PA UC tax withholding question - better to check or uncheck Federal tax box when filing?
Hey everyone, I'm filling out my UC application for the first time and I'm stuck on the tax withholding section. There's an option to have Federal taxes (10%) withheld from my weekly payments. Is it better to have them take taxes out now or just get the full amount and deal with taxes later? I'm worried about owing a bunch at tax time, but I also need every dollar I can get right now. What have you all done and why? Any pros/cons either way?
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Elijah Brown
Always check the box to withhold taxes!! I didn't do this last year and got hit with a $2,100 tax bill in April that I wasn't prepared for. Trust me, it's better to get slightly smaller payments now than to be shocked later. UC benefits are fully taxable income.
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Zoe Walker
•Ouch! $2,100 is a lot! Was that just from unemployment or did you have other income too? I'm trying to figure out how much I might owe if I don't have them withhold.
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Maria Gonzalez
depends on ur situation really. if u need every penny right now to pay bills take the full amount. thats what i did
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Natalie Chen
•That's a risky approach though. Remember that unemployment benefits are fully taxable income, and if you don't have withholding, you should really be making quarterly estimated tax payments instead. Otherwise you might face penalties on top of the taxes owed.
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Santiago Martinez
I didn't check the box my first time on unemployment and I regretted it SO MUCH! Now I always have them take out the taxes. Yes it sucks getting less money each week but not as much as scrambling to pay the IRS in April!!!!
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Samantha Johnson
I have been working with UC claims for years, and my advice is to always opt for the tax withholding. The 10% federal withholding is actually less than what many people end up owing (depending on your tax bracket), but it's better than nothing. Keep in mind that PA doesn't offer state tax withholding on UC benefits, but the benefits are still subject to PA state income tax (currently 3.07%). You'll need to plan for that separately. If you're in a truly desperate financial situation, you can take the full amount now, but set aside at least 15% of each payment for taxes if possible (10% federal + 3.07% state + a little buffer).
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Zoe Walker
•Thank you for explaining that! I didn't realize PA state tax isn't withheld automatically. Do a lot of people get caught by surprise with that part too?
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Nick Kravitz
i switched mine halfway thru my benefit year cuz i needed more $$ for car repair... can u change it later if u decide differently?
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Samantha Johnson
•Yes, you can change your tax withholding preference during your benefit year. Log into your PA UC dashboard, go to "View and Maintain Account Information," then select "Update Tax Withholding." Changes typically take effect within 1-2 payment cycles.
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Hannah White
Has anyone actually managed to GET THROUGH to the UC service center to ask questions like this?? I've been trying for WEEKS to talk to someone about my claim but all I get is busy signals or the automated message saying they're experiencing high call volume. This system is COMPLETELY BROKEN! How is anyone supposed to get answers when you can't even reach a human being??
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Natalie Chen
•I had the same problem but finally got through using a service called Claimyr. It basically waits on hold for you and calls you when an agent is available. Costs a bit but was worth it to finally get my issues resolved. Their website is claimyr.com and they have a video showing how it works: https://youtu.be/CEPETxZdo9E?si=WL1ZzVZWG3KiHrg2 - saved me hours of frustration.
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Elijah Brown
Coming back to the original tax question - there's another factor to consider: if you're already working part-time while on UC, you might definitely want the withholding. When you combine partial UC with work income, it can push you into a higher tax bracket than you might expect.
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Zoe Walker
•That's a good point! I might pick up some gig work while on unemployment. So it sounds like most people recommend withholding the taxes upfront?
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Maria Gonzalez
wait isnt unemployment not taxable? i thought they made it tax free during covid or sumthin
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Samantha Johnson
•That was a temporary measure for the 2020 tax year only, when the first $10,200 of unemployment benefits were tax-free under the American Rescue Plan. That provision expired, and now ALL unemployment compensation is fully taxable at both federal and state levels again.
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Santiago Martinez
What about state taxes? Does PA take those out automatically too or just federal?
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Natalie Chen
•Pennsylvania's UC system only withholds federal taxes (10% flat rate). State taxes (3.07% in PA) are not automatically withheld, so you'll need to set aside money for those or make estimated tax payments. Some people are surprised by this at tax time.
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Zoe Walker
Thanks everyone for all the advice! I'm going to check the box for federal tax withholding. Better to get slightly smaller payments than a big tax bill later. I'll also put a little aside for the PA state taxes since they don't withhold that automatically. Really appreciate all the help!
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Elijah Brown
•Smart choice! Your future self will thank you when tax season comes around.
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Dylan Fisher
Good decision @Zoe Walker! I went through the same dilemma last year and chose to have taxes withheld - definitely the right call. One tip: even with the 10% federal withholding, I still owed a little bit at tax time because my regular job earlier in the year had put me in a higher bracket. So maybe set aside just a tiny bit extra if you can, like $10-20 per week, just as a safety buffer. Also keep all your UC documentation organized - you'll get a 1099-G form in January that you'll need for filing. Best of luck with your claim!
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Sophia Carter
•That's really helpful advice about setting aside extra money! I hadn't thought about how my previous job income this year might affect my tax bracket. The $10-20 per week buffer sounds doable. Quick question - do you remember roughly how much extra you ended up owing even with the 10% withholding? Just trying to get a ballpark idea of what to expect.
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