How Weekly Benefits May be Reduced
There are several reasons why your weekly benefits may be reduced, including the following:
UC Fund Solvency: The Law requires benefit reductions when the balance in the UC Fund is low. Benefit payments for weeks ending January 6, 2018, and after, are reduced by 2.4%.
Earnings: The Law requires you report all work and earnings each week, Sunday through Saturday. You must report all gross earnings, even if you have not yet received payment. If you earned tips or commissions you must include these amounts as part of your regular gross earnings.
Potential Earnings: Each week you must report if you were absent from work when work was available. You must indicate the amount of potential earnings. Potential earnings, are the wages you could have earned had you not been absent from work when work was available.
Holiday Pay and Vacation Pay: Holiday pay and vacation pay that equal more than your PBC are deducted from your benefits for the week in which the holiday or vacation occurs. However, vacation pay is not deducted if you do not have a recall date from your employer.
Severance Pay: Severance pay means one or more payments your employer makes to you because of your separation from your employer. Severance pay that exceeds 40% of Pennsylvania's average annual wage is deducted from your benefits (unless your AB Date is prior to January 1, 2012, or the severance results from an agreement entered into before January 1, 2012). The deductible portion of your severance pay is allocated to the weeks immediately following your separation from employment, based on your full-time weekly wage.
EXAMPLE: You received severance pay of $25,000. For Benefit Years that begin in 2022, 40% of Pennsylvania's average annual wage is $23,659.26. $25,000 - $23,659.26 = $1,340.74 in deductible severance pay. Your regular full-time weekly wage is $500. Therefore, $500 will be attributed to each of the first two weeks following your separation, and $341 will be allocated to the third week.
Pensions: Pension payments may be deductible from UC if (1) your
Base-Year employer has contributed to or maintained the pension plan, and (2) your work during the Base Year increased the amount of, or affected your eligibility for, the pension. (See your Notice of Financial Determination and accompanying insert entitled "Explanation of Your Notice of Financial Determination" for complete information about your Base Year.) If your employer was the only one who contributed to the pension, 100% of the prorated, weekly pension amount is deductible. If you contributed in any amount to the pension, 50% of the prorated, weekly pension amount is deductible. Pensions are deductible from weekly benefits on a dollar-for-dollar basis. The following payments are NOT deductible, however:
- Social Security and Railroad Retirement pensions.
- A lump-sum pension payment, if you did not have the option of receiving monthly or periodic payments.
- A lump-sum pension payment that is deposited (rolled over) into an eligible retirement plan, such as an IRA, within 60 days after you received the payment. In other words, you can avoid having your UC benefits reduced if you roll over your pension to save it for retirement. If you roll over only a part of a lump-sum payment, that portion of the lump-sum that is not rolled over is deductible.
Back Wage Awards: If you receive a back wage award for a period of time when you received benefits, the award may affect your eligibility for the benefits you received.
Support Orders: Support that you owe will be deducted from benefits if the department receives an administrative or judicial order to do so. Any questions about the amount being deducted from your benefits should be directed to the Domestic Relations Section of the Court of Common Pleas that issued the order. More information on withholding support from benefits is provided in the pamphlet UCP-24. You can
view the UCP-24, or
contact the UC service center. If support is deducted from your benefits, log onto
www.childsupport.state.pa.us to access your payment information.
Taxes: UC benefits are included in gross income for federal income tax purposes. The department reports your benefits to the Internal Revenue Service (IRS) for the calendar year in which the benefits were paid. You may elect to have federal income tax withheld from your benefits at the rate of 10%. You can make this choice when you file your application for benefits. To change your withholding choice, log on to the PA UC system and access your dashboard. (Taxes withheld can be refunded to you only by the IRS.)
Tax Statements: By the end of January of each year, the department provides Form UC-1099G, Statement for Recipients of Pennsylvania Unemployment Compensation Payments, to people who were paid benefits during the prior year. This statement shows the amount of benefits paid and the amount of federal income tax withheld, if any. To obtain a copy of a form UC-1099G please call 1-888-313-7284.