Q&A with the Pennsylvania Department of Revenue

Scenario: claiming business expenses

Sep 25, 2014
Q:

Since a W-2 is issued with no Federal or PA Withholding (only FICA and Medicare Tax), is there any preference for:

a) Filing a Schedule C and claiming business expenses?

OR

b) Claiming the expenses on a UE form, as long as the net amount is reported on line 1 of the PA return?

A:

Even though statutory employees receive W-2 forms instead of 1099 forms, the form does not control how the statutory employee’s income is reported for PA PIT purposes.
Most, if not all, statutory employees receive non-employee compensation for their services. Consequently, their income should be reported as compensation and Schedule UE may be used to claim expenses associated with generating the income. If a statutory employee’s activities meet the “commercial enterprise test”, then his income classified as “business income” and his income and expenses can be reported on Schedule C.

1 comment

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  • assignmentman writing service | Mar 15, 2017
    This way if employees received all kinds of things then the compensations must benefit them or their family members. with out it it's waste of paying. They must sort out which schedule works better.

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