Do you worry about changes in the economy? Have you recently been fired or been a victim of downsizing? Whatever your situation, you may be wondering if you’re eligible for unemployment benefits. For a basic understanding of how unemployment benefits work, read on!
Am I Eligible?
The federal-state unemployment compensation program is a partnership based on federal law but administered by states under state law. Although specific eligibility requirements vary, states have the same basic standards for collecting unemployment benefits. They include:
- You must be unemployed or working less than full time
- You must have earned a certain amount during a base period before becoming unemployed
- You must be ready, willing, and able to work
- You must have involuntarily left your job
In general, you won’t be eligible for benefits if:
- You quit your job simply because you didn’t like it
- You’re fired for committing a crime (e.g., stealing)
- You’ve never worked before or haven’t worked enough
For more information on your state’s eligibility requirements, contact your state’s unemployment insurance department.
Where Does the Money Come From?
In most states, unemployment compensation is financed by employer contributions through a payroll tax. In a few states, employees are also required to contribute a minimal amount to the fund.
How Do I Apply?
Most states will encourage you to apply for benefits online or over the phone, and some may allow you to apply by mail or in person. Generally there is a waiting period of at least one week between the time you file and the time you can collect benefits, so it’s a good idea to contact your state’s unemployment office as soon as you lose your job. The claims process may take a few weeks, especially during periods of high unemployment.
When filling out the application, you’ll be asked a lot of questions. Check your state’s requirements, but you may need to have some or all of the following information handy:
- Your Social Security number
- Your last employer’s name, address, and phone number
- Your first and last day of work and the reason that you’re no longer working or are working reduced hours
- Employment history (names and addresses of post employers)
- Driver’s license or state ID
How Are Benefits Calculated?
Regardless of which state you live in, you’ll receive a weekly unemployment benefit based on how long you were employed and your prior wages. The state will calculate your benefit according to the formula that is used in that state and these formulas vary widely. The amount payable is also subject to minimum and maximum limits.
How Long Can I Receive Benefits?
In the majority of states, you can receive benefits for up to 26 weeks, but some states offer benefits for fewer weeks or specify both a minimum and maximum number of weeks. In addition, federal law and some state laws provide for additional benefits to be paid to workers who exhaust their regular benefits during periods of high unemployment. These additional benefits are funded partly by state governments and partly by the federal government.
Once you qualify for benefits, you must carefully follow state verification requirements. Generally, you must periodically request benefits and verify that you have not found a new job but are still available and able to work. You must continue to actively seek employment and may need to provide documentation that you are doing so (such as submitting a list of jobs you searched or applied for). You may also be required to attend a required career services program.
Are Unemployment Benefits Taxable?
The answer to this question comes as a big surprise to many people. Yes, the unemployment compensation you receive is counted as income. It’s subject to federal taxes and may be subject to state taxes, depending on where you live. In some states, you can ask that taxes be withheld from your unemployment check. This could save you from a big tax bill at the end of the year. For more information, consult your tax professional.
