Unemployment Benefits

U.S. Unemployment Benefits — also known as Unemployment Insurance — are designed to protect workers who unexpectedly find themselves out of a job for reasons such as layoffs, their employer going out of business, etc.

While these benefits are politically controversial, a case can be made that they benefit individuals and the economy. Putting more money into the economy when the private sector faces difficulties can have positive results for the population at large.

Others argue that these benefits contribute to the country’s budget deficit. They fight efforts to extend the amount of time the benefits can be received.There is some validity of both sides. But if you are suddenly unemployed what you care about is not who’s right, but how you are going to quickly get some cash flowing into your budget.

Each state administers its own unemployment benefits program, so the program’s details totally depend on where you live. At the same time there are some basic facts you should be aware of so you are prepared if you suddenly find yourself in need or you know what to do if you are already there…

News July 2019

Attention victims of domestic violence, especially those who live in Florida. A new law there provides unemployment benefits to such victims. You can qualify if your workplace has become unsafe because since your abuser knows where and when you work and might come after you. If you are unable to work in a different location for your same employer and you need to find another job you can also qualify. Good news that now you do not need to decide between your finances and your personal safety. This seems like quite an enlightened new law, hopefully other states will create similar laws and benefits.

News January 2019

Are you a federal employee who’s been furloughed during the current partial government shutdown? If so you might be able to apply for unemployment. To give it a try you will have to apply for these benefits in the state where you work. If they determine that you are eligible, the period of time you may receive benefits will depend on your state. Your state will contact your agency to verify your eligibility. And be aware that employees who get retroactive payment after the shutdown (and this may be most if not all) will need to return the amount received in unemployment insurance benefits.

*Update May 2018*

Good News: Jobless claims have reached their lowest number since 1969 — that’s almost forty years ago! And they’re still falling! We hop you have benefited by the increase in jobs and wages and that layoffs are probably not in your future. And it’s good for everyone, since employers are continuing to create new jobs even as they retain existing employees. Economic growth and consumer confidence are something that benefits everyone so stay tuned. And maybe think about starting that business of your own. Check out some opportunities you might not have thought of in Fund a Startup Business!

Update November 2017

Unemployment benefits for people who quit their jobs? Could it happen here? Sounds pretty far out but it’s actually being proposed in France. President Macron of France believes such a move will help to stimulate growth in the economy. Under his plan people who quit their jobs voluntarily — whether they are employed and voluntarily leave their jobs, or are freelancers — will receive unemployment payments. The proposal is considered to be pretty risky since France is already very generous in its unemployment benefit payments. But who knows. It will be interesting to see if it happens. And if it is a success, perhaps similar ideas would be proposed in the U.S.

Who Pays For Unemployment Benefits

First some basic questions. Who pays for Unemployment Benefits? Unemployment checks come from the state. But the funds themselves come from federal and state taxes on employers. So individual taxpayers are not footing the bill, at least not directly. (They do pay indirectly since the tax increases employers’ costs and those are surely reflected in prices.) It’s important to know too that these taxes on employers cannot be deducted from workers’ paychecks like Social Security is. So individual workers also are not directly paying for this program.

How Much Do Employers Pay for Unemployment Benefits?

The tax rate employers must pay depends on several things. First is the state where they are located since each state sets its own base tax rate. Then the rate is adjusted based on the size of the company’s payroll and by the number of claims that have been filed against the companies over a specified period of time.

*Do people receive unemployment benefits who shouldn't?* Over the years some people have claimed this. Several years ago CNNMoney reported – based on Labor Department figures – that the government had paid a whopping $14 billion in unemployment benefits the previous year. They indicated that recipients had included dead people, employed people, retired individuals and prisoners. However, other studies shown have shown that in fact

Unemployment Benefits: Who Is Eligible?

The first and most important criterion for eligibility is that you have lost your job for reasons not in your control. That is, you did not do something that got you fired and you did not voluntarily quit your job. You also have to meet specific criteria established by your state. Most require you to have worked for a specific amount of time and earned a certain amount of money. You can find this type of information by going to your state’s website. You must also be able to demonstrate that you are actively seeking a new job — you can’t just be taking the opportunity to enjoy a vacation or go back to school before jumping back into the work force. Note that in some states though if you are getting schooling or training for work in a field that’s in high demand you might be able to get an extension on the number of weeks you can receive unemployment benefits.You must be able to demonstrate that you are moving forward satisfactorily in the training program.

Update July 2017

Be aware that if you are applying for unemployment benefits in many cases you will be required to take a drug test. Previous president Obama had set some limits regarding how broadly states could decide to drug test in order for applicants to be eligible to receive unemployment benefits. This law has been revoked by the Trump administration. Under new guidelines the labor Department or Congress can establish their own rules, which are expected to provide broader discretion on the part of the states. So if you’re going to apply, be sure that you are drug free.

When to File for Unemployment Benefits


Again this will vary state by state. Sometimes you can apply for benefits right away; in other states there is a waiting period (often just one week). However, don’t let uncertainty keep you from filing. These things can take a while so you want to act as soon as possible. Also, don’t fail to apply because you assume you wouldn’t be eligible. Some studies have found that in certain time periods only about one half of eligible workers actually filed for the benefits they were entitled to. Don’t let that be you! Also be sure to check out our articles I Need Help and Grants to Pay Bills. Both do a great job giving you tips for how to reduce your costs and increase the amount of cash coming into your life (legally!).

How Much Will I Receive in Benefits?

Again this depends on your state. But it also depends on how long you worked and how much you were earning. It isn’t a limitless number though. We checked out a list of maximum weekly amounts of Unemployment Benefits payments by state. The numbers ranged from a maximum of $235 per week - for at most 26 weeks - in Mississippi to a high of $742 per week for as many as 30 weeks plus $25 per child in Massachusetts. Quite a difference!

How Do I File A Claim?


This isn’t going to happen automatically, and your employer may not provide you with instructions. It will be up to you to go to your State Unemployment Insurance website as soon as you can after you are no longer employed. You may be able to file your claim online; if not the site should provide the nearest unemployment office for you to visit. You’ll need to have all your employment information ready — things like how long you worked there, what you earned during the most recent four quarters, etc. The site may also provide a tool which will let you calculate an estimate of what your payment might be. The ultimate number will be determined after you’ve filed your claim and the state has gone through your application and confirmed the accuracy of your numbers.

What About Taxes?


It may not seem right but the money you receive in Unemployment Benefits will be taxable on your return for the year(s) in which you receive them. You’ll get a 1099-G form from your state detailing what you received and those are the numbers you must use on your return for the IRS.

Be aware that if you received some benefits from your union from regular union dues those may be required to report as well. There are some instances where this is not the case so it would be wise to check the current IRS publications on the topic when you are filing. You can also request that federal income taxes be withheld from your unemployment compensation using IRS Form W-4V. If you are confused about any of this find some Free Tax Help.