New Pennsylvania Income Tax Withholding

The Act of October 30, 2017, No. 43, P.L. 672, amended the Tax Reform Code of 1971 by adding new requirements for the withholding of Pennsylvania income tax from payments of Pennsylvania source income to nonresidents, and the Department of Revenue has recently published some guidelines regarding the new rules in its bimonthly newsletter, “Tax Update” (No. 197, June/July 2018), and on its website.  Although the Department of Revenue describes these new withholding rules in very broad terms, it appears that these new rules do not apply to distributions from estates and trusts to nonresident beneficiaries.

Specifically, the Act adopted new withholding rules for the following:

  • Payments of Pennsylvania source income for which a Form 1099-MISC is required.  (See new Code § 316.2, added by Act § 13.)  This would include payments made in the course of a trade or business for things like non-employee compensation for services performed in Pennsylvania, or royalties paid for mineral interests in Pennsylvania.
  • Payments by lessees of Pennsylvania real estate to a nonresident lessor, but only for lease payments in the course of a trade or business.  (See new Code § 324.4, added by Act § 25.)  According to the Department of Revenue, this does not apply to residential leases.

So these new provisions might apply to an estate or trust, but only if the estate or trust were conducting a trade or business and were making the kinds of payments described above.  Even then, other exceptions might apply.

New Webcalculators for Life Estates, Remainders, and Annuities

In addition to the domain change that has been announced for Webcalculators, two new calculators have been added:

  • Factors to determine the present value of the income interest and remainder for terms of years, one life, two lives, and the shorter of a life or a term of years.
  • Factors to determine the present value of an annuity for terms of years, one life, two lives, and the shorter of a life or a term of years.

These computations are all based on tables published by the Internal Revenue Service.  The intention is to add custom computations (such as for three or more lives) for paid subscribers, but leave the tables-based computations accessible to the public for free.  (Registration is required.)

Webcalculators Domain Change

As previously announced, I’ve created an on-line service that provides specialized calculators for estate and tax planning issues.  Although the service is still known as Webcalculators, the domain has been changed to wcalcs.com.  Previous links and references to the service on this website have been updated to reflect that change.

Currently, the following calculators are available:

  • Benefit/Cost of Gifts of Appreciating Property
  • Benefit/Cost of Grantor Trusts
  • Gift Tax on Net-Net Gifts
  • Income Tax on Estates and Trusts
  • Income Tax Changes for Individuals in 2018
  • Estate Tax Savings through Credit Exclusion Gifts
  • Required Minimum  Distributions
  • Annuity Factors
  • Income (Life Estate) and Remainder Factors
  • Value of  Income and ‘5 & 5’ Power
  • Pennsylvania Inheritance Tax
  • Interest on Federal Taxes
  • Interest on Pennsylvania Taxes

For additional information about these calculators, see Webcalculators at http://wcalcs.com.