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Dividend Earners

Certain types of 1099 income, including some dividend income, are taxable under Philadelphia’s School Income Tax (SIT).
Form 1099 DIV is issued to individuals who receive dividend income and other income such as passed through capital gains distributions. A Philadelphia resident who receives dividend income from common stocks, mutual funds or other investment-type companies will be required to file and pay a School Income Tax (“SIT”) return.

Philadelphia residents who are recipients of Form 1099 DIV should consult the SIT Regulations to ascertain whether the type/source of dividend received is subject to the SIT. For example, dividends paid by a National Bank to holders of common stock are not subject to the SIT.

Form 1099 Interest is issued to individuals who receive interest income. A Philadelphia resident who receives interest income from corporate bonds, mutual funds or other investment-type companies will be required to file and pay a School Income Tax (“SIT”) return.

Philadelphia residents who are recipients of Form 1099 Interest should consult the SIT Regulations to ascertain whether the source of the dividend received is subject to the SIT. For example, interest from a corporate bond or bond mutual fund is subject to the SIT whereas interest from a bank Certificate of Deposit (“CD”), direct obligation of the U.S. Treasury, or a municipal bond issued by a political subdivision of Pennsylvania are not subject to the SIT.