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  • There is a long-standing myth that you cannot work and claim unemployment benefits. This is of course not true. The government actually encourages unemployed workers to take on any type of work or even work as unpaid volunteers if paid work is not available. The only caveat, of course, is that unemployed workers have to declare any income they receive.

    Your local Unemployed Insurance Agency will deduct from your unemployment benefits any income you generate over a certain threshold. This threshold is the partial benefit credit. Any income you make over and above the partial benefit credit is deducted dollar-for-dollar from your unemployment benefits. Once your deduction reaches your weekly benefit amount, you cease to receive unemployment benefits. I guess this is why there is a widespread belief that you can’t work while receiving unemployment benefits. Some might say it is not worth your time to work, if most of it is going to be deducted from your benefits. If your goal is to milk as much as possible from social benefits while working the least as possible, then you would be right. Of course, there are situations, such as single parents of young children or unemployed workers who want to train for an industry in high demand, where working to receive only slightly more than you would get by staying at home does not make much sense.

    However, in general working part-time while you receive benefits is a smart choice. It enables you to remain in the labor market, which looks good on your resume and allows you to maintain and build your contact network, which can make finding a full-time job easier.

    However, how can you calculate how much you will get in unemployment benefits once you declare your weekly income? No worries, it could hardly be easier to workout.

    First calculate your partial benefit credit. In Pennsylvania your partial benefit credit is 40 percent of your weekly benefit rate. So, all you have to do is multiply your weekly benefit amount by 0.4 to calculate your partial benefit credit. For example, if you have a weekly benefit amount of $300 you could earn up to $120 (300 x 0.4) from a part time job without receiving any type of deduction.

    What happens though if your make more than your partial benefit credit? As mentioned above, any income over and above your partial benefit credit will be deducted dollar by dollar from your weekly benefit rate.

    To calculate how much you will receive if you earn more on your part time job than your partial benefit credit, add your weekly benefit rate and your partial benefit credit and deduct your total weekly earnings from your part time job. So, for example, if you earn $200 on a part time job and your partial benefit credit rate is $120, your benefit amount after deductions would be $300 + $120 – $200 = $220. This would equal a deduction of $80 and a total weekly income of $420.

    The Pennsylvania Unemployment Compensation Law includes provisions for reducing your unemployment benefits under certain circumstances. Understanding what these circumstances are does not always allow you to do anything about it, but it will help you prepare for any reduction in your income. This is especially important if you are a long-term unemployed worker and have extra financial responsibilities such as a mortgage. This series of article will discuss three of the main reasons the PA Labor and Industry Department could (legally) reduce your weekly benefits.

    Low Balance in the Unemployment Compensation Trust

    The Pennsylvania UC Law section 404e 4(ii) allows the Labor and Industry Department to reduce benefits when the state Unemployment Compensation Trust Fund is low. Since January 2, 2010, the Labor and Industry department have reduced the benefits of unemployed workers by 2.3 percent due to the increase in unemployed workers and the reduction in contributions toward the fund. This reduction is foreseen to continue during the rest of 2011.

    There are certain points you may want to consider if you are affected by this reduction.

    First, the benefit reduction amount will be rounded up to the next dollar. This is not going to break the bank, but its nice to know where your money is going, even if it’s only pennies.

    Second, this reduction of 2.3 percent applies to your basic unemployment benefits and your dependents allowance.

    Third, the reduction of benefits is applied to the final payable amount, once earnings, vacation, pensions and holidays have been deducted. However, it is deducted before any pending federal tax, child support or overpayment offsets are deducted.

    If you would like more information on the law that permits this reduction click here.

    Child Support Reduction

    Another possible source of unemployment benefit reduction is child support. If you are responsible for paying child support the DRS, or Domestic Relations Section will inform the PA Labor and Industry department and request the reduction of child support from your UC benefits.

    The process is as follows. The DRS will notify the PA UC agency of your financial responsibilities and provide an amount or percentage that must be deducted from your payments. For instance, the DRS may request a $75 or 50 percent deduction of your benefits. This means $75 or 50 percent of your benefits, whichever is less, will be taken away from your wages and sent directly to the DRS handling your children’s case.

    If you opted to deduct the Federal Tax from your benefits automatically, the percentage amount of your deduction will be taken from your gross amount, before the tax has been deducted.

    Our next article will discus the third main reason why the PA Labor and Industry department applies reductions from unemployment benefits.

    Losing a job is often a traumatic and unexpected experience. This often causes us to make less than ideal decisions, which can further affect our financial situation. For instance, what happens if you do not apply for unemployment benefits straight after losing your job. This often occurs with workers who have never or rarely been unemployed. You may go through a period of denial, which can last several weeks, where you hope to either recover your old job or bounce straight back into a new one.

    What happens if you took several weeks to file your initial unemployment benefits claim? Can you backtrack your application and get paid for the weeks you missed?

    Sadly, the answer to this question is not as straightforward as we would like. As a general rule you cannot backtrack your unemployment application. However, in some “very limited number of circumstances” the Labor and Industry Department of Pennsylvania may consider paying your for your missed benefits. Contact the PA Labor and Industry Department or visit your local CareerLink office for more information.

    Missing a few weeks benefits is not the only reason you should be quick to apply for UC in Pennsylvania. If you delay your application for too long this could affect your eligibility for unemployment compensation altogether. Let’s explain.

    In Pennsylvania your unemployment compensation eligibility is determined by the income you earned during your base period, the last four quarters from filing for UC. If you wait to long to apply while you are no longer reporting an income, your chances of receiving unemployment benefits could suffer.

    What is Pennsylvania’s PREP program and why should you set aside the time to go?

    The federal government has determined all states institute a worker profile and re-employment system. These systems are designed to screen for workers who are most likely to exhaust their unemployment compensation benefits and may need special assistance to find work. If you are selected by this program, you may receive special assistance finding work. Also, if your are selected to participate in the program without a good reason you could be lose your unemployment benefits. If your personal circumstances don’t allow you to attend the Profile Re-Employment Program (PREP) call your local Pennsylvania (PA) CareerLink office and explain your situation.

    What help will the PREP program provide?

    Participants in PA’s PREP are given personalized assessment and guidance on career planning and occupational needs. It also provides better job match and referral services. You will also qualify for job match, referral services, labor market information and resume preparation help. These services can increase your chances of finding employment and provide you with valuable education and training opportunities.

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