I know UE Compensation is taxable at the Federal level, but is it taxable for PA State tax purposes. Also, my UE was terminated after the company appealed, but it was determined to be a no-fault decision. I do not have to pay back any of the money. Will I still get a 1099UE or some other tax form - when I check the website it shows no taxes paid. Actually looks like slate was wiped clean -- has total amount I could possibly get at this point as the same maximum that was listed before I ever received any payments.

My main questions is about PA STATE TAX - whether the benefits I received will need to be included in my 2006 income. They did not withhold any State Tax, but did withhold Federal taxes.

Thanks,
meb24

http://www.dli.state.pa.us/landi/cwp/view.asp?a=202&q=228455

It appears that PA UI benefits are not excluded from gross income.
http://www.revenue.state.pa.us/revenue/lib/revenue/pitguide_chapter_07.pdf

Pattymd: Thanks for your reply - The first link to Dept. of UE - states on the Taxation of UC Benefits page "UC benefits are not taxable by the Commonwealth of Pennsylvania and local governments." I wasn't sure if this just meant they would not withhold the taxes or the compensation is in fact "NOT TAXABLE"

The 2nd Link which looks like an index page lists Unemployment Compensation as Income, but I'm not sure if this is just an index page & I'd have to check the actual PIT Guide.

Then at the PA DEPT of REV. website they have a Q&A section with same question I have--see link: https://revenue-pa.custhelp.com/cgi-bin/revenue_pa.cfg/php/enduser/std_adp.php?p_faqid=402&p_created=1038892542&p_sid=Tr4TfWqi&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PWRmbHQmcF9ncmlkc29yd D0mcF9yb3dfY250PTgwJnBfcHJvZHM9JnBfY2F0cz0wJnBfcHY 9JnBfY3Y9JnBfc2VhcmNoX3R5cGU9YW5zd2Vycy5zZWFyY2hfb mwmcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD11bmVtcGxveW1lbnQ gY29tcGVuc2F0aW9u&p_li=&p_topview=1

Question
Are taxpayers required to pay PA Personal Income Tax on their unemployment benefits?

Answer
No. Unemployment Compensation is not taxable for PA state income tax purposes.

I still don't know for sure - may be I have to give PA DEPT of REV. a call to clarify. My guess is that it is NOT taxable & IS excluded from income.

meb24

You'd better, because I definitely see that the state is saying two completely opposite things. Sorry. :o

The state of Pennsylvania does NOT tax unemployment benefits. No question about it!

If you look at the link I provided, you could understand why I said what I did.

I did look at the link, and I don't understand.

The link clearly provides that unemployment compensation is NON-taxable.

It's the second link, page 1 under the heading "Current Compensation-Gross Wages". Do you think that means the type of compensation that is counted as earnings when receiving UI benefits?

Pattymd & Barry:

Thank you both for your input.

Pattymd: My first thought was like yours that the list was all the types of taxable income, but in reading further, I think page one is just an Index of types of Compensation that may or may not be taxable -- Further down on Page 5 it specifically states in Table 7-2 (as BARRY noted) that UE compensation is NEVER taxable for PA State Income Tax purposes.

I do have another question, however. This is not about PA State Income Tax, but the Federal Tax implications. Since my benefits were stopped on an appeal won by the company (Non-Fault - says benefits do not have to be repaid), the Dept. of Labor/Industry website shows no benefits paid for 2006 & states there is no 1099. Do I still need to show this as income on my Federal Taxes. I have a feeling that I will not be receiving a 1099 for this overpayment of UE compensation--Looks like the slate has been wiped clean?? If I do need to include this & don't receive a 1099, is there a special TAX form that I will need to complete when I file my taxes.

Thanks, meb24

meb24: I have a feeling that I will not be receiving a 1099

My Ouija Board suggests otherwise.

meb24: Do I still need to show this as income on my Federal Taxes

The law requires you to report all income you received during the year (regardless of whether or not you receive a 1099 Form), unless the income item is statutorily excluded from taxation (i.e., gifts, inheritances, personal injury damages, etc.). The federal government (unlike the state of PA) taxes unemployment benefits and you are obligated to report the payments you received on your Form 1040.