By Eric J. Boyle, Wealth Manager at Crest Financial Group, Guest Writer
The Lehigh Valley continues to experience substantial growth that is attracting new entrepreneurs, employees, and residents every year. As the excitement of relocating settles, the reality of filing taxes in a new state sets in. Few states use a flat tax, however Pennsylvania (PA) is one of them, at 3.07%. Most of PA’s taxable income is derived from compensation, interest, dividends, business profits, and rental income, which are all taxed at the flat rate. Since there is no standard deduction or deduction for dependents, it is important to understand that certain exemptions and deductions exist.
Other taxes that may be unfamiliar for a transplant include real/personal property tax and sales tax. Technically, PA does not collect property tax, but counties, municipalities, and school districts do. Keep an eye out for tax slips from these localities because they are often mistaken as junk mail. You may have noticed while shopping that there is a 6% tax on all retail purchases with the exception of some common exemptions including unprepared food, most clothing, paramedical drugs, and residential heating such as oil, gas, or electricity. Though tax preparation in a new state can be confusing, PA tax forms can be found online at the Pennsylvania Department of Revenue. Remember, you may have to file a tax return in the state you moved from, which could result in a PA credit for taxes paid to other states. Some surrounding states have reciprocal agreements with PA, which could change the way you need to file taxes. If you need help preparing taxes there are plenty of highly qualified local professionals such as CFG Tax Services, which is a division of Crest Financial Group that specializes in individual, family, and small business owner tax preparation and wealth management. They can be contacted at (610) 821-7066. Welcome to Pennsylvania!
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