The Pennsylvania Department of Revenue has announced that the deadline to apply for Pennsylvania’s Property Tax/Rent Rebate Program for older adults and residents with disabilities has been extended from June 30, 2012 to December 31, 2012. The program benefits eligible Pennsylvanians who are age 65 and older; widows and widowers age 50 and older; and people with disabilities age 18 and older. A 2006 program expansion increased the income limit from $15,000.00 to $35,000.00 (which excludes half of Social Security income) for homeowners and raises the maximum standard rebate for both homeowners and renters from $500.00 to $650.00, with supplemental rebates that can boost the amount of $975.00. As of May 31, 2012, the Department had received 529,023 rebate applications. Rebates will be distributed starting on July 1, 2012.

(Property Tax/Rent Rebate Program Application Deadline Extended to End of Year, Dept. of Rev., 06/04/2012.)

IMPORTANT CHANGES TO THE LOCAL EARNED INCOME TAX LAW

Effective with the 2009 tax year, business losses from unincorporated businesses or sole member limited liability companies that are taxed as a disregarded entity are no longer allowed to offset earned income, such as wages; however, a loss from one business may be used to offset income from another business.

PA Act 32 of 2008, which amends Act 511 of 1965 (also known as the “Local Tax Enabling Act”), is responsible for the change. What this means to you is that if you have “earned” income and you have a business that reports income and expenses on the Federal and/or the Pennsylvania Schedules C, you are no longer going to be able to reduce the amount of your taxable income by the amount of the loss from the business.

If the loss from the first business is smaller than the income from the second business, Jim will have to pay local earned income tax on the total of his wages and the net business income.

Local earned income tax is assessed at different rates and in different manners in almost every jurisdiction. It is important to know what the rules are for your individual locale.

If you would like more information about Pennsylvania Elder Law, Business Law or Tax Law, please contact an experienced Pennsylvania Attorney who is also a Certified Public Accountant (CPA) via email or phone us at (724) 216.6551 at our Greensburg, Pennsylvania office.

The Iezzi Law Office serves clients in southwestern Pennsylvania, including Greensburg, Pittsburgh, Delmont, Monroeville, Murrysville, Latrobe, Irwin, Uniontown, Connellsville, Indiana, Somerset, and other towns located in Westmoreland County, Allegheny County, Fayette County, Indiana County, and Somerset County.

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IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.