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Under most circumstances, Pennsylvania wages in Box 16 are equal to Medicare wages entered in Box 5 of Form W-2. By default, the amount from Box 5 transfers to Box 16 when the first State line is coded to PA. When Form W-2 includes multiple states and the PA wage information is entered on any line other than the first, Box 16 wages will not automatically update to the Box 5 Medicare wages and will have to be manually updated.

Resident Returns

For resident returns, the amount that flows to Form PA-40, line 1a includes the sum of Box 16 wages entered on federal Screen(s) W2, regardless of the State postal code. To adjust the amount on Form PA-40, line 1a, enter either a negative or positive amount in Box 16 on federal Screen W2 with state postal code PA.

Part-year and nonresident returns

For part-year or nonresident returns, the amount that flows to Form PA-40, line 1a includes the sum of Box 16 wages that are only coded to PA on federal Screen W2. When the wages reported on Form W2 are not all taxable to Pennsylvania, use Screen PAH to complete Schedule NRH, Compensation Apportionment.

Due to the reciprocity agreement, when a resident Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia return is attached, and the applicable checkbox is marked on Screen PANRPY, wages on the Gross Compensation Worksheet and Form PA-40, line 1a are reduced to zero.

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