PA-40 Schedule W: PA Schedule W -- Employment Incentive Payment Credit (PA-40 W) (Revision)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024, 2025, 2026
PA-40 Schedule W figures the Pennsylvania Employment Incentive Payment Credit for employers who hired qualifying public-assistance recipients.
Who files this form
PA Schedule W is used to calculate an Employment Incentive Payment Credit carryover claimed on a Pennsylvania tax return. It includes calculations for individuals, fiduciaries, corporations, and other organizations.
Important limitation: The printed text says new credits can no longer be awarded. The last credits awarded were for tax years beginning before Jan. 1, 2010, and unused credits could be carried forward and used for tax years beginning before Jan. 1, 2020. The supplied text does not establish eligibility to claim this credit for 2024, 2025, or 2026.
What you'll need
- A complete copy of Schedule W from the most recent tax year in which you used an Employment Incentive Payment Credit. The copy must include an amount on Line 25.
- Your previous year's return showing the available carryover credit.
- Your applicable Pennsylvania return or report, such as PA-40, PA-41, or RCT-101, for the tax liability and other credit amounts used in the calculation.
- Your RK-1 or NRK-1, if a partnership or PA S corporation reported a share of its credits to you.
The form also has fields for your business name, tax year ending date, and identifying numbers.
How to file
Include Schedule W with your Pennsylvania return. The supplied text does not give a mailing address or e-filing instructions.
To complete the credit calculation:
- Enter the carryover available from the previous year's return on Line 19b.
- Enter that amount on Line 19. The printed instructions also direct partners and shareholders to enter their share of credits reported on RK-1 or NRK-1 here.
- Enter your applicable tax liability on Line 20 and other specified credits on Line 21.
- Subtract Line 21c or 21d from Line 20 for Line 22. If the result is zero or less, enter “0”.
- Multiply Line 22 by .90 for the maximum allowable credit on Line 23.
- Enter the lesser of Line 19 or Line 23 on Line 24 and on the appropriate Pennsylvania return or report.
- Subtract Line 24 from Line 19 for Line 25. If none remains, enter “0”.
Attach the required prior Schedule W to support the carryover. These calculation steps do not override the printed restriction to tax years beginning before Jan. 1, 2020.
Common mistakes
- Leaving out the prior Schedule W. The Department will verify each carryover claimed. Provide a complete copy from the most recent tax year when the credit was used, including an amount on Line 25.
- Completing obsolete lines. Section I is no longer applicable. The printed instructions say Lines 1 through 19a of the previous version are no longer required.
- Forgetting to include Schedule W with the return. The form specifically says to include it with your Pennsylvania return.
Questions people ask
Can a new Employment Incentive Payment Credit be awarded?
No. The printed text says the credit can no longer be awarded. The last credits awarded were for tax years beginning before Jan. 1, 2010.
What tax years does the printed carryover rule cover?
It says unused credits may be carried forward and used for tax years beginning before Jan. 1, 2020.
How is the maximum allowable credit calculated?
Multiply the tax liability on Line 22 by .90. The credit allowed on Line 24 is the lesser of that result or the available credit on Line 19.
What proof of the carryover must I provide?
Provide a complete copy of Schedule W for the most recent tax year in which you used the credit. That schedule must include an amount on Line 25. The Department will verify the carryover amount.