There is a multitude of reasons people might fall behind on taxes with poverty being one of the most common. As a result, Pennsylvania put special guidelines in place in 1974 in order to offer tax forgiveness to citizens for whom paying income tax might prove too heavy of a financial burden.

According to the Pennsylvania Department of Revenue, it is important to remember that poverty is relative. Consequently, the department considers not solely income levels but also the amount of money necessary to live as well.

Determining poverty eligibility income

Even the wealthy can make a bad investment or lose a high-paying job after taking on significant debt. They would then find themselves in a precarious financial situation, as the source of your income also makes a difference.

Note that when determining poverty eligibility, Pennsylvania considers all income, whether it is taxable or not. Here are some examples: 

  • Pennsylvania lottery winnings 
  • Spousal support 
  • Gifts of property or cash 
  • Education grants from the government 
  • Inheritance 

Identifying excluded income

In spite of the comprehensive approach Pennsylvania takes to determining income for poverty eligibility, the state does make some exceptions:

  • Unemployment benefits 
  • Awards for damages 
  • Social Security Disability benefits 
  • Workers’ compensation 
  • Personal use of an employer’s leased or owned property 

Effect on tax forgiveness

If you feel worried about your eligibility for tax forgiveness, note that forgiveness works on a continuum. This means that even if you make money on the higher end of the poverty threshold, you might still receive forgiveness for a portion of your income taxes.

Tax forgiveness can be complicated, and it may be wise to consult with an experienced attorney to better understand your unique financial situation.