With the COVID-19 pandemic expanding, large parts of the US economy are being shut down. An increasing number of businesses are announcing daily layoffs, with thousands of employees facing the risk of losing their jobs. The hardest-hit are the hospitality, transportation, healthcare, food services, arts, entertainment and recreation industries.
In response to the destruction brought to the lives and wallets of Americans, the Senate has already passed a $2 trillion economic relief package. This new legislation significantly expands unemployment insurance for out-of-work Americans.
Unemployment Insurance is a nationwide program that provides temporary income support for workers who lost their job through no fault of their own. Although the program is governed by federal law, each state handles it in its own way.
To receive unemployment benefits, you need to file a claim with the unemployment program in the state where you worked (Form 1099-G). Below are the key points you need to know before applying.
How much will I be refunded?
It depends on several factors, such as your previous wage and the current state you reside in. Back in January, state programs paid an average of $385 weekly to unemployed workers. The new legislation, however, offers an additional 13 weeks of unemployment insurance, funded by the federal government. It also restricts the maximum duration of unemployment benefits to 10 months.
So, under the new legislation, a typical worker could expect $985 a week for four months ($600 in extra relief plus state benefits), followed by up to 23 weeks of $385 a week in standard state benefits.
Who qualifies for unemployment?
The new legislation significantly extends benefits to previously ineligible workers. As it is now, every individual who’s been laid off by their employer is considered eligible.
This list includes freelancers, part-timers, workers who can’t reach their workplace due to COVID-19 and those who don’t have sufficient work history to otherwise qualify for benefits.
It also applies to individuals who had to quit their job as a direct result of COVID-19 Which is astonishing because people who quit their jobs don’t typically qualify for unemployment.
However, keep in mind, just because you apply doesn’t mean you’ll receive benefits. In fact, the share of unemployment to laid-off workers ranges from 10.5% in North Carolina to more than 50% in New Jersey.
I’m an independent contractor. Can I apply for benefits?
The answer is yes, the new legislation extends unemployment checks to self-employed individuals (writers, barbers, Uber and Lyft drivers, and so on).
The documentation used to prove a freelancer’s wage and work history is usually done using tax forms like the IRS Form 1040.
How do I apply for unemployment benefits?
In most cases, you need to file an unemployment claim in the state where you worked. We recommend submitting your request as soon as possible after becoming unemployed.
With a lot of unemployment offices around the USA closing, the best way to file your claim is to fill out your sample of the unemployment application form online (Form 1099-G).
How long will it take to receive the unemployment benefits?
It typically takes two to three weeks after filing a claim to receive your first benefit check. Some states require a one-week waiting period.
However, that’s when things are working as usual. The real problem is that unemployment insurance offices have been completely overwhelmed with claims and are having a tough time handling the new volume. Another reason why filing online might be the best and quickest option for you.
Should I report unemployment benefits on my tax return?
Yes, most definitely. Unemployment benefits are in fact taxable. If you received any unemployment compensation during the calendar year, you should use Form 1099-G to declare any unemployment compensation received.
As of today, laid-off workers have overwhelmed state labor departments with claims for unemployment benefits. In New York City, for instance, there has been a 1,000% increase in claims. These numbers are the highest ever reported, beating the previous record of 695,000 claims filed in October 1982.
These are uncharted times we’re living in. No matter how unpredictable the future feels, we’ll find a way through it. Sooner or later, the crisis will end and all those lost positions will need to be filled again!