Whether you've been working the same job for years or just recently taken a new opportunity, there may be a point in your life when you qualify for unemployment benefits. These short-term payments can help keep you afloat while you find a new job.
Here’s some things you should know about claiming unemployment benefits before you apply.
What are unemployment benefits?
The technical term for unemployment benefits or unemployment payments is unemployment insurance. It’s a program administered by the state you live in that pays money to certain qualified people when they lose a job. The payments are funded through a combination of payroll taxes collected from your check by your employer and the state government.
Payments are calculated weekly, but may be made either weekly or biweekly, depending on the state. It is usually in the form of a check, electronic deposit, or debit card. Payments typically make up just a portion of your paycheck, as unemployment is meant to be temporary and not a replacement for wages.
What are EDD payments?
In California, unemployment payments are handled by the Employment Development Department (EDD). For this reason, Californians commonly refer to their weekly payments as “EDD payments.”
How do I qualify for unemployment benefits?
Each state sets its own policies for how to administer payments, but you typically can’t claim unemployment if you quit your job or were fired because of something you did. If your hours were reduced, or you had a layoff for no fault of your own, you can usually qualify for unemployment.
Some exclusions can include:
Self-employed workers, freelancers, and independent contractors
People who haven’t worked long enough to have earned unemployment credit
People who have used up all of their unemployment benefits in the near past
Some exceptions were made for these during the COVID 19 pandemic, where unemployment benefits were extended to more people and for a longer amount of time. Many of these exceptions are no longer being recognized by the majority of states.
To get unemployment benefits in the state you live in, visit the state website that handles it. You can try Googling “unemployment benefits” plus your state to get the right place. Make sure it’s a .gov domain. This map will also take you directly to the state office that handles it in your area.
You will likely be asked about your last job, how long you worked, and even the job before that. Pay information and the details surrounding your termination will be asked, as well. Be honest about how you lost your job since they will also be verifying this information with your former employer. Lying or misrepresentation is unlawful and could cause you to lose benefits or even face fines.
How do I continue to receive benefits?
When you receive your first payment, the state unemployment department should let you know how often you'll need to recertify. This can be two weeks, in some cases. For example, at the end of the 2-week timeframe, you may need to log in to the state's system and let them know that you still don't have work, along with any other information they ask for. Some states may need to see evidence that you've been looking for work, such as filling out applications or watching videos to help you learn to be more employable. Each state develops their own system for delivering unemployment benefits. Find details at your state’s unemployment insurance office.
If at any point you do get employment and start getting paid again, let the unemployment office or Employment Development Department office know right away. Not reporting wages can cause you to be ineligible for future benefits or could subject you to a fine.
Do I have to report unemployment on my tax return?
Unemployment benefits are fully taxable, so you’ll need to report them at the end of the year on your tax filing. Your state should send you a form with the totals paid to you through the program. Enter this on the appropriate line for your return. If there is a discrepancy between the money you were paid and the amount the unemployment office reported, contact the unemployment office before filing to find out why. You could be missing a payment that is owed to you.
If you received the maximum amount of unemployment, it could total up to a good amount of income that you will have to pay taxes on. To avoid any end-of-year tax surprises, you may opt to have federal income tax taken out of your unemployment payments. The IRS recommends completing Form W-4V, Voluntary Withholding Request, to give to your state unemployment agency (the one paying your benefits.) Each agency may also have a copy of its own form that you can fill out when you first sign up for benefits.
What if I am missing an unemployment payment?
If you’ve been receiving payments regularly, it can be distressing to suddenly not get one you were expecting. First, do the following:
Ensure you didn’t run out of benefits.
Payments aren’t designed to last forever. While extended benefits are given in some cases (such as in states where unemployment is historically high), most states limit payments to 26 weeks. Some states pay for as little as 12 weeks. It’s possible you don't have any payments left, and that is why you aren't seeing your check.
Ensure you still qualify for benefits.
Something might have changed that has made you ineligible. Whether you received payment for work or forgot to fill out a certification form, check with your state unemployment insurance department to be certain payment is really due to you. It may be something you can correct and get that payment eventually.
Ensure your payment didn’t go to someone else.
Mistakes happen. Did your money show up as paid out to you? If so, try tracking down any electronic payments by contacting your bank. If you receive a check, ask the unemployment office if it was cashed. You may have to report a missing or fraudulently cashed payment and get things straightened out.
Ensure your child support is paid up.
Federal law allows for child support payments to be garnished from unemployment benefits. Check with your state to see if this is the case for your check and to see how future payments may be applied.
Unemployment payments can be a lifesaver for those who lose their jobs suddenly due to a layoff, company closure, or another uncontrollable event. Do your part to read up on what's required before you apply, and be in communication with your state unemployment office, so you don't experience any surprises during your payment eligibility term.
If you do decide to have your unemployment benefits paid to you via direct deposit methods, consider having it paid to your Netspend Prepaid Card for payment of bills and everyday expenses while you wait to get new employment.