PA-40 Schedule SP: 2024 PA Schedule SP - Special Tax Forgiveness (PA-40 SP) (2024)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024
PA-40 Schedule SP is used to claim Pennsylvania’s Special Tax Forgiveness Credit, which can reduce all or part of an eligible taxpayer’s Pennsylvania personal income tax liability. It reports filing status, dependent children and eligibility income, and calculates the credit.
Who files this form
Complete and include 2024 PA-40 Schedule SP with your original PA-40 if you claim the Tax Forgiveness Credit on PA-40, Line 21. The credit can reduce all or part of an eligible taxpayer’s Pennsylvania personal income tax liability.
Eligibility depends on your Pennsylvania tax status, whether someone claims you as a dependent, and your eligibility income. If you are a dependent on another taxpayer’s federal return, you cannot claim Tax Forgiveness unless that taxpayer also qualifies.
Nonresidents and part-year residents may claim the credit if they meet all eligibility requirements.
If you discover income changes or changes to information in Sections I, II, or III after filing, include an amended Schedule SP with Schedule PA-40 X. Explain changes affecting the credit in Section III on page 2 of Schedule PA-40 X.
What you'll need
Have these items available to complete the schedule:
- Your PA-40: Schedule SP uses amounts from Lines 9, 12, and 22.
- Names and Social Security numbers: Include your spouse’s information even if you file separately.
- Income information: Include Pennsylvania taxable income and the nontaxable income required by Schedule SP. Married claimants must include both spouses’ eligibility income.
- Dependent information: Each child’s name, age, relationship to you, and Social Security number, plus your 2024 federal return to identify the children you claimed.
Additional attachments may be needed:
- First-time Schedule SP filers, or filers claiming a new dependent for the first time, should include copies of birth certificates and Social Security cards for all dependents listed in Section II.
- Include pages 1 and 2 of your federal return if you claim an adult child, adopted child, foster child, or child whose last name differs from yours.
- Nonresidents and part-year residents filing a paper PA-40 must include pages 1 and 2 of their federal return.
- If you claim more than nine dependent children, include additional Schedules SP.
- If you claim a foster child but the foster care program did not place the child in your home, or you received no foster care payments, submit a written explanation that there is no foster-parent income to report and explain the child’s relationship to you.
How to file
Submit Schedule SP with your PA-40, rather than as a separate credit claim. The supplied text does not provide a mailing address or e-filing directions.
- Enter identifying information and answer the eligibility questions.
- Select your Tax Forgiveness filing status in Section I and list qualifying dependent children in Section II.
- Calculate eligibility income in Section III using the columns required for your status.
- Use the appropriate Eligibility Income Table and your dependent count to find the credit percentage. Enter its decimal equivalent on Line 15.
- In Section IV, subtract the resident credit from your PA tax liability, then multiply the result by the decimal on Line 15.
- Enter the credit on Schedule SP, Line 16, and PA-40, Line 21.
Use whole-dollar amounts. Drop amounts below $0.50 and round amounts of $0.50 or more up to the next dollar.
Married taxpayers claiming Tax Forgiveness on separate returns must report the same Schedule SP information, including dependents and joint eligibility income, and include a Schedule SP with each PA-40.
Common mistakes
- Leaving out a spouse’s income or Social Security number. Filing separately does not provide an advantage for Tax Forgiveness. Married claimants must report joint eligibility income and include the spouse’s SSN.
- Claiming the credit when the dependency questions disqualify you. If you answer “Yes” to being a dependent and “No” to whether that taxpayer qualifies for Tax Forgiveness, you cannot claim the credit.
- Listing children you did not claim on your 2024 federal return. The form says to claim only children you claimed as dependents on that return.
- Missing a required federal-return attachment. Include pages 1 and 2 when claiming an adult child, adopted child, foster child, or child with a different last name.
- Overlooking outside-Pennsylvania income as a reciprocal-state resident. If you have Pennsylvania-taxable income other than compensation, the caution requires Line 6 to include nontaxable income earned outside Pennsylvania and compensation exempt from Pennsylvania tax because of reciprocal-state residency.
Questions people ask
Can Tax Forgiveness help if I have not paid Pennsylvania income tax?
Yes. The credit can forgive eligible taxpayers’ liabilities even if they have not paid Pennsylvania personal income tax. It can also produce a state tax refund for some taxpayers.
Can a full-time student claim the credit?
A full-time student claimed on a parent’s federal return cannot claim the credit unless the parents qualify for Tax Forgiveness. The student must file their own tax return and Schedule SP to claim it.
Does eligibility income include only taxable income?
No. It includes Pennsylvania taxable income and the nontaxable income required on Schedule SP. Lines 2 through 10 cover items such as alimony, gifts, inheritances, and certain educational assistance.
Do Social Security benefits count on Line 10?
No. The instructions say not to include Social Security and Railroad Retirement Benefits on Line 10 when calculating eligibility income.
Can I claim an adult child as a dependent?
Yes, if the child meets the Schedule SP dependent-child rules and is claimed on your federal return. Include pages 1 and 2 of your federal return when claiming an adult child.