Entering Philadelphia Net Profit Tax (NPT) in Lacerte

The Philadelphia Net Profits Tax (NPT) is a tax imposed by the City of Philadelphia on the net profits earned from the operation of a trade, business, profession, enterprise, or other activity.

This tax applies to:  

• Philadelphia residents, even if their business is conducted outside of Philadelphia.  
• Non-residents who conduct business within Philadelphia.  

Before you start:

• The NPT is separate from the net income portion of the Business Income & Receipts Tax (BIRT). However, a credit may be available on the NPT based on the amount of BIRT owed.
• Estimated tax payments for the current year are due in two installments: April 15th and June 15th, each equal to 25% of the prior year's NPT.  
• Taxpayers owing $5,000 or more for the NPT are required to pay electronically.  
• Low-income residents and non-residents who are eligible for Pennsylvania's Tax Forgiveness Program may qualify for a reduced NPT rate of 1.5%. To claim this reduced rate, a completed Pennsylvania Schedule SP must be attached to the NPT return.  
• Corporations and LLCs that have elected to be treated as corporations for federal tax purposes are exempt from the NPT.  
• The NPT considers federal income realized on a real estate sale, meaning the tax deferral benefits of IRC Section 1031 are generally not available for NPT purposes.  

To enter in Lacerte:

Add Philadelphia taxes to your client using the left panel:

1. Select Add a state and then select Pennsylvania.
2. Select Add a city and then select Philadelphia.

Select your tax type:

Individual

1. Go to Screen 54, Taxes.
2. Use the top left panel to navigate to Screen 54.052, Pennsylvannia Cities Business Tax.
3. In the Philadelphia Miscellaneous section, check the 2024 NPT (Philadelphia) option.
4. Use the bottom left panel to navigate to the Philadelphia NPT section.
5. Fill out all applicable information in the section.

Partnership

1. Go to Screen 1, Client Information.
2. In the Electronic Return section, check the box for Philadelphia - NPT.
3. Use the bottom left panel to navigate to the approproate sections(s) for your situation:
   • Worksheet A: Primarily for Philadelphia Residents.
   • Worksheet B: Primarily for Non-Residents.
   • Worksheet D: Reports corporate members' income potentially relevant to both BIRT and NPT calculations
   • Worksheet NR-3: Specifically for Non-Residents who need to allocate their net profits between Philadelphia and other locations.
4. After completing all relevant sections, scroll down to NPT - Payments and Credits.
5. Fill out all applicable fields in this section.

Corporate

1. Go to Screen 51, Other Forms.
2. Use the top left panel to select Philadelphia BIRT.
3. Use the bottom left panel to select Payments and Credits.
4. Fill out all applicable fields in this section.

S-Corp

1. Go to Screen 49, Other Forms.
2. Use the top left panel to select City of Philadelphia.
3. Use the bottom left panel to select Payments and Credits.
4. Fill out all applicable fields in this section.