Unemployment: FAQ

An unprecedented number of people have filed for unemployment in the United States since the start of the pandemic**. Whether it’s due to layoffs, significant hours being cut, or furlough, more than ever this governmental assistance program is being tapped to aid U.S. workers who are being impacted by the Covid-19 crisis. Many people are for the first time filing for unemployment, and as a result many questions arise. 

What is “Unemployment”?

Simple put, according to the New York State’s government website, “Unemployment Insurance is temporary income for eligible workers who lose their jobs through no fault of their own.” 

How to Apply:

To apply, you must do so at your respective state’s unemployment office (or in our present situations, at your state’s unemployment website). 

You can use this website to locate your State and get directed to their unemployment website: https://www.careeronestop.org/LocalHelp/UnemploymentBenefits/unemployment-benefits.aspx

Who is eligible?

Since March 2020, unemployment insurance has been greatly expanded. Workers who were previously not covered may not be eligible. 

You could be eligible if you were permanently or temporarily laid off (including furloughed employees). Additionally, if your hours have been cut, or you are forced to quarantine due to coronavirus, you may be eligible. 

If you think your case is uniqure, and you aren’t sure if you could be eligible – reach out to your state’s unemployment office to find out! 

Is my unemployment check taxable? 

Yes, the IRS considers state unemployment benefits as taxable income[1]. You can voluntarily sign up to get your federal and state taxes withdrawn from your income (usually during your initial application), but it is not done automatically. The federal tax withholding is a flat ten percent while the state percentage varies (in New York it is 2.5%). 

If you do not request for your taxes to be withheld, there are other options for you to make tax payments, whether monthly, quarterly, or all at once during the 2021 tax season. The options vary case by case, and the best way to figure out what works for you is by contacting the IRS or your accountant. 

You must remember that unlike the stimulus check, you will be required to return a portion of your weekly unemployment benefits. If you need 100% of every check now, then focus on stabilizing your financial situation first, but remember that you may owe the IRS a lump sum come tax day 2021. And if you have more wiggle room, consider getting your taxes withheld – this will help you avoid later surprises.  

Dealing with income tax is pretty straight forward when you have a job, and your payroll taxes are automatically withheld. But, when receiving unemployment benefits the question of taxes gets more complicated. Having all the answers can help you avoid pitfalls and unexpected debt to the IRS.

Do I get my unemployment through the state government or through the federal government?

Currently, a bit of both. Along with the amount you qualify for when applying for your unemployment through the state, every qualifying resident receives an additional $600 a week through the federal government until July 31, 2020. This was passed in the CARES Act as a way to get money to residents quickly. 

If I quit can I get unemployment?

Yes, if you have “good cause.” It will be up to your State’s unemployment office but if you left due to a reason brought on by the pandemic, you should be approved.

Due to the current situation, your unemployment will most likely be approved if you quit for one of the following reasons[2]: 

  • If you develop a health problem, like being diagnosed with coronavirus by a doctor,
  • You are taking care of someone who has been diagnosed with coronavirus
  • You are taking care of your child because the pandemic related school closures
  • You are under government-imposed quarantine

Is this situation unprecedented?

Yes. Typically, unemployment systems are designed to encourage getting a new job as soon as possible. However, given the current situation the unemployment system is being expanded and extended to account for the massive workplace closures, and lack of hiring. While you may still be expected to apply for jobs while on unemployment, many states have removed that requirement as it is currently more of a formality. Regardless, you will not be kicked off your unemployment benefits for not finding a job, at least for the time being. 

———

1- https://turbotax.intuit.com/tax-tips/unemployment/guide-to-unemployment-and-taxes/L1uajNdHD

2-https://www.illinoislegalaid.org/legal-information/if-i-quit-my-job-can-i-get-unemployment-benefits

** As of 5/4/2020, 30 million Americans have filed initial unemployment claims.

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