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Taxes for Unemployment Compensation Pennsylvania

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  • Taxes for Unemployment Compensation Pennsylvania

    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

  • #2
    http://www.dli.state.pa.us/landi/cwp...a=202&q=228455

    It appears that PA UI benefits are not excluded from gross income.
    http://www.revenue.state.pa.us/reven...chapter_07.pdf
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Unemployment Compensation PA Income Tax??

      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-...i=&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

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      • #4
        You'd better, because I definitely see that the state is saying two completely opposite things. Sorry.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          The state of Pennsylvania does NOT tax unemployment benefits. No question about it!
          Barry S. Phillips, CPA
          www.BarryPhillips.com

          IRS Circular 230 Disclosure: This response is intended to provide general information and written for educational purposes only. It does not establish a client relationship. This communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any party any matters addressed herein.

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          • #6
            If you look at the link I provided, you could understand why I said what I did.
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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            • #7
              I did look at the link, and I don't understand.

              The link clearly provides that unemployment compensation is NON-taxable.
              Barry S. Phillips, CPA
              www.BarryPhillips.com

              IRS Circular 230 Disclosure: This response is intended to provide general information and written for educational purposes only. It does not establish a client relationship. This communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any party any matters addressed herein.

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              • #8
                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?
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                • #9
                  Pa State Tax Re: Unemployment Compensation

                  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

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                  • #10
                    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.
                    Barry S. Phillips, CPA
                    www.BarryPhillips.com

                    IRS Circular 230 Disclosure: This response is intended to provide general information and written for educational purposes only. It does not establish a client relationship. This communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any party any matters addressed herein.

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