Determine Income Taxes Paid

• 1). Locate the number in box 19, "Local income tax," of your federal Form W-2, Wage and Tax Statement, that you received from your employer. This is the value of Philadelphia earned income taxes withheld by your employer.
  
  
• 2). Total all additional payments you made during the calendar year to the City of Philadelphia for earned income tax. Typically, this will also be the amount of payments you have reported to the City of Philadelphia on your earned income tax return.
  
  
• 3). Total all additional payments you made during the calendar year to the City of Philadelphia for unearned income tax. Typically, this will also be the amount of payments you have reported to the City of Philadelphia on your school tax return.
  
  
• 4). Add together the income tax payments determined from steps 1 through 3. This amount is the Philadelphia income tax that is deductible for federal income tax purposes.
  
  

Report the Deduction

• 1). Record the aggregate Philadelphia income tax payments you paid on Schedule A of your federal Form 1040, under the line titled "State and local income taxes."
  
  
• 2). Add the amount of Philadelphia income tax payments to any Commonwealth of Pennsylvania income taxes paid and to any income taxes paid to other states or localities.
  
  
• 3). Include the total state and local income taxes paid with all other itemized deductions and limitations when computing the amount of total itemized deductions on Schedule A of Form 1040.
  
  
• 4). Carry total itemized deductions calculated on Schedule A of Form 1040 to page 2 of Form 1040, and enter the amount under the line titled "Itemized deductions (from Schedule A)."