If you are not a resident of Pennsylvania but you have certain income from sources in Pennsylvania, you are generally subject to Pennsylvania state income tax on that income and would have to file a Pennsylvania state income tax return.
According to the Pennsylvania Department of Revenue, Pennsylvania taxes nonresidents on compensation for services performed in Pennsylvania, unless you are a resident of Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia. Pennsylvania has reciprocal tax agreements with those states. If you are a resident of one of these states, you would be subject to state income tax in your home state and not in Pennsylvania. Your employer in Pennsylvania should withhold your applicable state’s income tax.
The reciprocal tax agreements apply to salaries, wages and most compensation reported on your W-2 form. The agreements do not apply to miscellaneous and non-employee compensation. They also do not apply to Ohio residents who are shareholder-employees who perform services in Pennsylvania for an S corporation in which they have a 20 percent or greater interest.
If you are a resident of a state that does not have a reciprocal tax agreement with Pennsylvania and you work in Pennsylvania, your employer should separately report your Pennsylvania wages on your W-2 form. If not, you can apportion your income on Pennsylvania Schedule NRH.
The Pennsylvania Department of Revenue points out that if you are a nonresident but you receive income from an early retirement incentive plan, deferred compensation plan, or from exercising stock option for work you performed in Pennsylvania, that income may be fully or partially taxable in Pennsylvania. You would generally have to determine the taxable portion based on the number of days you worked in Pennsylvania or the amount of time you spent in Pennsylvania.
Nonresidents are subject to Pennsylvania state income tax on net income from operating a business, profession or farm in Pennsylvania. If you have a business with income from sources inside and outside Pennsylvania, you would determine the portion applicable to Pennsylvania by keeping separate accounts and records. Otherwise, you would have to apportion your income on Pennsylvania Schedule NRH.
Nonresidents who sell, exchange or dispose of tangible or real property located in Pennsylvania would be subject to state income tax on the gain. But if you move into Pennsylvania and sell property in another state before moving, you would not be subject to Pennsylvania tax on the gain. And you may qualify to exclude the gain on the sale of your principal residence in Pennsylvania.
Nonresidents are subject to Pennsylvania tax on net income from rental property located in Pennsylvania and on income from royalties, patents and copyrights for the use of property in Pennsylvania.
If you are a nonresident partner in a partnership or a shareholder in an S corporation located in Pennsylvania, you are subject to Pennsylvania state tax on your share of the income, whether or not distributed.
Nonresidents are not subject to Pennsylvania tax on ordinary interest and dividend income, even if the income is from sources in Pennsylvania. And nonresidents are not subject to Pennsylvania tax on gains from the sale, exchange or disposition of intangible property such as stocks and bonds.
If you are a nonresident and have gambling and lottery winnings in Pennsylvania, you would be subject to Pennsylvania state tax, except for prizes from the Pennsylvania Lottery.
According to the Pennsylvania Department of Revenue, if you are a nonresident and you received total Pennsylvania gross taxable income of more than $33 (for 2013), you must file a Pennsylvania tax return even if no tax is due. You would also have to file a return if you incurred a loss from any transaction as an individual, sole proprietor, partner in a partnership, or shareholder in a Pennsylvania S corporation.
Sources:
Determining Residency for PA Personal Income Tax Purposes (REV-611 and 612), Pennsylvania Department of Revenue
Instructions for Nonresidents and Part-Year Residents, Pennsylvania Department of Revenue
Pennsylvania Personal Income Tax Return Instructions, Pennsylvania Department of Revenue
