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March 27, 2020
2020-0751

Philadelphia nonresident wage tax does not apply to employees ordered to work from home outside of the city for the employer's convenience

The City of Philadelphia Department of Revenue announced on March 26, 2020, that nonresident employees based in Philadelphia are not subject to the Philadelphia Wage Tax during the time they are ordered to work outside of Philadelphia. The guidance was published to address the situation that many employees have been forced to work from home, many for the first time.

Nonresident Wage Tax policy

The City of Philadelphia uses a "requirement of employment" standard that applies to all nonresidents whose base of operation is the employer's location within Philadelphia. Under this standard, a nonresident employee is not subject to the Wage Tax when the employer requires him or her to perform a job outside of Philadelphia (i.e. their home).

Nonresidents who work from home for their own convenience (rather than the need of the employer) are not exempt from the Wage Tax, even with their employers' authorization. On the other hand, if Philadelphia employers require nonresidents to perform duties outside the city, they are exempt from the Wage Tax for the days spent fulfilling that work.

Nonresident employees who mistakenly had Wage Tax withheld during the time they were required to perform their duties from home in 2020, will have the opportunity to file for a refund with a Wage Tax reconciliation form in 2021.

For more information about the City of Philadelphia Wage Tax, go here.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)

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