Philadelphia residents who have unearned income, such as dividends from stocks, must file and pay the City’s School Income Tax (SIT). You may have received a reminder in the mail. But even if you didn’t, you owe SIT when you have unearned income.
The due date for SIT is April 15, the same deadline for filing and paying your personal federal income tax return. Now is the time to make the grade.
From dividends to lottery winnings
Funds collected through the School Income Tax go directly to the School District of Philadelphia. In Fiscal Year 2018, neighborhood schools received $48.7 million thanks to SIT.
Both SIT and property taxes help fund the school district, but they are two separate taxes. SIT is based on unearned revenue; examples include:
- Dividends
- Royalties
- S-Corp distributions
- Gambling winnings, including Pennsylvania Lottery cash winnings
- Some types of interest
- Capital Gains from the sale of property (including stocks and bonds) held for less than 6 months
If you received money from any of these sources in 2018, you owe SIT. No School Income Tax is due from interest earned on savings or checking accounts. Capital gains from government issued bonds are also exempt from the School Income Tax.
The best way to file and pay is through the Philadelphia Department of Revenue’s eFile/ePay website. You may also choose to file a paper return and mail it to the Department with your payment. We’ve created a video with line-by-line instructions to file SIT.
Don’t play hooky
SIT makes a big difference to the success of public school students across Philadelphia. But file and pay SIT to keep yourself in good standing.
Through greater and more efficient data sharing with the IRS, the City can find Philadelphia residents who need to pay SIT. Skip out on SIT and you could wind up with costly interest and fines.
