Everything we know about unemployment benefits during the coronavirus pandemic

By Tanza Loudenback, Joseph Zeballos-Roig, Business Insider

• More than 30 million Americans are seeking unemployment benefits during the coronavirus pandemic.

• Under the CARES Act, the government expanded the scope of unemployment insurance to pay more money for a longer period of time.

• The amount and length of pay varies by state, but the CARES Act added an additional 13 weeks to every state's maximum pay period.

• As long as you are eligible to receive benefits, you can get an additional $600 a week on top of your regular benefits until July 31.

• To apply for unemployment insurance, visit your state's website.

More than 30 million Americans filed for unemployment insurance in March and April as a result of the coronavirus pandemic.

Restaurants, bars, nail salons, and scores of other nonessential businesses were ordered to close their doors to curb the spread of the pathogen. It sparked a wave of mass layoffs that erased a decade of record job creation after the Great Recession.

The speed and ferocity of the economic collapse prompted the passage of the CARES Act in late March, the largest rescue package in American history. Among its provisions, the $2 trillion stimulus law added $600 to weekly unemployment payouts and expanded eligibility to freelancers and contractors for the first time. By doing so, around half of the workforce can earn earn more on benefits than they did drawing salaries at their regular jobs.

But many states have struggled to process their claims with people seeking unemployment benefits all at once. The demand strained antiquated systems using 20th century technology, jammed phone lines, and sent websites crashing.

Here are some common questions around unemployment.

What is unemployment insurance?

Unemployment insurance is a joint state-federal government program that provides money for people who have lost their jobs. Under the CARES Act, the rules regarding unemployment insurance have expanded — more Americans will qualify for insurance, and the government will pay more money for an extended period of time.

How much does unemployment insurance pay?

Unemployment benefits range widely by state. While sometimes based on cost of living, it's not always closely aligned: An unemployed person in expensive California might receive a maximum of $450 per week, but a person in Nebraska might receive up to $440. Every state has a different way of calculating benefits, and not everyone will receive the maximum amount.

According to data from The Center on Budget and Policy Priorities, the average unemployment benefit in America was $387 before Congress expanded the program temporarily.

Do I qualify for unemployment insurance?

Normally, there are two criteria for unemployment insurance:

• You must have lost work through no fault of your own

• You must have met your state's requirements for wages earned or time worked

Under the CARES Act, there are additional rules for who qualifies amid the coronavirus pandemic. You may qualify for unemployment insurance if you've experienced any of the following:

• Your work has temporarily closed due to the coronavirus

• You have been quarantined but expect to go back to work after the quarantine ends

• You have to leave work to take care of a family member

• You leave work because there's a serious risk of exposure to the coronavirus

Furloughed workers do not usually qualify for unemployment insurance, but they do under the CARES Act. Self-employed people, contracted employees, and gig workers are also now eligible for benefits.

How long does unemployment insurance last?

Most states pay benefits for 26 weeks — about six months. That varies, however, depending on where you reside.

The CARES act extended benefits by time as well as money, adding an extra 13 weeks. That means people who qualify may receive benefits for up to 39 weeks this year, beginning April 4.

In order to receive unemployment insurance, you must prove that you're actively seeking work. Different states have different requirements for how often you must do this, and for what counts as active job seeking.

The Department of Labor lists all 50 states' unemployment insurances offices with phone numbers and links to informational websites.

Are there extra unemployment benefits during the pandemic?

Yes. Under the CARES Act, any eligible unemployed person will receive both regular unemployment benefits from their state and an additional $600 per week from the federal government from April 5, 2020 until July 31, 2020. 

How do I get the extra $600 a week?

The extra money will be automatically added to your state benefits check or deposit. You can get the additional $600 a week if you're approved for unemployment compensation from one of the following programs:

• Unemployment Compensation for Federal Employees (UCFE)

• Unemployment Compensation for Ex-Servicemembers (UCX)

• Pandemic Emergency Unemployment Compensation (PEUC)

• Pandemic Unemployment Assistance (PUA)

• Extended Benefits (EB)

• Short Time Compensation (STC)

• Trade Readjustment Allowances (TRA)

• Disaster Unemployment Assistance (DUA)

• Self Employment Assistance (SEA)

• How do I file for unemployment?

Visit CareerOneStop.org and select your state to learn how to apply in your state. CareerOneStop is a job resource from the US Department of Labor that provides links to general unemployment insurance information, coronavirus responses, and applications for your state. You'll have to apply through your state to receive benefits.

You may choose to call your state to apply, but due to long wait times amid the coronavirus outbreak, you can probably apply more quickly by filling out an online application.

Be ready with your bank account details, previous employer contact information, and job history for the last 18 months.

Who doesn't get unemployment insurance?

Undocumented immigrants cannot collect unemployment benefits, nor can workers who are on paid sick leave or paid family leave.

Do I qualify for unemployment if I was furloughed?

Yes. Furloughed workers do not usually qualify for unemployment insurance, but they do under the CARES Act. 

Do I qualify for unemployment if I was laid off?

Yes.

Do I qualify for unemployment if I quit my job?

No. You usually have to be unemployed "through no fault of your own" to receive benefits, so voluntarily leaving a job would not qualify.

Do I qualify for unemployment if I was freelancing or self-employed?

Yes. Self-employed people are now eligible for benefits under a program called Pandemic Unemployment Assistance (PUA).

Many states are still rolling out this program and have yet to approve applicants or pay out benefits, so check your state's website for updated information. If you qualify for benefits, you can get paid retroactively for an unemployment period beginning on or after January 27, 2020. Benefits last up to 39 weeks.

Do I qualify for unemployment if I was a contractor or gig worker?

Yes. Contractors are included in the Pandemic Unemployment Assistance (PUA) program.

Do I qualify for unemployment if my hours were cut back, but I'm still working part-time?

You might.

"The question isn't whether you're employed, it's whether you're working," Andrew Stettner, a senior fellow at The Century Foundation, told Business Insider. He told Business Insider's Katie Warren and Marguerite Ward that measure often includes furloughed workers and workers with severely reduced hours, and that about half of states offer unemployment benefits for part-time workers.

Do I qualify for unemployment if my employer is paying me using the Paycheck Protection Program (PPP)?

No, people cannot get a paycheck through PPP and unemployment benefits at the same time.

PPP is designed to safeguard employment at existing small businesses. PPP helps them cover worker salaries as well as fixed expenses like rent and utilities through a government-backed loan.

That federal loan is forgiven if the business doesn't fire its employees and keeps them on payrolls — and off unemployment systems.

Can states run out of unemployment money for people?

No. States can borrow cash from the federal government when the funding set aside for jobless benefits is depleted.

But they will have to pay the loan back down the road. That would likely lead to state governments adjusting their budgets to take into account the federal payments, since they usually can't run deficits.

Is there a downside to applying for unemployment?

No. If you think you might qualify for unemployment benefits under the expanded programs put in place by the CARES Act, just apply.

Are unemployment benefits taxed?

Yes, you have to report any unemployment compensation you receive on your federal tax return and potentially your state return as well. The money will ultimately be included in your gross income and taxed at your ordinary income rate.

You do, however, have a choice of how you'd like to pay the tax you owe — either through withholding or estimated quarterly payments.

If you want your taxes automatically taken from your benefit check or direct deposit before you get paid, like they would be from a traditional paycheck, then you need to file Form W-4V (Voluntary Withholding Request). This will instruct the payor — most likely your state government — to withhold 10% of each payment for federal income taxes. It will also take a portion of the money for state taxes, if applicable.

The other option is to make quarterly payments directly to the IRS for the amount you estimate you'll owe. Keep in mind that this method requires doing some calculations, meeting payment deadlines every three months, and may result in a penalty charge if you underpay.

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