On an email reminder sent last week, the City of Philadelphia requires businesses to give notifications to their employees about a) The Federal Earned Income Tax Credit (EITC) and b) Philadelphia Wage Tax Refund Program on electronic or printed copy and no later than February 1, 2022.
The Federal Earned Income Tax Credit (EITC)
The City of Philadelphia wants every Philadelphian who is eligible, to receive the federal Earned Income Tax Credit (EITC). This federal credit is for low- to moderate-income individuals and families. With an average benefit of about $2,500 per tax return, EITC provides hard-working Americans with a needed financial boost every year. Despite this, thousands of Philadelphia residents are not claiming EITC; the result is millions of dollars left out of our local economy. You can claim this credit by filing the Federal personal tax return (1040).
The City of Philadelphia Income-based Wage Tax Refund Program
The City also reduces the rate on Wage and Net Profit Taxes to 1.5% for taxpayers who are eligible and complete Pennsylvania Special Tax Forgiveness (“Schedule SP”) of the Pennsylvania Personal Income Tax Return. Eligible Philadelphia Wage taxpayers may request a refund from the Philadelphia Department of Revenue by submitting an Income-based Wage Tax Petition.
What does your business have to do to promote the Income-based Wage Tax refund?
Employers may not reduce their employees’ Wage Tax withholding. We ask employers to send employees who receive a W-2, and earned less than $100,000, an Income-based Wage Tax Petition. Eligible employees who file a petition can receive a refund of Wage Tax paid in excess of 1.5% for the previous year.
For the Income-based Wage Tax Petition, you will have to visit the link below . You can download and print the document, or share this webpage with your Philadelphia employees: