PENNCREST Wage Tax Office

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Definitions

“Earned Income” – Salaries, wages, commissions, bonuses, incentive payments, fees, tips and other compensation received by a person or his personal representative for services rendered, whether directly or through an agent, and whether in cash or in property; not including, however, wages or compensation paid to persons on active military services, periodic payments for sickness and disability other than regular wages received during a period of sickness, disability or retirement or payments arising under workman’s compensation acts, occupational disease acts and similar legislation, or payments commonly recognized as old age benefits, retirement pay or pension 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, or unemployment compensation payments made by any governmental agency or payments to reimburse expenses, or payments made by employers or labor unions for wages and salary supplemental programs, including but not limited to programs covering hospitalization, sickness, disability or death, supplemental unemployment benefits, strike benefits, social security and retirement.

Compensation as determined under section 303 of the act of March 4, 1971 (P.L. 6, No. 2) known as the “Tax Reform Code of 1971”, and regulations in 61 Pa. Code Pt I Subpt. B Art. V (relating to personal income tax). Employee business expenses are allowable deductions as determined under Article III of the “ Tax Reform Code of 1971”. The amount of any housing allowance provided to a member of the clergy shall not be taxable as earned income.

“Net Profits” – The net income from the operation of a business, profession, or other activity, except corporations, after provision for all costs and expenses incurred in the conduct thereof, determined either on a cash or accrual basis in accordance with the accounting system and used in such business, profession, or other activity, but without deduction of taxes based on income.

Determined under section 303 of the act of March 4, 1971 (P.L. 6 No. 2), known as the “Tax reform Code of 1971”, and regulations in61 Pa. Code Pt I Subpt. B Art. V (relating to personal income tax). The term does not include income which is not paid for services provided and which is in the nature of earnings from an investment. For taxpayers engaged in the business, profession or activity of farming, the term shall not include:
(1) any interest earnings generated from any monetary accounts or investment instruments of the farming business;
(2) any gain on the sale of farm machinery;
(3) any gain on the sale of livestock held twelve months or more for draft, breeding or dairy purposes; and
(4) any gain on the sale of other capital assets of the farm.