May 11, 2020
Category: Money Management
ACE's Guide to Unemployment Benefits Under the CARES Act
On March 27th, 2020, Congress passed, and the President signed into law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help Americans affected by the coronavirus outbreak, including by expanding unemployment benefits to individuals who previously weren’t eligible for unemployment benefits, such as gig workers, independent contractors and self-employed individuals.
Read on to learn more about the unemployment benefits outlined in the CARES Act, how to apply for unemployment, and how much financial assistance you may be able to receive.
One of the primary purposes of the CARES Act is to give monetary relief to millions of individuals facing hardship due to the coronavirus, including those who have lost their jobs. Here are three important provisions from the CARES Act to keep in mind:
Each state has its own unemployment eligibility requirements, but generally an individual will qualify if they are unemployed through no fault of their own and meet certain work and wage requirements. Each state also determines how much unemployment compensation an individual receives.
Typically, assuming other criteria are met, individuals who have been furloughed will also qualify for unemployment benefits and corresponding federal benefits under the CARES Act.
To apply for unemployment, you can either file online or call your state. And, in some states, you may be able to apply for unemployment by mailing a claim to your applicable state unemployment office. To file for unemployment online, you can search for your state’s unemployment insurance program through CareerOneStop.org or by visiting the U.S. Department of Labor’s website. Remember to provide complete and correct information to help ensure your claim is not delayed due to incomplete information. After the claim is accepted, it may take two to three weeks to receive your first benefits check.5
The maximum unemployment compensation you get is determined by your state. In general, benefits are based on a percentage of your earnings over a recent 52-week period, but each state sets its own maximum amount. According to Newsweek, the average unemployment paycheck is somewhere between $300 to $400 per week.
Yes. The federal government considers unemployment benefits as taxable income. In some states, you may also pay state taxes on unemployment benefits. You can choose to either withhold your taxes or make quarterly payments to the IRS. In most scenarios, it’s more convenient to withhold your taxes, because they are automatically deducted from your benefits check. To withhold federal income taxes, you can file Form-W4V. This will allow the federal government to withhold a portion of each payment for federal income taxes.
Quarterly payments can be trickier to calculate. To make quarterly payments, you must calculate the amount you owe and pay the IRS every three months.
Want more information on the CARES Act? Read our blog post on economic impact payments.
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