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.

The CARES Act and Unemployment Benefits

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:

• Pandemic Unemployment Assistance: The CARES Act broadens eligibility for unemployment benefits by providing for up to 39 weeks of unemployment benefit assistance for certain individuals who are unemployed or partially unemployed as a result of COVID-19. This includes those who do not typically qualify for state unemployment benefits (such as gig workers, independent contractors and self-employed individuals). To obtain unemployment benefits under the CARES Act, individuals must self-certify that they are able and available to work or are unable to work for specific COVID-19 reasons, including they or a member of their household have been diagnosed with COVID-19 or a child for whom they are the primary caregiver is without childcare or school as a result or COVID-19.

• Pandemic Unemployment Compensation: The CARES Act provides for additional unemployment benefits to individuals who receive unemployment benefits in the state where they were employed. Under the CARES Act, those individuals will receive an additional $600 per week on top of ordinary state benefits until July 31, 2020.

• Pandemic Emergency Unemployment Compensation: Additionally, the CARES Act provides that the federal government will fund up to an additional 13 weeks of pandemic emergency unemployment compensation for individuals who remain unemployed after they have exhausted their state benefits, up to a maximum of 39 weeks of unemployment compensation to those individuals.

Who qualifies for unemployment benefits?

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.

How do I apply for unemployment?

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

What’s the maximum amount I can get?

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.

Is the amount I get taxable?

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.

Sources:

1. https://oui.doleta.gov/unemploy/docs/factsheet/UI_Program_FactSheet.pdf
2. https://www.dol.gov/newsroom/releases/eta/eta20200405
3. https://www.dol.gov/newsroom/releases/eta/eta20200410
4. https://www.newsweek.com/how-much-money-you-can-get-unemployment-benefits-1494182
5. https://www.dol.gov/general/topic/unemployment-insurance