Philly residents with dividend checks and other "unearned income" need to cough up a School Income Tax, which has been in place since the '60s to fund local public schools. A not-so-fun fact for filers is that the deadline to shell out 3.75% to the City coincides with the taxman's favorite day, April 15.
If you're laying your head down each night within city limits and your pockets are getting lined with stuff like S-Corp distributions, royalties, or gambling winnings, you're on the hook to file and pay, according to information from the city’s website. And do it on time, or else you'll find yourself footing the bill for extra charges. Oh, and don't mix this up with the Real Estate Tax—yeah, those taxes go to schools too, but the School Income Tax? It's a whole different ball game.
Scratching your head over what counts as unearned income? The City breaks it down: dividends, royalties, S-Corp distributions, gambling winnings, certain interests, and the capital gains from rapid property sales—it's all fair game. In the Fiscal Year 2023, the School District of Philadelphia bagged upwards of $60 million from these taxes. But take note, your regular savings account interest and government bonds are given a pass from this tax, reported the city’s website.
For those who want to keep things simple, the Department of Revenue doesn't mail you the forms, but you can still file and pay online at the Philadelphia Tax Center. Paper versions exist on their site, but who needs that when you can click through the process online swiftly, easily, and securely? When it's time to part with your cash, choose the eCheck option, and you'll dodge processing fees—a small condolence.
Just remember, to file returns, you'll need to create a username and password on the Tax Center but paying doesn’t require a sign-in. First-timers will need to verify their identity to access existing tax accounts. Or, for the tech-savvy, there's always the tax preparation software approved by the Department’s bigwigs, with regulations available on their website for all to see.
