With unemployment rates at all time record levels, unemployed workers are taking more than usual to find a new job. This can be extremely frustrating and stressful, especially as your state insurance benefits are close to running out. So, it is no surprise that one of the most frequent questions we get asked is, how many weeks of unemployment do I get in Pennsylvania? A popular variation on this question is, how many tiers of unemployment are ther in Pennsylvania?

If you are not sure what is meant by “ties”, you need a little background in a federal unemployment program called Emergency Unemployment Compensation.This unemployment compensation program is a safety net for Pennsylvania unemployed workers who exhaust their 26 weeks of state unemployment insurance and still are searching for suitable employment.

This program is divided into four tiers, each with a set number of unemployment benefit weeks. tier 1 has 20 weeks; tier 2 has 14 weeks, tier 3 has 13 weeks and tier 4 has six weeks. The number of tiers a state is eligible for depends on its seasonally adjusted unemployment rate. The seasonally adjusted unemployment rate of a state is simply its three-month average unemployment rate.

Therefore, it is more accurate to ask, how many tiers does Pennsylvania have NOW?

This is how the program works. All states qualify for tiers 1 and 2, regardless of their unemployment rate. If your state’s seasonally adjusted unemployment rate is above 6.5 percent, you qualify for tier 3, and if your state’s unemployment rate is above 8.5 percent, it qualifies for tier 4 also.

Pennsylvania’s seasonally adjusted unemployment rate has just fallen below 8.5 percent, so its tier 4 benefits system is phasing out. This means workers who exhaust their tier 3 benefit weeks will not be able to apply for tier 4 benefits. The Pennsylvania Unemployment Insurance Agency will send them information on how they can apply for other unemployment compensation programs, such as the Extended Benefits program.

However, if you qualified for tier 4 benefits before April, 2, 2011, you will continue to receive your tier 4 weeks until they run out.

The Extended Benefits program we mentioned above, does work as a de facto tier 5, which most states are eligible for. The Extended Benefits program provides 13 or 20 weeks of unemployment benefits to workers who exhaust their state UI benefits and EUC benefits.

Wait a second! You are telling me I have to pay taxes on my benefits? Afraid so. In the eyes of the IRS all benefits are considered taxable income. However, taxation on benefits is not the same as taxation on normal income, that is, income from a job. If you are unemployed or know someone that is, it is worth spending a few minutes checking how the taxation side of things works. It can save you a lot of trouble in the long run.

So What Taxes Do I Have To Pay?

You have to pay federal income tax on all the benefits you receive, whether they are state unemployment compensation benefits or federal EUC or EB benefits. They are all taxable. However, in Pennsylvania you don’t have to pay state or local taxes on your benefits. This means you will have to pay taxes equivalent to your federal tax bracket after deductions, but don’t have to worry about Pennsylvania taxes.

How Can I Pay For These Taxes?

You have four main options.

1) You can collect all your benefits and set aside money for when your taxes are due. If you choose this option, put aside at least 10 percent of your benefit amount. So if you receive $200 a week, put aside $20 a week, $80 a month aside for taxes.

2) Ask the PA Department of Labor to deduct an estimate of your taxes from your benefits. This is probably the easiest and safest method. You just have to sign a form authorizing the PA Department of Labor to deduct 10 percent from your gross benefits. Gross benefits means the entire sum you are entitled to before any deductions, such as deductions for earnings or child support, are taken away. If you wish the PA Department of Labor to withhold your federal taxes click here and update your tax withholding status or call 1.888.255.4728.

3) Put aside 10 percent of your gross benefits and make your own estimated tax payments every quarter. This is what self-employed workers do to keep on top of their taxes and you can do it whether you are self-employed, unemployed or employed. Simply fill in a 1040ES form to work out your quarterly tax. If you need any help working out your estimated taxes or want to know how to make these payments call 1.800.829.1040.

4) If your file joint returns with your spouse, get your spouse to increase the taxes they withhold from their wages. Once it is time to work out how much you owe, the amount your wife or husband overpaid will offset the taxes you owe. For this system to work you need to estimate how much you will owe in taxes and how much of your spouse’s income needs to be withheld to cover your tax burden.

If you are close to exhausting your EUC (Emergency Unemployment Compensation) benefits you may qualify to join the federal Extended Benefits program. Remember how easy it was to jump from Pennsylvania state unemployment insurance to EUC benefits? Well, the transition to EB is not that easy. This is not to say you should have any trouble qualifying if you have a valid claim, but the requirements are more stringent and it is much easier to get your claim disqualified.
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This article will discuss some of the main questions workers have about the Extended Benefits program in Pennsylvania. Please note that not all Extended Benefits programs are the same. Although the EB program is funded with federal money, each states manages its own program and determines many of the requirements. It is therefore important you get information of the EB program for your state.

When does the EB period start and end in Pennsylvania?

Good question. Unlike other unemployment programs, such as PA UI program, the EB will not last indefinitely. EB programs are designed to help long term unemployed workers during periods with a high unemployment rate. In Pennsylvania this period started in February 2009. It will end once Pennsylvania’s unemployment figures improve. For instance, the program will end if the PA unemployment rate drops to 6 percent.

How do I qualify for EB payments?

If everything works out as it should the PA department of Labor should send you a notice of financial determination by mail if you qualify and you are close to exhausting your EUC benefits. However, if you feel you qualify and have not received a determination after 10 days of receiving your final EUC payment, you can call and ask about your claim at 1.888.313.7284.

What are the special requirements of the EB Program?

Very good question. The EB has more stringent requirements for workers and your claim could be cancelled if you don’t know what is expected of you. To receive EB payments you must prove you are making a systematic and sustained effort to find work every week you claim for benefits. More specifically, you must carry out two search activities every week and these must be on separate days. Of course, this is a minimum not a maximum. The more time and effort you spend searching for work the more chances you have of finding suitable employment. Note that you must provide tangible evidence of your job search efforts, so keep good records of all your job search activities. If you are requested to prove your claims and have no evidence, your claim could be closed down.

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