Instructions for Nonresidents and Part-Year Residents
Nonresidents of Pennsylvania. PA law taxes the income you earn, receive and realize from PA sources.
Part-Year Residents of Pennsylvania. Part-year residents are subject to PA personal income tax on all income earned, received and realized from all sources when residents of PA. Part-year residents are also subject to PA tax on income earned, received and realized from sources within PA when they were not a PA residents. Part-year residents are not subject to PA tax on ordinary interest, dividends, gains, intangible property or gambling and lottery winnings from PA sources while a nonresident.
As a nonresident, you may apportion income earned within and outside PA. Apportion PA-taxable compensation when your employer does not separately report PA wages on Form W-2. You must apportion income (loss) from operating a business within and outside Pennsylvania unlesss you maintain books and records that clearly substantiate and separately allocate your PA-source receipts, expenses, liabilities, etc.
Allocating Income (Loss)
As a nonresident, you may allocate income (loss) from a business when you maintain separate books and records.
- Allocate income (loss) from real or tangible property located within Pennsylvania.
- Allocate gain (loss) on the sale, exchange or disposition of real or tangible personal property within Pennsylvania.
- Allocate income (loss) from rental property, royalties, patents or copyrights in Pennsylvania.
- Allocate winnings from gambling and lotteries from PA sources.
As a nonresident, you pay PA income tax on compensation for services performed in Pennsylvania. Your PA employer should report and withhold PA tax from your PA-taxable compensation. If your employer does not report or incorrectly reports your PA taxable compensation, you must file PA Schedule NRH to apportion compensation and any allowable employee business expenses.
Interest Income, Dividend Income and Gain from the Sale of Intangible Property
Nonresidents do not pay PA income tax on ordinary interest, such as interest from personal savings and checking accounts, and dividends.
Nonresidents do not pay PA income tax on gains realized on the sale, exchange or disposition of intangible personal property, such as stocks and bonds, nor may nonresidents use the loss from such sales against other taxable gains. Nonresidents must pay PA income tax on gains from the sale, exchange or disposition of real property in Pennsylvania.
Net Income (Loss) from the Operation of a Business, Profession or Farm
Nonresidents must report net profit (loss) from business or farm operations.
Net Gain (Loss) from the Sale, Exchange or Disposition of Property
Nonresidents must report net income (loss) from the sale of real or tangible property in Pennsylvania.
Net Income (Loss) from Rents, Royalties, Patents and Copyrights
Nonresidents must report net income (loss) from rental property in Pennsylvania and income from royalties, patents and copyrights for the use of the property in Pennsylvania.
Income from Estates or Trusts
Nonresidents must report net income received as beneficiaries of estates or trusts as reported on PA Schedules NRK-1.
Gambling and Lottery Winnings
Nonresident must report winnings from gambling and lotteries in Pennsylvania, but not prizes awarded by the PA Lottery.
Nonresident Partners and Shareholders of PA S Corporations
Report your share of partnership or PA S corporation income (loss), whether distributed or not, in the same PA income class in which the partnership or PA S corporation realized the income (loss). Enclose a copy of each PA Schedule NRK-1 you receive.
IMPORTANT: If the partnership only provides a federal Schedule K-1, you must classify the income (loss) according to the instructions for each PA income class.