News & Resources

1099 PA Withholding Reminder

Beginning on January 1, 2018, and continuing in 2019, Pennsylvania businesses and non-profits are required to withhold Pennsylvania Personal Income Tax on nonemployee compensation that is paid to nonresident individuals and single-member LLCs that have a nonresident owner for "work performed in PA." The withholding payments should be remitted with your quarterly withholding payments filed through your PA e-Tides account. Through clarification from the PA Department of Revenue, you may use your existing PA employer withholding account number or apply for a new 1099 account number using Form PA-100. The withholding threshold and rate have remained the same for 2019. Withholding is required at a rate of 3.07% for any nonresident vendor/contractor to whom you pay $5,000 or more in one calendar year. If you do not withhold and the amount paid exceeds the $5,000 threshold, you will be subject to interest and penalties on the withholding amounts not paid. There is also the possibility of being required to pay the tax in its entirety if the nonresident vendor/contractor does not file in PA. If unsure of whether the amounts paid to these nonresident vendors/contractors will exceed the $5,000 threshold, we would advise to start withholding with their first payment in 2019. For those of you that are not Pennsylvania businesses, other states are requiring nonresident withholding on nonemployee compensation. Not all states will have the same withholding thresholds or withholding percentages, so you should check into your state's withholding requirement or contact us to help you determine if it is required.