Fill - Free fillable Form 2021: PA SCHEDULE UE 2101710057 Allowable Employee (Pennsylvania) PDF form

PA-40 UE (EX) MOD 06-21 (FI)

PA Department of Revenue

2101710057

PA SCHEDULE UE

Allowable Employee Business Expenses

2021

OFFICIAL USE ONLY

Describe the duties of the job in which you incurred these expenses

Employer’s Name Employer’s address Employer Identification Number

SECTION I – Direct Employee Business Expenses.

1. Union dues. List union name(s) and amount(s) paid. Enter the total. Submit additional sheets, if needed.

Name of union(s) and amount(s). 1.

2. Work clothes and uniforms. Needed for your employment and not suitable for everyday use.

Description: 2.

3. Small tools and supplies. Needed for your employment and not provided by your employer.

Description: 3.

4. Professional license fees, malpractice insurance and fidelity bond premiums. Required as a

condition of your employment.

Description: 4.

5. Total Direct Employee Business Expenses. Add Lines 1 through 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

SECTION II – Business Travel Expenses.

Vehicle Expenses: Standard Mileage Rate.

6. Enter your total business miles and multiply by the federal standard mileage rate. . . . 6.

Vehicle Expenses: Actual Vehicle Expenses.

7a. Total vehicle miles driven in 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7a.

7b. Total business miles driven in 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b.

7c. Business use ratio. Divide Line 7b by Line 7a. See the Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..7c.

8a. Gasoline, oil, repairs, vehicle insurance, vehicle rentals, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a.

8b. Depreciation. See the Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8b.

9. Total vehicle expenses. Add Lines 8a and 8b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Allowable Actual Vehicle Expenses. Multiply Line 9 by Line 7c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

Other Business Travel Expenses.

11. Parking fees, tolls and transportation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Travel expenses while away from home overnight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Meals expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Entertainment expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

15. Total Business Travel Expenses. Add Lines 6 or 10 and Lines 11, 12, 13 and 14. . . . . . . . . . . . . . . . . . . . 15.

SECTION III – Miscellaneous Expenses. Itemize your additional expenses.

16. Total Miscellaneous Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.

Total Allowable PA Employee Business Expenses. You must account for reimbursements, if any.

A. Direct Expenses from Line 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.

B. Business Travel Expenses from Line 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.

C. Miscellaneous Expenses from Line 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.

D. Office or Work Area Expenses from Line 17, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.

E. Moving Expenses from Line 20, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E.

F. Education Expenses from Line 24, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.

G. Total Depreciation Expenses from Line 25, on Side 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.

H. Total Allowable Employee Business Expenses. Add Lines A through G. . . . . . . . . . . . . . . . . . . . . . . . . . . H.

I. Reimbursements. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I.

J. Net expense or reimbursement. Subtract Line I from Line H. Enter the difference, and: . . . . . . . . . . . . . . J.

If Line H is MORE than Line I, include on Line 1b, on your PA-40.

If Line I is MORE than Line H, include the excess on Line 1a, on your PA-40.

Nonresidents and part-year residents may also need to complete PA Schedule NRH. See instructions.

CAUTION: You must complete a separate schedule for each job or position. Spouses may not file joint PA Schedule(s) UE.

Name of taxpayer claiming expenses

Social Security Number (shown first)

Employer’s Telephone Number

SIDE 1

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IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING

PA-40 UE (EX) MOD 06-21 (FI)

PA Department of Revenue

2101810055

OFFICIAL USE ONLY

Name of taxpayer claiming expenses

SECTION IV – Office or Work Area Expenses. You must answer ALL three questions or the Department will disallow your expenses.

D1. Does your employer require you to maintain a suitable work area away from the employer’s premises? YES NO

D2. Is this work area the principal place where you perform the duties of your employment? YES NO

D3. Do you use this work area regularly and exclusively to perform the duties of your employment? YES NO

If you answer YES to ALL three questions, continue. If you answer NO to ANY question, you may not claim office or work area expenses.

Actual Office or Work Area Expenses. Enter expenses for the entire year and then calculate the business portion.

a. Depreciation expense (homeowners only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a.

b. Real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.

c. Mortgage interest (homeowners only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.

d. Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Sales Tax License Number: d.

e. Property insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e.

f. Property maintenance expenses from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . f.

g. Other apportionable expenses from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . g.

h. Rent (renters only). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . h.

i. Total. Add Lines a through h. Enter the total here. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i.

j. Business percentage of property. Divide the total square footage of your work area by the total square

footage of your entire property. Round to 2 decimal places. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . j.

k. Apportioned expenses. Multiply Line i by the percentage on Line j. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . k.

l. Total office supplies from statement. See the instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l.

17. Total Office or Work Area Expenses. Add Lines k and l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.

SECTION V – Moving Expenses.

Distance Test.

E1. Enter the number of miles from your old home to your new workplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . miles

E2. Enter the number of miles from your old home to your old workplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . miles

E3. Subtract Line E2 from Line E1 and enter the difference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . miles

If Line E3 is 35 miles or more, continue. If it is not at least 35 miles, you may not claim any moving expenses.

18. Transportation expenses in moving household goods and personal effects. . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Travel, meals, and lodging expenses during the actual move from your old home to your new home. . . . . . 19.

20. Total Moving Expenses. Add Lines 18 and 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.

SECTION VI – Education Expenses. You must answer ALL three questions or the Department will disallow your expenses.

F1. Did your employer (or law) require that you obtain this education to retain your present position or job? YES NO

If you answer YES, continue. If you answer NO, you may not claim education expenses.

F2. Did you need this education to meet the entry level or minimum requirements to obtain your job? YES NO

F3. Will this education, program or course of study qualify you for a new business or profession? YES NO

If you answer NO to questions F2 and F3, continue. If you answer YES to either question, you may not claim education expenses.

Name of college, university or educational institution:

Course of study:

21. Tuition or fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Course materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.

23 Travel expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.

24. Total Education Expenses. Add Lines 21 through 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.

SECTION VII – Depreciation Expenses. PA law does not allow any federal bonus depreciation and limits IRC Section 179 expensing to $25,000.

25. Total Depreciation Expenses. Add the amounts from columns (e) and (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.

(a) Description of property

(b) Date acquired

(d) Depreciation method

(e) Section 179 expense

(f) Depreciation expenses

PA SCHEDULE UE

Allowable Employee Business Expenses

Social Security Number (shown first)

SIDE 2

2021

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PA-40 UE 1www.revenue.pa.gov

PURPOSE OF SCHEDULE

Use PA-40 Schedule UE to report unreimbursed employee

business expenses incurred in the performance of the duties

of the taxpayer’s job or profession.

Refer to the PA Personal Income Tax Guide – Gross Com-

pensation section for additional information.

Show money amounts in whole-dollars only. Eliminate any

amount less than $0.50 and increase any amount that is

$0.50 or more to the next highest dollar.

PA-40 Schedule UE must be completed and included with

an originally filed PA-40, Personal Income Tax Return, for

any taxpayer reporting unreimbursed employee business

expenses on Line 1b of the PA-40.

An amended PA Schedule UE must be included with Sched-

ule PA-40 X to report any changes - increases or decreases

in business expense amounts on PA Schedule UE that are

discovered after an original or other amended return is filed

with the department. Section III on Page 2 of Schedule PA-

40 X must be completed to explain any increase or decrease

to the unreimbursed employee business expenses reported

on an amended PA-40, Personal Income Tax Return.

IDENTIFICATION INFORMATION

NAME OF TAXPAYER CLAIMING EXPENSES

Enter the name of the taxpayer claiming the expenses. If a

jointly filed return and the expenses are claimed for the

spouse, enter the spouse’s name.

SOCIAL SECURITY NUMBER

Enter the Social Security number (SSN) of the primary tax-

payer (name shown first on the PA-40, Personal Income Tax

Return) even if the expenses are claimed for the spouse on

a jointly filed return.

EMPLOYER’S NAME

Enter the name of the employer for which the expenses

were incurred.

EMPLOYER’S ADDRESS

Enter the employer’s local address.

EMPLOYER’S IDENTIFICATION NUMBER

Enter the employer identification number from Box b of the

W-2 for the employer.

DUTIES OF THE JOB

Describe the duties of the job in which the expenses were

incurred.

EMPLOYER’S TELEPHONE NUMBER

Enter the employer’s local telephone number.

Allowable employee business expenses for PA purposes are

similar to, but not the same as, expenses for federal pur-

poses. PA law only permits expenses required to perform

the duties of a job or profession.

Allowable Pennsylvania employee business expenses must

be:

1. Ordinary, customary, and accepted in the industry or oc-

cupation;

2. Actually paid while performing the duties of the employ-

ment;

3. Reasonable in amount and not excessive;

4. Necessary to enable the proper performance of the du-

ties of the employment; and

5. Directly related to performing the duties of the occupa-

tion or employment.

IMPORTANT: 100 percent of the Pennsylvania-allow-

able unreimbursed employee business expenses may

be deducted. Pennsylvania law does not have federal ex-

pense and percentage accounting limitations and thresh-

olds.

An allowable business expense did not occur during the

year if:

● A fixed-mileage allowance; a fixed expense reimburse-

ment amount; a daily, weekly, monthly or yearly expense

allowance reimbursement; or a per-diem allowance was

received for the allowable business expense, and the

employer did not include the allowance in compensa-

tion; or

● Allowable expenses were accounted to the employer

and the employer reimbursed the employee in the exact

amount of the expenses.

EXAMPLE: James is a regional manager for a chain of retail

stores and is required by his employer to drive his personal

vehicle and visit each retail location within his region at least

one time per month. James’ employer reimburses him at a

rate of $0.40 per mile and provides a lunch per diem of $8.00

per travel day. James is not permitted to deduct a mileage ex-

pense on his PA-40 Schedule UE for the difference between

the federal allowance and his employer’s reimbursement or

an expense for meals while traveling to visit the retail loca-

tions within his region unless his employer includes the reim-

bursements in his Pennsylvania compensation.

GENERAL INFORMATION

RECORDING DOLLAR AMOUNTS

WHO MUST COMPLETE

FORM INSTRUCTIONS

GENERAL INSTRUCTIONS

2021

Instructions for PA-40 Schedule UE

Allowable Employee Business Expenses

PA-40 UE IN 06-21

PA-40 UE2 www.revenue.pa.gov

CAUTION: If an employer reimburses at a rate less

than the federal rate for the mileage expense or pro-

vides a fixed or per-diem reimbursement for any expense,

do not include such reimbursements in gross compensation.

Do not claim such expenses on a PA-40 Schedule UE.

If an employer does not reimburse for expenses, compen-

sation may be reduced by the allowable expenses. How-

ever, if a reimbursement is more than the allowable

expenses, the excess must be reported as taxable compen-

sation on Line 1a.

EXAMPLE: Dave earned compensation of $30,000. He in-

curred allowable vehicle and travel employee business ex-

penses of $3,000, and was reimbursed $3,500. He must

complete a PA-40 Schedule UE. He includes the excess

$500 as compensation. His total net taxable compensation

is $30,500.

IMPORTANT: Sole proprietors, partners, sharehold-

ers, or other self-employed individuals should not use

PA-40 Schedule UE to claim expenses.

CAUTION: Nonresidents must use PA Schedule NRH

to apportion expenses for PA personal income tax pur-

poses. Part-year residents may only claim 100 percent of

unreimbursed business expenses if the expenses were in-

curred only while providing services in Pennsylvania or while

a PA resident. Include a statement indicating the method

used to determine the expenses for the period of residency

(PA Schedule NRH may also be used for this purpose).

NON-ALLOWABLE EXPENSES

Pennsylvania does not allow the following business ex-

penses, even if allowed for federal purposes:

● Personal, living, or family expenses;

● Dues to fraternal organizations, professional societies,

Chambers of Commerce, or recreational club member-

ships;

● Dues and subscriptions to publications, including trade

and professional publications;

● Political candidate or campaign contributions;

● Charitable contributions;

● Commuting expenses – driving to and from work;

● Cost of meals while working late, unless while traveling

away from home overnight on business;

● Childcare or elderly care expenses;

● Life, disability income and health insurance premiums;

● Contributions to deferred compensation plans or other

pension plans;

● Legal fees (except to recover back wages), fines, penal-

ties and bad debts;

● Bribes, kickbacks, or other illegal payments;

● Job hunting or other pursuit of employment expenses;

● Malpractice insurance premiums, except when allowed

in Section I;

● Moving expenses, except when allowed in Section V;

● Educational expenses, except as allowed in Section VI;

● Capital expenditures; and/or

● Expenses calculated at federal per-diem rates.

A separate PA-40 Schedule UE must be filed for each

employer and each taxpayer. Spouses may not report

joint expenses on a PA Schedule UE, even if filing jointly and

even from the same employer. An incomplete schedule may

result in delays in the processing of a return and/or denial

of the expenses.

KEEP YOUR RECORDS

The department has the legal authority to require evidence

that the expenses claimed on a PA Schedule UE are allow-

able for PA purposes. Keep all necessary documents, re-

ceipts, vouchers and other records for at least four years.

PA-40 SCHEDULE UE - SIDE 1

Side 1 of the PA-40 Schedule UE is for the most common

expenses claimed on PA income tax returns.

PA-40 SCHEDULE UE - SIDE 2

Side 2 of the PA-40 Schedule UE is for reporting office or

work area expenses, moving expenses, education ex-

penses and/or depreciation expenses claimed as unreim-

bursed business expenses on PA income tax returns.

Taxpayers may wish to provide with the PA-40 Sched-

ule UE a copy of a letter from the employer verifying

that expenses are required to be incurred to perform the du-

ties of the position for which the expenses are claimed and

the method of any reimbursement by the employer for those

expenses. Form REV-757, Employer Letter Template,

should be completed by the employer for such purposes. In

lieu of an employer letter, a taxpayer may provide a copy of

the employer’s employee expense reimbursement policy or

Form REV-775, Personal Income Tax Employee Business

Expense Affidavit. Reviews of the department’s Tips For

Successfully Filing PA Schedule UE (REV-489) and Unre-

imbursed Allowable Employee Business Expenses For PA

Personal Income Tax Purposes brochure (REV-637) should

also be conducted prior to completing PA-40 Schedule UE.

DIRECT EMPLOYEE BUSINESS EXPENSES

Direct employee business expenses are those paid directly

or through a withholding arrangement with an employer.

These expenses are necessary to perform or maintain a job.

Itemize the nature and amount of the expenses claimed in

Section I.

Enter the amount of union dues, assessments, and initiation

fees paid if the amounts are:

● Paid as a condition of continued membership in the

union, and membership is related directly to the job for

which the expense is claimed; or

● A required payment of a wage deduction under an

agency shop agreement.

LINE INSTRUCTIONS

PA-40 SCHEDULE UE, SIDE 1

SECTION I

LINE 1

PA-40 UE 3www.revenue.pa.gov

Enter the amount paid for purchasing and maintaining uni-

forms and work clothing used for the protection from bodily

injury if the uniforms and clothing are both:

● Of a type specifically required by the employer to be pur-

chased as a condition of continued employment; and

● Not adaptable to general usage.

Enter the amount paid for small tools and supplies that the

employer does not provide, but are required to perform the

duties of the job. Depreciation is the annual deduction that

must be taken to recover the cost of business property hav-

ing a useful life beyond the taxable year. If any of these tools

or supplies has a useful life of more than one year, depreci-

ate or amortize the cost in Section VII.

Enter the amount of trade, professional or occupational li-

cense fees required as a condition of employment as well

as any malpractice insurance and fidelity bond premiums

where required by law or by the employer.

Add Lines 1 through 4 and enter the result.

BUSINESS TRAVEL EXPENSES

Enter the total business miles and multiply by the federal

mileage allowance to calculate the allowable business

mileage expense.

CAUTION: Depreciation may not be claimed on any

vehicle on which the standard mileage rate method is

used.

COMMUTING EXPENSES

The costs of public transportation or driving a car between

a home and the main place of work may not be claimed.

These are personal commuting expenses. Commuting ex-

penses may not be deducted no matter how far a home is

from the regular place of work. Commuting costs between

different jobs for different employers are also not allowable.

For tradesmen, commuting costs also include mileage for

any job 35 miles or fewer from the closer of the union hall or

personal residence to the jobsite.

ACTUAL VEHICLE EXPENSES

If using the actual vehicle expense method to calculate busi-

ness travel expenses, Complete Lines 7a through 10.

IMPORTANT: If more than one vehicle was used for

business purposes, Lines 7a through 10 must be com-

pleted and included on a separate Schedule UE for each

vehicle driven. In place of separate Schedules UE, a state-

ment may be included that shows the amounts for each ve-

hicle for Lines 7a through 10. Add the Line 10 total expense

amount from each vehicle and include the result in the

amount for Line 15, Total Business Travel Expenses.

Enter the total vehicle miles driven in 2021 including any

miles driven for a vehicle that was rented during the time a

regular vehicle was being repaired.

Enter the total business miles driven in 2021 including any

business miles driven for a vehicle that was rented during

the time a regular vehicle was being repaired. Do not include

commuting miles from home to workplace and workplace to

home in the total business miles driven.

Divide Line 7b by Line 7a and enter the result rounded to

six decimal places.

Enter the amount of the total expenses for gasoline, oil, re-

pairs, insurance, tires, license plates, vehicle registration,

car washes and other similar items. If the vehicle driven for

business purposes was rented or leased, enter the cost of

renting. Also enter the cost of temporary rentals for vehicles

rented during the time a regular vehicle was being repaired.

Do not enter temporary vehicle rentals included in Line 11.

Enter the amount of depreciation expense for the vehicle.

Federal vehicle depreciation limits do not apply for PA per-

sonal income tax purposes. In addition, PA Section 179 ex-

pense is limited to $25,000 per return. You must include a

statement showing the description of the vehicle, date ac-

quired, cost or other basis, depreciation method, Section

179 expense (if taken), accumulated depreciation previously

taken, and the depreciation expense for the year. Do not re-

port the depreciation expense for vehicles in Section VII.

Refer to Informational Notice Personal Income Tax 2012-05

- IRC Section 179 Expense Deductions for additional infor-

mation.

Add the amounts on Lines 8a and 8b and enter the total

here.

Multiply Line 9 by the ratio on Line 7c and enter the result

here. If more than one vehicle was used for business

purposes, add the amounts from Line 10 for each vehicle

reported on separate Schedules UE (or separate statement)

and include the total from all vehicles in the amount reported

on Section II, Line 15, Total Business Travel Expenses.

OTHER BUSINESS TRAVEL EXPENSES

Enter the actual amount of these expenses that were in-

curred.

LINE 3

LINE 4

LINE 5

SECTION II

LINE 6

LINE 7a

LINE 7b

LINE 7c

LINE 8a

LINE 8b

LINE 9

LINE 10

LINE 2

PA-40 UE4 www.revenue.pa.gov

CAUTION: Deductible expenses may not be based

upon federal per-diem allowances. Only those ex-

penses actually paid while performing the duties of the em-

ployment may be deducted.

Enter the amount of parking fees, tolls and transportation

expenses incurred while in an overnight or business travel

status.

Enter the amount of hotel or motel accommodation ex-

penses incurred while in an overnight travel status.

Enter only the actual expenses incurred for meals expense.

IMPORTANT: Meals expense is 100 percent allowable

for Pennsylvania purposes. However, meals while not

in overnight traveling status (e.g. meals while working late)

and federal per-diem rates for meals and incidental ex-

penses are not allowable.

Enter only the actual expenses incurred for entertainment

expenses.

IMPORTANT: Entertainment expenses for business

purposes are 100 percent allowable for Pennsylvania

purposes. However, entertainment expenses calculated

using federal per-diem rates are not allowable.

Add Lines 6 or 10, and Lines 11, 12, 13 and 14 and enter

the result. If more than one vehicle was used for business

purposes and actual expenses were reported for those ve-

hicles, add the amounts from Line 10 of the separate Sched-

ules UE or the separate statement prepared for the

additional vehicles.

MISCELLANEOUS EXPENSES

Enter the description and amount of all Pennsylvania-allow-

able expenses incurred not required to be listed elsewhere

on PA-40 Schedule UE in the space provided. If there are

more than two miscellaneous expenses, a separate state-

ment that itemizes and describes in detail these expenses

must be provided. Additional examples of expenses that

may be claimed include:

● Breakage fees or cash shortages required to be paid to

the employer;

● Fees or income included in Pennsylvania-taxable com-

pensation on Form W-2 that is required to be paid to the

employer as a condition of employment;

● Costs incurred by blind employees to pay readers who

assist them in performing their job duties;

● Business gifts that are ordinary, necessary, reasonable,

and actually incurred for business purposes.

Pennsylvania does not follow federal percentage limits

on such expenses.

CAUTION: Pennsylvania law does not contain statu-

tory employee provisions. If a statutory employee for

federal purposes, the W-2 income must be claimed as com-

pensation on PA-40 Schedule W-2S and the business ex-

penses on PA-40 Schedule UE. All other income and

expenses should be reported on PA-40 Schedule C and Line

4 of the PA-40, Personal Income Tax Return. If applicable,

enclose the necessary PA Schedule C.

For more information on statutory employees, see the PA

Personal Income Tax Guide – Gross Compensation Section.

A PA-40 Schedule C may be used to report the allo-

cated business expenses of a statutory employee.

Enter “See PA Schedule C for expenses” in the Miscella-

neous Expenses description line along with the total allo-

cated expenses. Include a copy of the PA-40 Schedule C to

support the amount of expenses allocated to the PA-40

Schedule UE. The allocated expense PA-40 Schedule C

should include “Schedule UE Miscellaneous Expenses” as

the main business activity on Line A and should not include

income on Lines 1 through 5 of the schedule as the income

will be reported on PA-40 Schedule W-2S. A separate PA-

40 Schedule C for any other business income and expenses

may also need to be completed for any related non-statutory

employee activity.

Add the miscellaneous expenses listed and enter the result.

If there are no expenses for an office or work area

(Section IV), moving (Section V), education (Section

VI), or depreciation (Section VII), Skip Side 2 of the PA-40

Schedule UE and complete Lines H through J of the Sched-

ule.

TOTAL ALLOWABLE PA EMPLOYEE

BUSINESS EXPENSES

Complete Lines A through G by entering the amounts of al-

lowable expenses from each completed section of PA-40

Schedule UE.

Add Lines A through G and enter the result.

CAUTION: Nonresident or part-year residents who

earned income and incurred expenses within and out-

side Pennsylvania must complete PA Schedule NRH.

If an employer included the reimbursement in PA-taxable

compensation on Form W-2, do not enter that reimburse-

ment here. If the reimbursements from an employer ex-

ceeded the expenses, enter the reimbursement here.

Otherwise, if a reimbursement from an employer was re-

ceived for any type of expense included on PA Schedule UE,

even though the amount was less than the total amount of

the expense incurred, do not include the reimbursements

LINE 11

LINE 12

LINE 13

LINE 14

LINE 15

SECTION III

LINE 16

LINES A THROUGH G

LINE H

LINE I

PA-40 UE 5www.revenue.pa.gov

for those expenses and do not include the expense on PA

Schedule UE. The expense is not an unreimbursed ex-

pense.

Determine the net expense reimbursement by subtracting

Line I from Line H. Report the amount as:

● Unreimbursed employee business expenses on Line 1b

of the PA-40, Personal Income Tax Return, if Line H is

more than Line I; or

● Additional compensation on Line 1a of the PA-40, Per-

sonal Income Tax Return, if Line I is more than Line H.

CAUTION: Nonresident or part-year residents who

earned income and incurred expenses within and out-

side Pennsylvania must complete PA Schedule NRH. Re-

port the amount on Line H of the PA-40 Schedule UE on

Line 13 of Section D of the PA-40 Schedule NRH. Include

PA-40 Schedule NRH with the PA-40, Personal Income Tax

Return.

OFFICE OR WORK AREA EXPENSES

Office or work area expenses may be claimed when an em-

ployer does not provide an employee with a suitable work

area and the answer to each of the following questions is

YES:

D1. Does your employer require you, as a condition of em-

ployment, to maintain a suitable work area away from

the employer's premises?

D2. Is this work area the principal place where you per-

form the duties of your employment?

D3. Do you use this work area regularly to perform the du-

ties of your employment?

If an employer provides a suitable work area, or the answer

to one or more of the above questions is NO, office or work

area expenses cannot be claimed.

CAUTION: The department does not permit the use

of the federal safe harbor deduction for a home office

or work area. Actual expenses must be used to determine

the amount of the deduction.

ACTUAL OFFICE OR WORK AREA EXPENSES

Enter the actual expenses incurred if claiming office or work

area expenses on this schedule. Include statements detail-

ing property maintenance and other apportionable expenses

from Lines f and g.

Enter the depreciation expense for a home only. Do not in-

clude depreciation for furniture and fixtures.

Enter the total amount of real estate taxes paid.

Enter the total amount of mortgage interest paid for a home

only.

Enter the total amount of utilities for gas, electric, fuel oil,

kerosene, steam, and/or telephone.

CAUTION: Certain utilities, which are not subject to

sales and use tax when purchased exclusively for res-

idential use, become subject to sales and use tax when

used for commercial purposes. If including electricity, natural

gas, fuel oil, or kerosene in the calculation of home office

expense, use tax on the prorated expense amount should

be reported. The use tax on these utilities should be paid

via a PA-1, Use Tax Return, or, if you are required to file a

sales tax return, as part of that return. If you have a regular

recurring use tax liability on utilities, you should register for

a use tax account using the Online PA-100 at

www.pa100.state.pa.us. Enter the Sales Tax License num-

ber used to report the use tax in the space provided.

Enter the amount paid for property insurance.

Enter the amount paid for property maintenance expenses.

Include a statement listing the expenses by type and

amount. Do not include capital expenditures that improve

the useful life or value of the property.

Enter the amount of other expenses related to the property.

Do not include personal living expenses. Include a state-

ment listing the expenses by type and amount.

If a renter, enter the amount of rent paid for the dwelling.

Add Lines a through h and enter the result.

Calculate the percentage of the property used for business

by dividing the square footage of the property used for a

work area by the total square footage of the entire property

or dwelling. Enter the amount as a percentage and carry the

amount to two decimal places.

Calculate the apportioned expenses. Multiply the amount on

Line i by the percentage on Line k and enter the result.

LINE J

PA-40 SCHEDULE UE, SIDE 2

SECTION IV

LINE a

LINE b

LINE c

LINE d

LINE e

LINE f

LINE g

LINE h

LINE i

LINE j

LINE k

PA-40 UE6 www.revenue.pa.gov

Enter the total amount paid for office supplies used exclu-

sively for business purposes. Include a statement listing the

expenses by type and amount.

Add Lines k and l and enter the result here and on Line D

on Side 1 of this PA-40 Schedule UE.

MOVING EXPENSES

Moving expenses incurred to retain employment may be de-

ducted. Moving expenses may also be deducted if the ex-

penses are related to reporting to a new location after

obtaining employment. However, the Distance Test de-

scribed below must be met.

Allowable expenses incurred in moving yourself, your im-

mediate family, household goods, and personal belongings,

including the cost of transportation to the new home, using

actual out-of-pocket costs or the federal mileage allowance

may be deducted. Expenses for storing household goods,

for meals and lodging on the way, including such costs on

the day of arrival, and parking fees and tolls may be de-

ducted.

The following expenses may not be deducted:

● selling or purchasing a house;

● breaking a lease;

● house hunting;

● temporary lodging prior to or after moving to the new lo-

cation;

● seeking new employment;

● moving for your own convenience;

● relocating to a new job or workplace less than 35 miles

farther than the old commute to work; or

● moving anywhere other than within or into Pennsylvania.

DISTANCE TEST

The new workplace must be at least 35 miles farther from

the old residence than the old workplace was. To determine

if this test is met, complete Lines E1, E2, and E3.

Enter the number of miles from the old home to the new

workplace by the shortest route.

Enter the number of miles from the old home to the old work-

place by the shortest route.

Subtract Line E2 from Line E1. If less than 35 miles, moving

expenses may not be deducted. Do not complete Lines 18,

19 and 20.

EXAMPLE: If the old workplace was three miles from the

old residence, the new workplace must be at least 38 miles

from the old residence. Measure the distance using the

shortest of the most commonly traveled routes.

IMPORTANT: Persons in the military do not have to

meet the distance test if the move is a permanent

change of duty station. If a military family with dependents

are moving to the new duty station from different locations,

all the allowable expenses for each family member and de-

pendent may be claimed.

Enter the amount of actual allowable transportation ex-

penses paid directly by the taxpayer for moving the house-

hold goods and personal effects as well as an in-transit

storage fees.

Enter the amount out-of-pocket costs paid for qualifying ex-

penses for travel, meals and lodging along the way, parking

fees and tolls during the move.

Add Lines 18 and 19 and enter the result here and on Line

E on Side 1 of this PA-40 Schedule UE.

EDUCATION EXPENSES

The federal and PA rules for educational expenses are sim-

ilar, but not exactly the same. For PA purposes, costs for ed-

ucation expenses that are paid or incurred are allowable

only if:

● The education is specifically required by law or by the

employer to retain an established employment status or

rate of compensation; and

● The education is not part of a program that would qualify

an employee for a new occupation, trade, or business,

even if the employee does not intend to enter that new

occupation, trade, or business.

Unlike federal rules, education expenses incurred to main-

tain or improve skills may not be deducted.

EXAMPLE: Anthony is a licensed professional in a position

that, by law, requires a specific number of continuing edu-

cation credits every other year. If Anthony fails to obtain

these credits, he will lose his license. Anthony also takes

courses in using a computer to improve his job performance.

Anthony may claim the cost of his continuing education

courses. He may not claim the computer courses.

LINE 17

SECTION V

LINE E1

LINE E2

LINE E3

LINE 18

LINE 19

LINE 20

SECTION VI

LINE l

PA-40 UE 7www.revenue.pa.gov

An answer must be provided for question F1 for all educa-

tion expenses even if reporting the expense as a miscella-

neous expense in Section III on Side 1 of this PA-40

Schedule UE. If the answer is YES, continue. If the answer

is NO, education expenses may not be claimed.

Answers to questions F2 and F3 must also be provided. If

the answer is NO to both questions, continue. If the answer

is YES to either question, no education expenses may be

claimed.

Enter the name of the college, university, or educational insti-

tution attended, and the specific course of study. All education

expenses must meet the requirements described above.

Enter the amount of tuition or fees actually paid.

Enter the costs of books and other materials required for the

courses.

Enter the cost of travel to and from the educational facility.

Pennsylvania follows the federal rules for travel expenses

for education.

CAUTION: Travel as educational expenses may not

be deducted even if claiming that the travel itself con-

stitutes a form of education.

Add Lines 21, 22 and 23 and enter the result here and on

Line F on Side 1 of this PA-40 Schedule UE.

DEPRECIATION EXPENSES

Depreciation is the amount of expense claimed over the

useful life of property used in performing the duties of em-

ployment. A depreciation expense is allowable if the prop-

erty:

● Has a useful life exceeding one year; and

● Is required to be regularly and predominantly used to

perform the duties of employment; and

● Is required and not provided or supplied by the em-

ployer.

PA law allows generally accepted depreciation methods and

current expensing. PA law does not allow federal bonus de-

preciation. PA law limits IRC Section 179 expensing. The

department accepts most generally accepted methods of

calculating depreciation used for federal purposes.

Do not use Section VII to report all depreciation. Use

Section II for vehicles and Section IV for office or work

area depreciation of a home. Fair market value of property

is not an acceptable other basis. Section VII may be used

to report depreciation of office furniture, fixtures and equip-

ment used in the work or office area reported in Section IV.

Section VII should also be used to report depreciation for

any other equipment required to be purchased by an em-

ployee to perform the duties of the employment.

COLUMN (a)

Enter the description(s) of the property being depreciated.

COLUMN (b)

Enter the date the property being depreciated was acquired.

COLUMN (c)

Enter the cost or adjusted basis of the property being de-

preciated.

COLUMN (d)

Enter the depreciation method chosen for calculating the de-

preciation expense.

IMPORTANT: Once a depreciation method has been

selected, it must be consistently used and may not

change without permission from the PA Department of Rev-

enue.

COLUMN (e)

Enter any PA Section 179 expense claimed on the asset.

Refer to Informational Notice Personal Income Tax 2012-05

- IRC Section 179 Expense Deductions for additional infor-

mation.

COLUMN (f)

Enter the amount of depreciation expense for the year using

the depreciation method described in Column (d).

Add Columns (e) and (f) and enter the total here and on Line

G on Side 1 of this PA-40 Schedule UE.

LINE 22

LINE 23

LINE 24

LINE 25

LINE 21

SECTION VII

LINES F2 & F3

LINE F1

RETURN TO FORM

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