A), TOTAL EVERYWHERE,
and the purchaser is the U.S. government.
enter total compensation paid within and outside
Pennsylvania during the entire year. In Column (B),
Sales, other than sales of tangible personal property, are in
WITHIN PENNSYLVANIA, enter total compensation paid
Pennsylvania if: (1) the income-producing activity is performed in
in Pennsylvania during the entire year. In Column (C),
Pennsylvania; or (2) the income-producing activity is performed
enter the decimal figure which results from dividing the
within and outside Pennsylvania, and the greater proportion of the
dollar amount in Column (B) by the dollar amount in
income-producing activity is performed within Pennsylvania
Column (A).
(based on cost or performance).
Compensation is paid in Pennsylvania if:
Line 4.
Add Lines 1, 2 and 3.
1. The individual performs service entirely within
Pennsylvania; or
Line 5.
Average - Divide the amount on Line 4 by the number of
factors which apply; i.e. the number of entries in Column
2. The individual performs services within and outside
(A). Example: If you entered amounts only for property
Pennsylvania, but the service performed outside
and sales in Column (A), you would divide the amount
Pennsylvania is incidental to the individual’s service
on Line 4 by 2.
performed within Pennsylvania; or
Line 6.
Enter total net profits from business or farm income for
3. Some of the service the individual performs within
the tax year.
Pennsylvania, and either the base of operations, or if
there is no base of operations, the place from which
Line 7.
Multiply the amount shown on Line 6 by the allocating
the service is directed or controlled is within
fraction shown on Line 5. This is the portion of your net
Pennsylvania; or the base of operations or the place
profits from business or farm income subject to tax in
from which the service is directed or controlled is
Pennsylvania. Enter the amount on Line 4 of PA-40.
PAGE 2
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