Finance - Earned Income Tax - Resident Filing

Every full year or partial year resident must file a local tax return if they have earned income regardless of age. Interest, dividends, social security, capital gains, lottery winnings, unemployment, 3rd party sick pay, insurance proceeds, gifts, bequests, inheritances and active duty pay are not taxable for the upcoming tax year. Partial year residents should list the date they moved into or out of Lower Macungie Township on the tax return.

Our tax returns are set up with two separate columns to enable spouses to file on the same return. Each spouse must list the amounts that pertain to them as individuals in one of the columns. Wages, taxes withheld, net profits/losses, employee business expenses or overpayments of a spouse MAY NOT be crossed used against the other spouse as all records are kept as individual files. If spouses are filing on separate returns, the social security number of the spouse not filing on the return should not be listed. If spouses are filing on the same return but one spouse has no income, the column for the spouse with no income should not be left blank. A -0- should be indicated and the reason why in the column (housewife, retired, unemployed, etc.).

Due to the passage of Act 166 by the state of Pennsylvania, PA state forms should be used to verify net profits/losses and employee business expenses. If the taxpayer does not have access to these state forms, they can be obtained through the state website

If no wage amount is listed on a W2 by an employer in box 18 (Local wages, etc) or the amount in the local wage box is known to be in error or not to be the full wages for the year, the state wage box amount (box 16) should be used.

Any amount listed on the tax return MUST HAVE readable paperwork remitted to verify the amount used. If only one form is received such as a 1099, a copy can be made and remitted with the tax return. Sometimes reportable income may come about with an unusual circumstance for which no paperwork is received. The resident should include a note explaining what the miscellaneous income represents and why there is no verifying paperwork. This will save needless correspondence questioning these amounts.

No refunds are given for Philadelphia/Pittsburgh withheld tax as no reciprocal agreement is in tact. These two cities keep all tax withheld. If a municipality is on the distressed list and has no agreement to remit the additional tax withheld at the higher rate than 1%, this also will not be refunded as the additional tax will not be forwarded to Lower Macungie Township. Out of state tax will not be refunded as it cannot be obtained. Up to 1% of the tax withheld (LMT's tax rate) by an employer located in one of these areas can be applied toward the resident's tax liability. The resident would not have to pay the tax twice even though Lower Macungie cannot claim any of the tax.

If a resident is self employed or working for an employer who is not required to withhold the local wage tax due to the employer's physical location, the resident should make quarterly estimated tax payments.

Any resident working for an employer who does withhold the local wage tax should be sure their employer is reporting their place of residence correctly as Lower Macungie Township. Each year, thousands of claims must be sent to locate local wage tax because the collector is being misinformed by the employer as to the employee's place of residence. (Ex: A Lower Macungie Township Allentown address can be miscoded to North Whitehall, South Whitehall, Upper Macungie, City of Allentown, Salisbury Township or Hanover Township). It can sometimes take months to locate the missing taxes the resident has paid.