Taming the Dragon — A Practical Guide to The Pennsylvania Local Earned Income Tax
- Topics:
- Payroll
- Tags:
- Finance,
- Income,
- Income Tax,
- Operational Accounting,
- Payroll,
- Payroll Solutions,
- Payroll Taxes.com
- Source:
- Payroll Taxes.com
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Overview: This article defines on of the ways of deciding payroll with the help of small story. In the legend of Hercules, Hercules had to perform a number of labors. In the second labor he was faced with the task of defeating the Hydra, a dragon with nine heads, one of which was immortal. If he cut off one of the heads, it immediately grew back two heads, thus multiplying the difficulty of his task. Well, to many payroll professionals, dealing with the Pennsylvania Local Earned Income Tax is like dealing with the Hydra. It has so many heads that seem to multiply with each new employee. But dealing with the Earned Income Tax (EIT) does not have to be like fighting an uncontrollable dragon. It is possible to tame the dragon and gain control. In this guide we will try to clear away the confusion as well as provide practical direction for administering the withholding and remitting of the local EIT. This Earned Income Tax (EIT) is commonly referred to as a “local tax” or “wage tax.” Earned income is now defined as follows: “Compensation means remuneration received for services whether directly or through an agent and whether paid in cash or property. Compensation includes salaries, wages, tips, gratuities, commissions, bonuses, incentive payments, vacation or holiday pay, termination or severance pay, sick leave pay (unless excludable), reimbursements and allowance in excess of allowable business expenses, and payments realized in the form of property or a discharge of indebtedness, unless specifically excludable from income.”
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