Earned Income Tax

The Board of Commissioners adopted the Earned Income Tax by resolution. The tax took affect on January 1, 2004. Please contact our Board approved Earned Income Tax Collector, Berkheimer and Associates with any questions.

325-A N. Pottstown Pike
Exton, PA 19341
610-363-7214
www.hab-inc.com

Earned Income Tax Questions & Answers

What is the Earned Income Tax?

A tax applying to gross compensation and/or net profits which is commonly referred to as a "Wage Tax." It is a tax levied against an individual taxpayer's earned income and/or net profits whether the income is from the operation of a business of from wages, commissions, or other sources.

Why is the Earned Income Tax necessary? Why not increase taxes on real estate?

The Earned Income Tax will impact, on a more equitable basis, only those persons most capable of incurring the additional tax liabilities. The elderly living on pensions, unemployed and others on fixed income would have no additional tax liability, except where they have income that would be classified as earned income and/or net profits. In effect, for some residents their share of the tax burden will be decreased.

Who is taxable?

All residents of Lower Moreland Township regardless of age or amount of earned income, would be taxed. In addition, non-residents working in the Township of Lower Moreland are taxed, unless they have a similar tax at a place of residence in Pennsylvania.

If I am subject to the Philadelphia Wage Tax, must I also pay this tax?

No. If employed in Philadelphia, you may use the Philadelphia Wage Tax as a credit against your liability for the Township tax.

How will the Earned Income Tax be collected?

From some, it will be collected at the source of their income by means of withholding by their employers. From others, it will be collected directly either in full or in quarterly installments.

When is the tax due?

The due dates for the quarterly payment are as follows per tax period or fractional quarter:


QuarterPeriod CoveredDue Date

1

Jan/Feb/March

April 30

2

Apr/May/Jun

July 31

3

July/Aug/Sept

Oct 31

4

Oct/Nov/Dec

Jan 31

Final Return

Full Tax Year

April 15


Will I be notified when each tax installment is due?

If the Earned Income Tax is enacted, you will be mailed a packet of forms which must be completed and returned as the appropriate returns are due. The failure to receive notification will not relieve the taxpayer of his responsibility for making payments or filing the required notices.

Is all income subject to the tax?

No, only EARNED INCOME/NET PROFITS are subject to this tax. Earned Income Tax is defined as: Salaries, wages, commissions, bonuses, incentive payments, fees, tips and other compensation received by a person or his/her personal representative for services rendered, whether directly or through an agent, and whether in cash or in property, but not including:

  • wages or compensation paid to persons on active military service;
  • periodic payments for sickness and disability other than regular wages received during a period of sickness, disability or retirement;
  • payments arising under worker's compensation acts, occupational disease acts and similar legislation;
  • payments commonly recognized as old-age benefits, retirement pay or pensions paid to persons retired from service after reaching a specific age or after a stated period of employment; or payments commonly known as public assistance;
  • unemployment compensation payments made by any governmental agency; or payments to reimburse expenses;
  • payments made by employers or labor unions for wage and salary supplemental programs, including, but not limited to programs covering hospitalization, sickness, disability or death, supplemental unemployment benefits, strike benefits, social security and retirements.

Who must file a quarterly return?

In effect, each resident will be responsible for filing a tax return on actual or estimated income each quarter. To be relieved of this obligation every resident whether working, unemployed, or retired including non-working housewives, must file the RESIDENT QUESTIONNAIRE provided by the Tax Collection Office. Residents who are temporarily unemployed are still required to file returns quarterly, whether they have income to report or not. Residents subject to total withholding of their tax by their employer must complete the "Resident Questionnaire". Generally, these residents will not receive or be required to file Quarterly Returns unless they have additional income to report which is not subject to withholding by employer.

Who must file a Final Return?

Every resident who has earned income or could reasonably be expected to have had earned income during the succeeding year must file a Final Return by April 15th whether there is any tax due or not.

Must I File if I receive no taxable income?

Yes, write the facts on the Report Form, sign, and return to the Income Tax Office.

What happens if I do not pay or file the required returns?

Late payments are subject to interest of six percent (6%) per annum on the amount of the tax and an additional Penalty of one-half of one percent (1/2 of 1%) of the amount of the unpaid tax for each month or fraction thereof during which the tax remains unpaid. Taxpayers who refuses or fail to file the Returns or otherwise comply with the terms of the Ordinance or Resolution, may upon conviction be sentenced to pay a fine of not more than Five Hundred Dollars ($500.00) for each offense, and costs in default of payment of said fines and costs, the taxpayer may be imprisoned for a period not exceeding Thirty (30) Days for each offense.

What employers are required to withhold the tax from their employees?

All employers doing business in Lower Moreland Township must withhold the tax from all their employees that are subject to the tax. THERE IS NO OPTION!!

Must those subject to withholding do anything else?

Yes. They must file a Final Return on or before April 15, on the forms provided showing total salary paid and tax withheld. Their employers are required to pay to the Tax Officer, on a quarterly basis, all taxes withheld, and on or about February 28 of the succeeding year the employer will reconcile all earnings paid and taxes withheld for each employee.

If my work status should change from an employer who has been withholding, to and employer in an area who does not withhold - what do I do?

At such time as you are no longer subject to withholding, it becomes the responsibility of the taxpayer to notify the tax office, make future payments and returns.

What happens if I overestimate or underestimate my income?

Adjustments will be made on the following Quarterly or Final Return. Underpayment may be subject to interest and penalty charges.

Are non-residents taxable?

Yes, persons who reside in other areas but work in the Township of Lower Moreland are liable for the tax unless they pay the same tax to their resident community in the Commonwealth of Pennsylvania.

Why should non-residents be subject to the tax?

They, as "daytime citizens," share in the benefits and services such as citizenship provides and therefore must bear their share of the cost of providing them with these services.

Is there any minimum or maximum income or age group?

No. Under state law all earned income is taxable no matter who earns it. The tax is levied on the income not the person.