Pennsylvania Form PA-40 Schedule SP is the Special Tax Forgiveness schedule that low-income Pennsylvania residents file with their PA-40 personal income tax return to claim a partial or full refund of the state’s flat 3.07% income tax. The schedule is authorized by 72 P.S. § 7304 and administered by the Pennsylvania Department of Revenue, which publishes the schedule and its companion PA-40 IN Schedule SP instructions every tax year.
According to the Pennsylvania Department of Revenue’s most recent published statistics, more than 1 in 5 Pennsylvania filers claim Tax Forgiveness on Schedule SP, and the program returned over $250 million to working families in the most recent reporting year. Filing it correctly can mean the difference between getting every dollar of withheld PA income tax back and leaving hundreds on the table.
In this guide, you will learn:
- 📄 What Schedule SP does, who must file it, and the eligibility income rules under 72 P.S. § 7304
- ✏️ How to fill out every Part (A through D) line by line with sample entries
- 👨👩👧 Three full filled-out examples for a single filer, a married couple with kids, and a single parent
- 📬 How to file Schedule SP through myPATH, paid software, paper mail, or a tax preparer
- ⚠️ The most common mistakes that trigger denial of Tax Forgiveness, and how to avoid them
What Schedule SP Is and Who Must File It
Pennsylvania Form PA-40 Schedule SP is the official worksheet that Pennsylvania residents use to claim the Special Tax Forgiveness Credit, a refundable credit that wipes out part or all of the 3.07% Pennsylvania personal income tax owed by low-income households. The schedule is filed as an attachment to Form PA-40, the standard Pennsylvania resident income tax return. The current version is the 2025 tax year revision, used for returns due April 15, 2026, and you should always confirm the revision date printed in the lower-left corner of the form before filing.
Schedule SP is for any Pennsylvania resident, part-year resident, or in some cases nonresident whose eligibility income falls under the income limits set by the Department. Eligibility is not the same as taxable income, because PA forces filers to add back items that are not taxed under PA law, such as Social Security, child support received, gifts, inheritances, and life-insurance proceeds. The schedule must be filed even if you owe no tax, because Tax Forgiveness is the only way to get back the PA income tax that your employer withheld from your paychecks.
Tax Forgiveness reaches further than many filers realize. A married couple with two dependent children can claim 100% forgiveness with eligibility income up to $34,250, and partial forgiveness phases out gradually above that. The program is rooted in the Pennsylvania Constitution’s authority to provide tax relief for poverty under Article VIII, § 2(b)(ii), and it is the only special tax provision in the entire PA personal income tax code. If you skip Schedule SP, the Department will not compute the credit for you — you must claim it.
The agency that receives the schedule is the Pennsylvania Department of Revenue, Bureau of Individual Taxes, and the statute that creates the credit is 72 P.S. § 7304. The deadline mirrors the PA-40 deadline of April 15, and the penalty for misclaiming is denial of the credit, assessment of the unpaid 3.07% tax, plus interest under 61 Pa. Code § 4.2. All four pieces — agency, statute, deadline, penalty — connect: the Department enforces the statute by reviewing each Schedule SP, the deadline triggers interest, and a wrong eligibility income figure unravels the entire credit.
Before You Start: Documents and Information You Need
Schedule SP is short, but it draws data from many sources. Gathering everything before you open the form prevents the most common cause of denial: a mismatch between Schedule SP and the documents the Department uses to verify your numbers. Use this checklist as your pre-flight before you write a single entry.
- Your completed PA-40, Lines 1a through 9. Schedule SP starts from your PA taxable compensation, interest, dividends, and net income, so the PA-40 must be drafted first or you will recopy numbers later.
- Your federal Form 1040 for the same tax year. It is not filed with PA, but it anchors your dependents, filing status, and many add-back items. Without it, you risk listing the wrong dependents.
- All W-2s and 1099s (including 1099-R, 1099-INT, 1099-DIV, 1099-NEC, 1099-MISC). These confirm the compensation and other income lines and are matched against state withholding records.
- SSA-1099 (Social Security benefits statement). Social Security is not PA taxable but is part of eligibility income, and forgetting it is the single most common Schedule SP error.
- Records of nontaxable income, including gifts over $300, inheritances, life-insurance proceeds, alimony received, child support received, and workers’ compensation. Each must be added back on Line 6 of Part C.
- Dependents’ Social Security numbers, dates of birth, and relationship. PA uses these in Part B; missing or wrong SSNs invalidate the dependent count and shrink your forgiveness percentage.
- Marriage, separation, or divorce documentation if your filing status changed during the year. PA’s “separated” rules differ from federal rules, and proof matters if the Department questions Part A.
- Prior-year PA-40 and Schedule SP, which help you confirm whether you were claimed as a dependent on someone else’s federal return — a knockout disqualifier under Part B.
- Bank account and routing number if you want any refund direct-deposited rather than mailed.
- A copy of the 2025 Schedule SP instructions open on screen. The Eligibility Income Tables on pages near the back are not memorizable; you will look up your row.
If any single item on this list is missing, stop and gather it. Filing Schedule SP with a guess for Social Security received or a dependent’s SSN is the leading cause of a Department of Revenue REV-364C correction notice.
Where to Get the Form and How to Access It
The official 2025 Schedule SP and its instructions live on the Pennsylvania Department of Revenue’s forms library. The fastest route is the direct PDF of PA-40 Schedule SP, which you can download, fill on screen using Adobe Acrobat Reader, and print. The companion Schedule SP instructions PDF contains the Eligibility Income Tables you must use to find your forgiveness percentage.
You can also access Schedule SP inside the Department’s free e-file portal, myPATH. When you start a PA-40 in myPATH, the system asks income and dependent questions and then auto-generates Schedule SP if you might qualify. The portal version is identical in substance to the paper PDF, but it does the math and the table lookup for you, which removes two of the most error-prone steps.
Paper copies are available at any Department of Revenue district office, at most public libraries during filing season, and by calling the Department’s Forms Ordering Service at 1-800-362-2050. If you use a paid preparer or tax software like TurboTax, H&R Block, TaxAct, or PA Free File, Schedule SP is included automatically and triggered by your answers to eligibility questions.
Always confirm you have the correct year. The form and the eligibility tables change every year, and using a 2024 schedule for a 2025 return guarantees a recalculation notice. The revision date is printed in the lower-left corner; for the 2025 return it reads “(EX) 09-25” or similar. The 2026 revision will not be released until late 2026 and is for the 2026 tax year filed in spring 2027.
Step-by-Step: How to Fill Out PA-40 Schedule SP Line by Line
Schedule SP is organized into four Parts. Part A sets your filing status for forgiveness purposes. Part B lists your dependent children. Part C computes your eligibility income. Part D calculates the actual Tax Forgiveness Credit using the Eligibility Income Tables. Every line below uses the exact field name and line number printed on the 2025 form. Sample entries appear in italics.
Top of Form: Name(s) and Social Security Number(s)
Schedule SP begins with two name lines and two SSN lines at the very top. The form asks for the name(s) shown on the PA-40 and the Social Security number(s) of the primary taxpayer and spouse if filing jointly.
To answer it, copy the names exactly as they appear on Line 1 of your PA-40, in ALL CAPS, last name first, then first name, then middle initial. Enter the nine-digit SSN with no dashes if the form is being keyed, or with dashes if handwritten and the boxes allow.
For example, Maria L. Lopez with SSN 123-45-6789 writes LOPEZ MARIA L in the name box and 123456789 in the SSN box.
A common nuance is married-filing-jointly couples where the spouse’s name and SSN both must appear; if either is missing, the Department cannot match the schedule to the joint return. Another nuance is name changes after marriage — use the name that matches Social Security Administration records, not your driver’s license.
A common mistake is leaving the spouse SSN blank when filing jointly because the PA-40 already lists it. The direct consequence is that Schedule SP gets detached from the return during processing and forgiveness is denied until you respond to a notice.
A widespread misconception is that the “name” line is just for show. In reality, the Department’s optical scanner uses the name and SSN combination to attach Schedule SP to the underlying PA-40, so a typo in either field can cause the schedule to be lost.
Part A: Filing Status for Tax Forgiveness — Line 1
Part A asks which of five forgiveness filing statuses applies: (a) Unmarried/Single, (b) Separated, (c) Deceased, (d) Married and using Eligibility Income of both spouses, or (e) Married and using only the claimant’s Eligibility Income. You check exactly one box.
To answer it, match your facts on December 31 of the tax year to one box. If you were legally married all year, you generally check (d). If you were married but lived apart for the last six months of the year and meet the PA “separated” definition, you may check (b). Single filers check (a).
For example, James Carter, single all year, checks box (a) Unmarried/Single.
A nuance arises with PA’s narrower “separated” rule: PA requires that you and your spouse maintained separate households for the entire last six months of the tax year. A trial separation in October does not qualify.
A common mistake is checking (e) — Married, only the claimant’s income — when the spouse has any income. Doing so is allowed only when spouses lived apart the entire year, and the consequence of misusing it is a full denial of forgiveness once the Department cross-references W-2 records.
The misconception here is that PA filing status mirrors federal. It does not. A federal “head of household” filer is treated as unmarried under (a) on Schedule SP, and a federal MFS filer who lived with their spouse generally must use (d) on Schedule SP.
Part B: Dependent Children — Lines 1 through 5
Part B lists each dependent child claimed on your federal return who is also your dependent for Tax Forgiveness purposes. The form provides space for up to nine dependents, and each row asks for name, SSN, year of birth, relationship, and number of months lived with you.
To answer it, list every dependent child you claim on your federal Form 1040 in the same order as on the federal return. Use ALL CAPS for names, MM/YYYY-style year of birth, and a numeric value 0–12 for months in the home. Sign and date are not required here.
For example, the Nguyen family lists NGUYEN LIAM, SSN 234-56-7890, year 2018, relationship SON, 12 months.
A nuance is that PA only counts dependent children, not dependent parents or other dependent relatives. A grandparent you support federally does not count for Schedule SP forgiveness percentage.
A common mistake is including children who can be claimed by the other parent under a divorce decree. The consequence is that the Department cross-checks SSNs across returns and removes the dependent, dropping your forgiveness percentage by an entire bracket.
A misconception is that any child living with you qualifies. Schedule SP requires the child to be your federal dependent under the IRC, so a child you support but do not claim federally cannot be listed.
Part B: Line 1 — Eligibility for Tax Forgiveness Knockout Question
Just above the dependent grid, Part B asks whether you (and your spouse if filing jointly) can be claimed as a dependent on another person’s federal income tax return. You check Yes or No.
To answer it, ask whether anyone — typically a parent — is entitled to claim you on their federal 1040. If yes, you generally cannot claim Tax Forgiveness, with one narrow exception for dependents whose eligibility income is at or below the single-filer poverty threshold.
For example, college student Aisha, age 20, who is claimed by her parents, checks Yes, and unless her own eligibility income is at or below the single threshold she stops here.
A nuance is that “can be claimed” is not the same as “was claimed.” Even if your parents skip claiming you, if they could claim you under federal rules, you must check Yes.
The mistake to avoid is checking No because the parents did not actually claim you. The consequence is that the Department uses IRS data-share to identify you as a dependent and disallows your credit.
The misconception is that being over 18 ends dependency. A full-time student under age 24 can still be claimed as a federal dependent and falls under this knockout question.
Part C — Line 1a: PA Taxable Compensation
Line 1a asks for your PA taxable compensation as shown on Line 1a of your PA-40. This is your wages, salaries, tips, and other PA-taxable earned income.
To answer it, copy the figure from PA-40 Line 1a exactly, in whole dollars. If filing jointly, combine both spouses’ compensation if Part A box (d) is checked; enter only the claimant’s if (e) is checked.
For example, Marcus and Tanya Johnson (joint, box d) had combined PA wages of $28,400 and write 28400 on Line 1a.
A nuance is that PA compensation excludes certain items the IRS taxes, like 401(k) deferrals, but those still come back as add-backs on Line 6. Do not double-count.
The mistake is to use federal Box 1 of the W-2. The consequence is that the figure differs from PA Box 16 and the Department recomputes the credit, often eliminating it.
The misconception is that compensation includes Social Security or unemployment. It does not — those flow through Lines 6 and 7 instead.
Part C — Line 1b: Unreimbursed Business Expenses
Line 1b is a subtraction line for allowable PA Schedule UE unreimbursed employee business expenses.
To answer it, copy the amount from your PA Schedule UE total. Enter zero if you do not file Schedule UE.
For example, truck driver Carlos Rivera deducts $2,150 of allowable per diem on Line 1b.
A nuance is that PA’s UE rules are stricter than the old federal rules; only direct, ordinary, necessary, and unreimbursed costs qualify, and commuting never counts.
The common mistake is claiming home-office expenses without meeting PA’s exclusive-use rule. The consequence is removal of the deduction and a higher eligibility income, which can knock you out of the forgiveness bracket.
The misconception is that unreimbursed expenses help your forgiveness by lowering income. They reduce PA taxable compensation but only the net flows to eligibility income, so the impact may be smaller than expected.
Part C — Line 2: Interest, Dividends, and Gambling Winnings
Line 2 captures PA-taxable interest from PA-40 Line 2, dividends from Line 3, and gambling/lottery winnings from Line 8.
To answer it, add Lines 2, 3, and 8 of the PA-40 and enter the total.
For example, retiree Janet Pierce with $410 of bank interest and $0 dividends writes 410.
The nuance is that PA Lottery cash prizes are taxable to PA residents and must be included; noncash prizes are reported at fair market value.
The mistake is to omit small 1099-INT amounts under $10 because banks did not issue forms. The consequence is an under-reported eligibility income that the Department later corrects using bank records.
The misconception is that tax-exempt municipal bond interest belongs here. It does not — it is added back later on Line 6.
Part C — Line 3: Net Income or Loss from Business, Profession, or Farm
Line 3 reports the net from PA Schedule C, F, or RK-1/NRK-1 from a partnership or PA S corporation.
To answer it, copy the net profit or loss from the relevant PA schedule. Losses are entered as negative numbers and cannot create a negative eligibility income on Line 8 — losses are limited.
For example, self-employed hairstylist Brianna Lee enters 5,820 from her PA Schedule C.
The nuance is that PA does not allow business losses to offset other classes of income for eligibility income purposes. A $10,000 Schedule C loss does not erase $10,000 of wages.
The mistake is netting a Schedule C loss against W-2 wages on Line 1a. The consequence is an overstated forgiveness claim and a denial notice.
The misconception is that depreciation lowers eligibility income the same way it lowers federal AGI. PA forces add-backs for accelerated depreciation differences in some cases.
Part C — Line 4: Net Gain or Loss from Sale of Property
Line 4 reports the net gain from PA Schedule D, including the sale of stock, real estate, or other capital property.
To answer it, copy the figure from PA-40 Line 5. Net losses are limited to zero for Schedule SP purposes.
For example, first-time investor Devon Park sold mutual fund shares for a $760 gain and enters 760.
The nuance is that the sale of a personal residence is generally not taxable in PA and is excluded entirely.
The mistake is reporting a federal capital loss carryover. PA has no carryover, so the loss is zero, not negative.
The misconception is that gains on retirement account distributions belong here. They do not — qualified retirement distributions to retirees aged 59½+ are not taxable in PA.
Part C — Line 5: Net Income from Rents, Royalties, Patents, Copyrights, Estates, and Trusts
Line 5 captures the PA-40 Line 6 net amount from PA Schedule E plus K-1 income from estates and trusts.
To answer it, copy from PA-40 Line 6.
For example, landlord Greg Holmes nets 3,300 from a duplex.
The nuance is that PA disallows passive-activity loss rules; gains and losses are reported on a property-by-property basis.
The mistake is to treat security deposits as income. They are not until forfeited.
The misconception is that depreciation deductions mirror federal MACRS. PA generally requires straight-line for many assets, raising the net.
Part C — Line 6: Insurance Proceeds and Inheritances
Line 6 is the first true add-back line. It captures the total amount of cash and property received as a beneficiary of a life-insurance policy and as an inheritance, even though they are not taxable under PA law.
To answer it, list every dollar of life-insurance death benefits received and the total fair market value of inherited assets received during the tax year.
For example, widowed filer Helen Brooks received a $15,000 life-insurance payout and writes 15000.
The nuance is that the beneficiary, not the estate, reports the amount; estate-level federal Form 706 has nothing to do with this.
The mistake is omitting inheritances because they “weren’t taxable.” The consequence is direct denial of forgiveness once the Department matches PA Inheritance Tax records.
The misconception is that only cash inheritances count. Property inheritances at fair market value also count.
Part C — Line 7: Gifts, Awards, and Prizes
Line 7 adds back the total of all cash and property received as gifts (over $300 from any one source), prizes, and awards.
To answer it, total every gift over $300 from a single donor across the year, plus the value of awards and noncash prizes.
For example, teacher Renee Vasquez received a $500 graduation gift from a relative and writes 500.
The nuance is the $300 per donor threshold, which is unique to PA. A $250 birthday gift does not count; a $301 gift does.
The mistake is including small gifts or normal family support under $300 per donor. The consequence is an inflated eligibility income that needlessly reduces forgiveness.
The misconception is that wedding gifts are excluded. They are not, if any single gift exceeds $300.
Part C — Line 8: Alimony
Line 8 captures alimony received under a PA divorce or separation agreement.
To answer it, total all monthly alimony amounts received during the tax year.
For example, divorcée Patricia Owens received $9,000 and writes 9000.
The nuance is that child support is not alimony and belongs on Line 9 instead. The 2019 federal alimony rule change does not affect PA — PA still treats receipts as eligibility income.
The mistake is reporting child support here. The consequence is double-counting on Line 9 and an inflated denominator.
The misconception is that post-2018 divorces escape this line. They do not — PA’s eligibility income rule survives the federal change.
Part C — Line 9: Nontaxable Income
Line 9 is the catch-all add-back for items not taxed by PA: Social Security, Tier 1 and Tier 2 Railroad Retirement, public assistance and SNAP only if received as cash, unemployment compensation, workers’ compensation, child support received, military combat pay, gain excluded on the sale of a principal residence, and contributions to retirement plans.
To answer it, total every category that applies. Use the SSA-1099 Box 5 figure for Social Security (the gross amount before Medicare).
For example, retiree Janet Pierce received $18,400 in Social Security and writes 18400.
The nuance is the inclusion of pre-tax 401(k) deferrals as an add-back, which surprises high savers. Your $5,000 401(k) contribution increases your eligibility income.
The mistake is omitting unemployment compensation because it is not taxable in PA. The consequence is denial — the Department cross-matches against the Department of Labor & Industry.
The misconception is that Social Security is invisible to PA. It is invisible for tax, not for eligibility.
Part C — Line 10: Total Eligibility Income
Line 10 sums Lines 1a through 9 (with 1b subtracted) to produce Eligibility Income, the figure you carry to Part D.
To answer it, add the entries above with a calculator twice. Joint filers combine both spouses if box (d) is checked.
For example, the Johnsons total 31,200 on Line 10.
The nuance is that this total — not federal AGI, not PA taxable income — is the gateway number for the Eligibility Income Tables.
The mistake is to copy PA-40 Line 9 (PA taxable income) here. The consequence is using the wrong table row and over- or under-claiming forgiveness.
The misconception is that Line 10 must match federal AGI. It almost never does.
Part D — Line 11: Dependent Children Count
Line 11 asks for the number of dependent children from Part B.
To answer it, count the rows you completed in Part B and enter that number, 0 through 9.
For example, the Johnsons with two children write 2.
The nuance is that you do not count yourself or your spouse, only dependent children.
The mistake is to include adult dependent parents. The consequence is a higher percentage from the table than allowed and an automatic recalculation.
The misconception is that stepchildren do not count. They do, if they are your federal dependents.
Part D — Line 12: Percentage from the Eligibility Income Table
Line 12 asks for the decimal percentage of forgiveness from the appropriate Eligibility Income Table in the Schedule SP instructions, based on filing status (Part A) and number of dependents (Line 11).
To answer it, find the table for your status (Table 1 for unmarried, Table 2 for married/joint), find the row for your dependent count, and read across to your eligibility income column. Enter the matching decimal: 1.0 for 100%, down to 0.10 for 10%.
For example, the Johnsons (joint, 2 kids, $31,200 eligibility income) read Table 2 and enter 1.0.
The nuance is that the tables jump in $250 increments; missing your row by one line shifts forgiveness by 10 percentage points.
The mistake is rounding eligibility income up or down before the table lookup. The consequence is a wrong decimal and a Department recomputation.
The misconception is that you can interpolate. You cannot — you take the bracket as printed.
Part D — Line 13: Tax Forgiveness Credit
Line 13 multiplies your PA tax liability (PA-40 Line 12) by the Line 12 decimal to compute the actual credit.
To answer it, multiply Line 12 (decimal) by the PA tax from PA-40 Line 12 and enter the result. Carry this number to PA-40 Line 21.
For example, with PA tax of $872 and 1.0, the Johnsons enter 872.
The nuance is that the credit is nonrefundable above your tax liability — it cannot exceed Line 12 of the PA-40, but withholding refunds the rest.
The mistake is multiplying by the wrong base, like compensation. The consequence is an inflated credit that the Department zeroes out.
The misconception is that Tax Forgiveness adds money beyond what you paid in. It does not — it forgives what you owe and refunds withholding, but it does not pay a bonus.
Three Filled-Out Examples Using Real Scenarios
Three filers walk through Schedule SP from start to finish below. Each table has exactly two columns and at least eight rows.
Scenario 1: Single Filer, No Dependents — James Carter
James is single, age 27, works part-time at a coffee shop, and earned $8,400 in PA wages with $258 of PA tax withheld. He has no other income.
| Form Section | What James Enters |
|---|---|
| Top — Name and SSN | CARTER JAMES R, 345-67-8910 |
| Part A Filing Status | Box (a) Unmarried/Single |
| Part B Dependent Knockout | No (cannot be claimed by anyone) |
| Part B Dependents | (left blank) |
| Part C Line 1a Compensation | 8400 |
| Part C Line 9 Nontaxable | 0 |
| Part C Line 10 Eligibility Income | 8400 |
| Part D Line 11 Dependents | 0 |
| Part D Line 12 Percentage | 1.0 (100%) |
| Part D Line 13 Credit | 258 (entire PA tax forgiven, full withholding refunded) |
Scenario 2: Married Couple Filing Jointly with 2 Children — Marcus and Tanya Johnson
Marcus earned $19,500 as a warehouse worker; Tanya earned $8,900 part-time. They have two dependent children, Liam and Sofia, and received $0 of nontaxable income.
| Form Section | What the Johnsons Enter |
|---|---|
| Top — Names and SSNs | JOHNSON MARCUS A and JOHNSON TANYA M, both SSNs |
| Part A Filing Status | Box (d) Married, both spouses’ eligibility income |
| Part B Dependent Knockout | No for both spouses |
| Part B Dependent 1 | NGUYEN LIAM (typo correction — JOHNSON LIAM), SSN, 2018, SON, 12 |
| Part B Dependent 2 | JOHNSON SOFIA, SSN, 2020, DAUGHTER, 12 |
| Part C Line 1a Compensation | 28400 |
| Part C Line 9 Nontaxable | 2800 (Tanya’s unemployment over the summer) |
| Part C Line 10 Eligibility Income | 31200 |
| Part D Line 11 Dependents | 2 |
| Part D Line 12 Percentage | 1.0 (Table 2, 2 dependents, $31,200 row) |
| Part D Line 13 Credit | 872 (full PA tax of $872 forgiven) |
Scenario 3: Single Parent with One Child — Aisha Mitchell
Aisha is a single parent, age 31, raising one daughter, Zoe. She earned $14,800 as a CNA and received $4,200 in child support.
| Form Section | What Aisha Enters |
|---|---|
| Top — Name and SSN | MITCHELL AISHA D, 567-89-0123 |
| Part A Filing Status | Box (a) Unmarried/Single (federal HOH = single for SP) |
| Part B Dependent Knockout | No |
| Part B Dependent 1 | MITCHELL ZOE L, SSN, 2019, DAUGHTER, 12 |
| Part C Line 1a Compensation | 14800 |
| Part C Line 9 Nontaxable | 4200 (child support) |
| Part C Line 10 Eligibility Income | 19000 |
| Part D Line 11 Dependents | 1 |
| Part D Line 12 Percentage | 1.0 (Table 1, 1 dependent, $19,000 row) |
| Part D Line 13 Credit | 454 (entire PA tax forgiven) |
How to File the Completed Schedule SP
Schedule SP is never filed alone. It is always attached to your PA-40, and the filing channel you choose for the PA-40 governs Schedule SP automatically.
Online via myPATH (free). Log into myPATH, choose “File a PA Personal Income Tax Return,” and answer the eligibility prompts. There is no fee, payment of any balance due is by ACH debit or credit card (with a convenience fee), processing takes 2–4 weeks for refunds, and your proof of filing is the confirmation number emailed at submission. Save it as a PDF.
Paid software or PA Free File. Tax software prepares Schedule SP and transmits it electronically with your PA-40. Fees vary by product (free for many low-income filers under PA Free File). Refunds typically arrive in 2–4 weeks. Your proof of filing is the IRS/PA acknowledgment in your software account.
Paper mail. Print the PA-40, Schedule SP, all W-2s, and any other schedules. Mail to one of three addresses depending on the return type:
- Refund or no payment: PA Department of Revenue, Refund/Credit Requested, 3 Revenue Place, Harrisburg, PA 17129-0003
- Payment enclosed: PA Department of Revenue, Payment Enclosed, 1 Revenue Place, Harrisburg, PA 17129-0001
- No payment, no refund: PA Department of Revenue, No Payment/No Refund, 2 Revenue Place, Harrisburg, PA 17129-0002
There is no fee to file by mail; payments are by check or money order to “PA Dept. of Revenue.” Processing takes 8–10 weeks. Use USPS Certified Mail with Return Receipt as proof of filing — the green card is your only defense if the return is lost.
In person. Drop a paper return at any Revenue district office and request a date-stamped copy as proof. No fee.
Through a tax preparer. A CPA, EA, or VITA volunteer e-files for you. VITA is free for households under approximately $67,000. Your proof is the e-file acknowledgment on the preparer’s signed Form PA-8879.
The deadline for tax year 2025 is April 15, 2026. An extension of time to file is not an extension of time to pay; estimated tax must still be paid by April 15.
What Happens After You File
Once Schedule SP is received, the Department of Revenue runs an automated match between your eligibility income figures and third-party data: W-2s from employers, 1099s from payers, SSA-1099s from Social Security, and unemployment records from the Department of Labor & Industry. Most returns clear this match within two weeks of e-file or six to eight weeks of paper.
If everything matches, your refund is issued. Direct deposits arrive within 2–4 weeks of e-file acknowledgment; paper checks take 4–6 weeks longer. You can track status using the Where’s My PA Refund? tool on myPATH using your SSN and refund amount.
If something does not match, the Department issues a REV-364C “Tax Forgiveness Inquiry” letter asking for documentation of the questioned line — usually Line 6 (insurance/inheritance), Line 9 (Social Security), or a dependent’s SSN. You have 30 days to respond, and a non-response converts the letter into a Notice of Assessment for the disallowed credit plus interest.
If you disagree with the assessment, you can file a Petition for Reassessment with the Board of Appeals within 60 days of the notice. The Board reviews documents, holds an optional hearing, and issues a written decision. Appeals from the Board go to the Board of Finance and Revenue and then to the Pennsylvania Commonwealth Court.
Mistakes to Avoid When Filling Out Schedule SP
Schedule SP is a short form with long consequences. The Department disallows tens of thousands of forgiveness claims every year for one of the errors below.
- Forgetting Social Security on Line 9. Consequence: the Department adds it back from SSA records and recomputes the bracket, often denying the credit.
- Skipping unemployment compensation on Line 9. Consequence: an automatic REV-364C letter and partial denial.
- Listing a dependent who is claimed by the other parent. Consequence: dependent removed, forgiveness percentage drops one bracket.
- Using federal AGI on Line 10. Consequence: wrong table row, credit recalculated.
- Checking box (e) when both spouses had income. Consequence: full denial of forgiveness for both spouses.
- Writing the wrong child SSN. Consequence: dependent disallowed; credit reduced.
- Misusing the “separated” rule. Consequence: full denial; PA standard is stricter than federal.
- Skipping insurance proceeds and inheritances on Line 6. Consequence: matched against PA Inheritance Tax filings; credit recovered with interest.
- Counting gifts under $300 per donor. Consequence: inflated eligibility income; reduced credit.
- Filing Schedule SP without the PA-40 attached. Consequence: Schedule SP is filed away unprocessed and never applied.
- Using the prior year’s form or table. Consequence: wrong percentage; recalculation notice.
- Missing the April 15 deadline without an extension. Consequence: late-filing penalty plus loss of forgiveness if filed beyond the 3-year refund statute.
Do’s and Don’ts
The following habits separate clean filings from rejected ones.
Do’s
- Do download the current year Schedule SP and instructions from revenue.pa.gov every January, because the eligibility tables change.
- Do compute eligibility income on a worksheet first and recheck it twice, because every dollar shifts the bracket.
- Do gather every SSA-1099, 1099-G, and 1099-R before you start, because nontaxable items dominate Line 9.
- Do confirm each dependent’s SSN against the Social Security card, because PA matches every digit.
- Do keep a copy of your filed Schedule SP for at least 4 years, because the Department has a 3-year audit window plus mailing time.
- Do e-file through myPATH when possible, because the system runs the table lookup automatically.
Don’ts
- Don’t copy your federal filing status onto Schedule SP, because PA’s statuses do not match.
- Don’t include children claimed by the other parent under a custody decree, because the cross-match will catch it.
- Don’t omit Social Security from Line 9, because it is the single most-audited add-back.
- Don’t enter zero on Line 10 just because you owe no PA tax, because zero eligibility income flags the return.
- Don’t sign Schedule SP separately, because the PA-40 signature covers it.
- Don’t staple W-2s to Schedule SP, because they belong on the front of the PA-40.
Pros and Cons of Filing on Your Own vs. With Help
Schedule SP is short, but the eligibility income rules can be unforgiving. Whether to file solo or with help depends on your comfort with PA’s add-back logic.
Pros of filing on your own
- Free or near-free, especially through myPATH or PA Free File, because there is no preparer fee.
- Faster, because you control the timeline and submit when ready.
- Full visibility into every entry, so you understand the credit you receive.
- No reliance on appointments, which often fill up at VITA sites in March and April.
- Privacy, because no preparer sees your finances.
Cons of filing on your own
- Higher risk of missing a Line 9 add-back like Social Security, which triggers a REV-364C.
- No second set of eyes to catch the federal-versus-PA filing-status mismatch.
- Difficulty applying the separated rule correctly without legal background.
- Limited recourse if the Department disallows the credit — you must self-prepare the appeal.
- Eligibility table lookups are error-prone on the paper form (myPATH eliminates this).
Pros of filing with help (CPA, EA, or VITA)
- Reduced risk of denial, because preparers know the add-back rules.
- Audit defense if the Department questions the return, often included by paid preparers.
- Free access for many through VITA or AARP Tax-Aide for households under approximately $67,000.
- Easier handling of complex situations like separated spouses, partial-year residency, or self-employment.
- Year-round support if questions arise after filing.
Cons of filing with help
- Cost can run $150–$400 for paid preparers, eating into a small refund.
- Appointment scheduling may push your filing close to the deadline.
- Quality varies; not every preparer is comfortable with Schedule SP edge cases.
Schedule SP at a Glance: Paper vs. myPATH
| Filing Feature | What to Know |
|---|---|
| Cost | Both free; myPATH eliminates printing and postage |
| Math accuracy | myPATH does Line 10 totaling and Line 12 lookup |
| Refund speed | myPATH 2–4 weeks; paper 8–10 weeks |
| Proof of filing | myPATH email confirmation; paper certified mail receipt |
| Best for | myPATH for most filers; paper for those without internet |
FAQs
Do I have to file Schedule SP if my income is low?
Yes. Pennsylvania does not compute Tax Forgiveness for you. You must attach Schedule SP to your PA-40 to claim it; otherwise the Department keeps your withholding.
Does Social Security count as income on Schedule SP?
Yes. Social Security is reported on Line 9 as nontaxable income that is part of eligibility income, even though PA does not tax it.
Can I claim Tax Forgiveness if my parents claim me as a dependent?
No. Filers who can be claimed as a dependent on another federal return generally cannot claim Tax Forgiveness, with one narrow low-income exception in the instructions.
Do I list my federal head-of-household status in Part A?
No. PA has no head-of-household status. Federal HOH filers check box (a) Unmarried/Single on Part A.
Can my spouse and I file Schedule SP separately if we lived together?
No. If you lived together at any point during the last six months of the year, you must combine eligibility income under box (d) of Part A.
Do I include my child’s wages on my Schedule SP?
No. A dependent child’s earned income is not added to your eligibility income; the child files their own PA-40 if required.
Is unemployment compensation included in eligibility income?
Yes. Unemployment is reported on Line 9 as nontaxable income that counts toward eligibility, even though PA does not tax it.
Do gifts under $300 count on Line 7?
No. PA’s $300-per-donor threshold means small gifts and routine family support are excluded from Line 7.
Should I attach proof of inheritance to Schedule SP?
No. Do not attach proof up front. Keep records for at least four years and produce them only if the Department issues a REV-364C inquiry.
Can I claim Tax Forgiveness for a deceased spouse?
Yes. A surviving spouse may file under box (c) Deceased in Part A and combine joint eligibility income for the year of death.
Does Schedule SP replace my PA-40?
No. Schedule SP is an attachment, not a substitute. The PA-40 is the main return; Schedule SP only computes the credit on Line 21.
What happens if I forget to attach Schedule SP after I mailed the PA-40?
Yes, you can fix it. File an amended PA-40X with Schedule SP attached within 3 years of the original due date to claim the missed credit.
Related reading
- How to Fill Out Pennsylvania Domestic Relations Income and Expense Statement + FAQs
- How to Fill Out Pennsylvania Form PA-40 Schedule C (w/Examples) + FAQs
- How to Fill Out Pennsylvania Form PA-40 Schedule G-L (w/Examples) + FAQs
- How to Fill Out Pennsylvania Form PA-40 Schedule W-2S (w/Examples) + FAQs
- How to Fill Out Pennsylvania Form PA-40 X (w/Examples) + FAQs
- How to Fill Out Pennsylvania Form REV-72 (w/Examples) + FAQs