PA-40 Schedule NRH: PA Schedule NRH - Non-Resident Apportionment (PA-40 NRH) (Revision)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024, 2025, 2026
PA Schedule NRH determines the Pennsylvania share of a nonresident’s compensation and allowable employee business expenses. It also calculates the Pennsylvania share of net profits from a business, profession, or farm when income comes from sources within and outside Pennsylvania
Who files this form
A nonresident employee who works both within and outside Pennsylvania must complete Section I for each employer that:
- Did not report Pennsylvania gross-taxable compensation on Form W-2.
- Reported an incorrect amount of Pennsylvania gross-taxable compensation on Form W-2.
- Paid Pennsylvania gross-taxable compensation for which the employee incurred unreimbursed employee business expenses.
If your employer reported your Pennsylvania compensation correctly and you had no unreimbursed employee business expenses, you do not need this schedule.
Complete Section II if your business, profession, or farm earns income within and outside Pennsylvania and your accounts and records do not clearly show the Pennsylvania income. If your records accurately show that income, report it based on those records instead.
What you'll need
For employee compensation and expenses, have:
- Your Form(s) W-2 or pay stubs showing gross-taxable compensation.
- Your employer's name, address, and federal employer identification number.
- Working-day totals or business-volume totals, depending on your apportionment method.
- A completed PA Schedule UE if you are apportioning allowable employee business expenses.
Include a signed employer statement verifying the days worked outside Pennsylvania when using the working-day method. For the business-volume method, include a signed employer statement showing the actual amount earned while working outside Pennsylvania.
If you believe the Pennsylvania compensation on your W-2 is incorrect, attach a separate statement explaining why.
For Section II, gather your business locations and types, property values, compensation paid, sales totals, and total net profits from PA Schedule C or PA Schedule F. The calculation uses amounts both everywhere and within Pennsylvania.
How to file
Submit Schedule NRH with your PA-40. Complete a separate Schedule NRH for each employer.
For employee compensation:
- Use the business-volume method if your income depends directly on business earned or received through Pennsylvania activity. Otherwise, use the working-day method. Do not use both.
- Complete Part C only if your employer omitted or incorrectly reported Pennsylvania gross-taxable compensation on your W-2.
- Complete PA Schedule UE and Part D to apportion allowable employee business expenses. If you complete Part D, also complete Part E.
- Transfer apportioned compensation to PA-40 Line 1a and apportioned expenses to Line 1b. Include the net taxable compensation from Part E, Line 22, on PA-40 Line 1c. If you completed Part C and have no allowable employee business expenses, include Part C, Line 12, on Line 1c.
Enclose the schedule, your Form(s) W-2, the required employer verification, and your completed PA Schedule UE when applicable with your PA-40.
For business, profession, or farm income, complete Section II when required, enclose it with your PA-40, and include the allocated net profits from Section II, Line 7, on PA-40 Line 4.
Common mistakes
- Using both apportionment methods. Use either working days or business volume, not both.
- Treating personal-convenience workdays as days outside Pennsylvania. Days worked outside Pennsylvania for personal convenience or tax purposes count as Pennsylvania days on Line 4. Outside-Pennsylvania treatment applies when your employer required you to perform duties outside the state.
- Leaving out employer verification. The required signed employer statement helps avoid processing delays.
- Omitting business generated by Pennsylvania services. For Line 7, include outside-Pennsylvania transactions that directly resulted from services performed in Pennsylvania.
- Changing W-2 compensation without an explanation. Include a separate statement explaining why you believe the reported amount is incorrect.
- Including expenses Pennsylvania does not allow. Do not include those expenses on PA Schedule UE.
- Entering compensation on both Lines 17 and 18. You should not have amounts on both lines unless you received more than one W-2 from the same employer.
Questions people ask
Do I need Schedule NRH if my W-2 correctly reports my Pennsylvania wages?
Not if you also had no unreimbursed employee business expenses. If you incurred those expenses in earning Pennsylvania compensation, complete the schedule for that employer.
Can I use one schedule for all my employers?
No. Complete a separate Schedule NRH for each employer for which the schedule is required.
How do I calculate the employee apportionment fraction?
For the working-day method, divide Pennsylvania working days on Line 4 by total working days on Line 3. For the business-volume method, divide Line 7 by Line 6. Carry the calculation to at least six decimal places.
What if only one or two business apportionment factors apply in Section II?
Divide the total on Line 4 by the number of factors that apply, based on the entries in Column A. Divide by two if two factors apply. If only one applies, use the Line 4 figure.