Unemployment Insurance FAQ

It can be challenging to find the answers you need sometimes.  With many people finding themselves in a tight financial situation, it can be hard to get through to Unemployment offices over the telephone.

Here are answers to some of your most pressing questions.

What is Unemployment Insurance?

Unemployment insurance was put in place so that people who have lost their jobs or who have had their hours reduced can still pay the bills.  When the COVID-19 pandemic hit the US, other assistance programs such as CARES were added to the basic benefits so that more Americans would be eligible for assistance.

How much is paid by Unemployment Insurance?

The amount of money received will vary depending on which state you live in and how much money you made before being unemployed.  Each state has its own method of calculating what will be paid, so you will need to check the regulations where you live.

Do I qualify for benefits?

There are two ways in which a person usually qualifies to receive benefits:

• Your loss of work was involuntary
• You have met the state requirements for either the wage earned or number of hours worked

With the CARES Act in place since the inception of COVID-19, more people are now eligible for assistance.  You may qualify if:

• You are forced to leave work to care for a family member
• Your work has closed either temporarily or permanently due to the Coronavirus
• You are quarantined but able to return to work after the quarantine period
• You leave work because of the risk of exposure to Coronavirus

The CARES Act has also made it possible for freelance workers and gig workers to apply for benefits.

How long can I collect benefits?

In most states, benefits are paid for a maximum of 26 weeks.  Due to the pandemic, the CARES Act has extended the benefit period to help those in need.  An extra 13 weeks of benefits can be paid on top of your state’s maximum.  

For you to receive UI benefits, most states require that you are actively seeking employment.  Each state has its own requirements for this, so check with your local unemployment office to see what is needed.

How does the pandemic affect my benefits?

With the CARES Act, eligible unemployed individuals could apply for an additional $600 per week from the federal government.  The extra payment was available from April 5, 2020, to July 31, 2020.   

There is the possibility that with the current unemployment situation, more federal supplements could be forthcoming.  The unemployment rate is still high, and new jobs are in short supply.

What if my claim has not been processed and I am waiting?

If you are waiting on the payment of a benefit, you will get an up-front payment for the weeks misses.  Though the federal benefit payments have expired, if you did not receive it yet, you are eligible to receive it even after the date of expiration.

How do I file for unemployment?

You can apply for UI online, over the phone, or in-person at an Unemployment office.  Generally speaking, an online application will be more convenient.  It can be hard to get through on the phone due to the increased call volume.

Make sure you have all the information that you will need ready before you start the application process.  You will need your bank account details, information about your job history over the last 18 months, and your previous employer's contact information.

Who does not qualify?

Unemployment benefits are not available for undocumented immigrants.  Workers who are on paid sick leave or paid family leave are also ineligible.

Do furloughed employees qualify?

Under state rules, furloughed employees would not be eligible for benefits.  However, the CARES Act ensures that you would then be eligible if the Coronavirus is the reason.

Do I qualify if I quit my job?

If you quit your job voluntarily, you would not qualify.  You have to be unemployed through no fault of your own to be eligible for unemployment.

Do I qualify if I was freelancing or self-employed?

Under ordinary circumstances, freelancers and self-employed individuals were not covered.  Now, those individuals qualify for Pandemic Unemployment Assistance (PUA).  Because this program is new, it was not available in all states at the same time.  Check with your state's unemployment site for updated information and find out how to receive retroactive benefits if you qualify.

If my hours have been reduced, do I qualify for unemployment?

You may, and you may not be depending on specific factors and the regulations in your state.  Some states offer assistance for part-time workers, while others do not.  If your hours have been drastically reduced, check with the guidelines in the state in which you reside.

If my employer is paying me using the Paycheck Protection Program (PPP), will I qualify for unemployment?

Unfortunately, you would not qualify.  You can’t receive a check through PPP and unemployment at the same time.

Small businesses use PPP to help cover worker salaries and their fixed operating expenses through a government-backed loan.  The federal loan is forgiven as long as the company does not fire employees – the goal is to keep them off unemployment systems. 

What if my state runs out of unemployment money?

Fortunately, that won’t happen.  If unemployment funds are depleted, states can borrow money from the federal government to replenish the fund.  

Keep in mind that states can't run deficits and will have to pay the loan back eventually.  That will mean budget adjustments at the state level to have funds for the repayment of the loan.

Will I be penalized down the road for drawing unemployment benefits?

There is no penalty for receiving benefits.  The only thing to be aware of is the amount you should be receiving.  If you receive an overpayment, you may have to pay it back.

But there is no penalty for using unemployment benefits if you are out of work for reasons beyond your control.

Is there a tax to be paid on unemployment benefits?

When you do your federal tax return, you will have to report the unemployment benefits received.  You may need to report it on your state return as well.  The benefits are included in your gross income and taxed the same as your regular income.

The taxes can automatically be deducted from your benefit check before the funds are paid to you so that you will not need to pay it down the road.  If you wish to go that route, you will need to file a Voluntary Withholding Request.

You could choose to pay the taxes in quarterly installments to the IRS if you can estimate what you will owe.  It is crucial to calculate amounts correctly, as if you underpay, you may end up with a penalty fee.