[Anonymous]

So I’m preparing tax return for a friend who lives/works in PA

Town he works in: Phoenixville

Town he lives in: Norristown

Filing for Federal/State using ProSystem is simple enough, however, I learned I also have to file for local tax? Is this something that needs to be done in the software or different filing? I work/live in NJ and have no idea about PA.

Also, his wife has an ITIN which is used for tax purposes…can this be used as SSN?

Please, any help is really really appreciated! Thank you so much!!

[Anonymous]

The local tax in PA is separate from the federal and state. There are different tax collectors depending the county you live in. I used to live close to Phoenixville and the collector was Berkheimer (see link below). It is usually simple and can be filed online. Make sure your client didn't move in the middle of the year to a different county cause you may have to file two local returns with their appropriate income tax share. That happened to me one year. Sometimes the also change tax collectors for the area. About the SSN question I'm not familiarized. Hope this helps.

https://www.hab-inc.com

[Anonymous]

Thank you!! However, I put in locality number in the ProSystem and it produced PAC CLGS. Is this okay? Or do I have to file separately online? Thank you for your help.

[Anonymous]

Also, is it okay to claim my sister dependent on my parents' return this year even though wasn't considered dependent in the prior year?

She is 24, college student, lives at my parents' house and is 100% supported by them!

[Anonymous]

Bump!!

[taxgeek83]

I have no idea about the PA thing, but the ITIN should be okay, but will likely preclude the taxpayer from claiming certain credits such as the EITC. Search ITIN on the IRS website.

As far as the sister dependent issue, if she lived with your parents all year, did not earn any income (or the income was under the threshold – $3,950 I think- check me on that) and they paid all of her support they should be able to claim her (by my understanding). Look up the rules for “qualifying relative.”

https://www.irs.gov/publications/p17/ch03.html#en_US_2014_publink1000170933

[Anonymous]

She did earn income over $3950…so then she can't be claimed dependent even though she lived at home, full time college student…etc?

[taxgeek83]

Correct – to meet the qualifying child age test she would have to be a student under age 24 at the end of 2014. So essentially she will be filing her own return to get her withholding back, and likewise claim any education credit she is entitled to.

The rules are kind of tricky and trip me up every year. I always have to go back and double check when doing returns. Especially when it gets into EITC and child tax credit issues, which each have their own set of rules.

[Anonymous]

She was born in 1991, so in 2014 she was 23 thus under the age of 24.

However, it is my understanding that it doesn't matter how much income she earns, she would be claimed dependent because she's a child. She lived at home and didn't provide support for herself.

She files to get federal tax back. Correct me if I'm wrong.

[taxgeek83]

When did she turn 24? If it was in 2015 then you are correct – there is no income test to be a qualifying child. As long as she was a student and Mom & Dad paid for everything – look up the definition of “student” for the qualifying child test though. I can't remember if student means full time or half time, or if they had to be in school all year or just for one semester.

If she turned 24 before the end of 2014, however, she won't meet the age test to be a qualifying child.

[stoleway]

If she was 23 in 2014, she can be claimed as a dependent since 2014 is the tax year we are talking about. Your parents will not be able to claim her for 2015 tax year. the ceiling does not apply if the dependent is a child of the tax payer is under age 19 at the end of the calendar year or a full-time student at under age 24 at the end of the calendar year.

Apart from being claimed as a dependent, Your sister should file a separate tax return if any of the following applies to her

1.Her unearned income was more than $1,000.

2.Her earned income was more than $6,200.

3.Her gross income was more than the larger of

a.$1,000, or

b.Her earned income (up to $5,850) plus $350.

If you want to be convinced whether your sister can be claimed as dependent or not, simply follow the link below and answer some few questions on the irs website. The system will tell you if your sister qualifies or not

https://www.irs.gov/uac/Who-Can-I-Claim-as-a-Dependent%3F

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Anonymous]

Thank you so much for all the help!! This is so simple yet age and income trips me off. On the IRS website, she is considered dependent but still I had to confirm here.

Her b-day is in March, so she is 24 now (turned 24 in March, 2015). So she would be considered dependent even though she earned more than $3500. Yes, I will file for her separately since she does have income more than above mentioned. I just wanted to claim her dependent on my parents'. Thank you again!!!

[taxgeek83]

Seems simple until you realize that there is a different age/income/whatever else test for seemingly every line item on the 1040!! Kind of ridiculous if you ask me, but then again, that's the IRC for ya. 😉

[Anonymous]

I agree…lucky us, we have to deal with them for rest of our life:)

I swear it's going to drive me crazy, I had to make sure 3x that 1991 – 2014 is 23yrs old. Tax season is driving me crazy.

[Anonymous]

I don't have anything helpful to add since your questions have already been answered, but I spent a few hours yesterday preparing PA local returns for some of my personal tax clients so I just wanted to chime in to let you know you're not alone in being confused. 🙂 Especially when you're coming up with a refund due to working in a different locality than you live in. In those cases the person is almost never actually entitled to a refund because of the way they do things there, but it was certainly giving me a headache.

I actually used to live in PA until I moved to Virginia for college and I'm very glad I decided to stay where there's personal property tax instead of local income tax. Although I now do those returns for businesses at work, so I suppose if it's not one thing it's the other. Oh, I did want to mention one thing. The Berkheimer website lets you set up a profile with them that you can then file multiple local returns on for the localities they represent. So if you file local returns for multiple clients that's a convenient way to keep all of your returns in one place and you can download copies form there at any time of the returns you've filed with them.

[Anonymous]

Thank you so much!! I was able to put in locality name in ProSystem and that came with client owing money. However, on the Berkheimer website, it came up as $0. Do you recommend just filing through Berkheimer instead of ProSystem? I prefer that better than ProSystem; I'll file Federal/State on there but local from Berkheimer. What do you think?

[Author]

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