Cheltenham's Earned Income Tax (EIT) rate is 1.5% total (1.0% Township and 0.5% School District). The School District PSD code is 460301.
On December 16, 2020, the Cheltenham Township Board of Commissioners voted to increase its share of the EIT by 1/2% for a total EIT of 1.5% (1.0% to the Township and 0.5% to the School District). This change takes effect on January 1, 2021. For more information, visit the 2020 Earned Income Tax Referendum page.***
EXACTLY WHAT IS THE “EARNED INCOME TAX”?
Commonly called a “Wage Tax,” it is usually a tax of one percent (1%) on gross wages and/or net profits from a business or profession. For individuals, this means salaries, wages, commissions, bonuses, incentive payments, fees and tips or any other compensation for services, whether in cash or property. For those who conduct businesses, professions and other activities for profit, it means the net profit derived from their operation after deductions of all costs and expenses incurred in the conduct of such businesses have been made.
HOW DO I PAY THE EARNED INCOME TAX?
Employers are required to deduct the full amount of the Earned Income Tax from your pay and remit it to Berkeheimer, the organization hired by the Township to collect EIT. If you are self-employed or employed outside of Pennsylvania, you will be required to file a quarterly return on your own behalf with Berkheimer no later than the last day of the month after the end of each quarter. Fees and penalties may apply for late or incorrect filing. For more information or to e-file, visit: www.berk-e.com.
WHAT INCOME IS SPECIFICALLY EXEMPT FROM THE EARNED INCOME TAX?
Unearned income such as dividends, interest, income from trusts, bonds, insurance and stocks is exempt. Also exempt are payments for sick or disability benefits; old age benefits; retirement pay; pensions, including social security payments; public assistance or unemployment compensation payments made by any governmental agency; and any wages or compensation paid by the United States for active service in the armed forces of the United States, including bonuses or additional compensation for such service. In addition, net profits of corporations subject to or exempt from the Pennsylvania Corporate Net Income Tax of the Pennsylvania Franchise Tax are exempt under state law.
ARE NON-RESIDENTS OF A SCHOOL DISTRICT SUBJECT TO THE EARNED INCOME TAX?
No, your school district cannot tax non-residents. However, if the municipality in which you live has also enacted a “wage tax,” then a non-resident, working in your municipality, would be subject to the tax.
IF THE TAX IS WITHHELD IN ANOTHER COMMUNITY WHERE I WORK, DO I ALSO PAY THE DISTRICT IN WHICH I LIVE?
No, however, it is still required that our Questionnaire be answered by ALL residents.
WHOSE EARNED INCOME TAX WILL BE WITHHELD AT THE SOURCE?
The tax on those persons employed on salary, wage, commission or other compensation basis in their resident district will have their earned income tax withheld at the source.
FROM WHOM WILL THE EARNED INCOME TAX BE COLLECTED DIRECTLY?
The earned income tax will be collected directly from those who are (1) self employed, (2) salaried but self-employed in a side business.
HOW WILL THE EARNED INCOME TAX BE COLLECTED DIRECTLY?
Those persons must file a declaration of the total of such estimated net profits or income, together with the total estimated tax due, with the Earned Income Tax Collector. Proper forms for reporting the quarterly payments will be sent to each person so liable.
MUST ALL TAXPAYERS FILE A FINAL RETURN?
WHAT HAPPENS IF I NEITHER FILE A RETURN NOR PAY THE TAX DUE?
The resolution and/or Ordinance provides for your arrest with a fine not to exceed $500.00 for each offense, plus cost of prosecution, and in default of payment of said fine and costs, to be imprisoned for a period not exceeding 30 days.