A person passes the office of the California Employment Development Department in Sacramento, Calif., on Dec. 18, 2020. The American Relief Plan will include a 25-week extension of expanded unemployment benefits. Rich Pedroncelli/AP Photo
5 Things Unemployed Workers Need to Know
The original version of the House bill contained a 0 weekly federal boost to state benefits. However, Democrats agreed to a lower 0 a week supplement to appease moderate Democratic Sen. Joe Manchin of West Virginia, who threatened to vote against the relief bill.
1. Extra jobless benefits will continue through Sept. 6.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
- Pandemic Unemployment Assistance, or PUA, which provides assistance to gig workers, freelancers and self-employed people who traditionally wouldn’t have qualified for unemployment.
- Pandemic Emergency Unemployment Compensation, or PEUC, which provides an extra 13 weeks of benefits on top of the 26 weeks that states typically offer.
Here are five things you need to know if you’re receiving unemployment compensation.
2. Your weekly unemployment checks won’t increase.
Some “mixed earners,” i.e., workers who earned a combination of wages and self-employment income, will continue to receive an additional 0 each week, or a total federal benefit of 0. The reason for those higher payments is that these workers are typically eligible for lower state unemployment payments. The law only applies to benefits paid in 2020. You should still plan on paying taxes for any compensation you get in 2021. The IRS has yet to issue guidance for what to do if you received unemployment and already filed your taxes for 2020.
The amount of those checks won’t change, though. Workers who were laid off from a regular job will continue receiving an additional 0 a week federal subsidy on top of their state’s weekly benefit. The average state benefit was 4 in the third quarter of 2020, the most recent quarter the U.S. Department of Labor has data for.
3. The first $10,200 of unemployment benefits will be tax-free for 2020.
If you lost employer-sponsored health coverage because your job was eliminated or your hours were cut, the federal government would pay 100% of your COBRA premiums through Sept. 30.
For the millions of people in the U.S. who are unemployed, the American Relief Plan that President Joe Biden signed into law on Thursday contains good news: a 25-week extension of expanded unemployment benefits, along with a few provisions that will help workers who have lost their jobs.
4. The bill makes it more affordable to buy health insurance.
Many workers have been surprised to discover that unemployment benefits are taxable. To help workers who have lost their jobs avoid a major tax bill, the relief package retroactively exempts the first ,200 of unemployment benefits from taxes for households with incomes of 0,000 or less in 2020.
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The bill also makes it more affordable to buy insurance through the Affordable Care Act. It caps health care exchange premiums at 8.5% of your income.
5. You could see a gap in unemployment benefits.
In addition to extending the extra benefits unemployed workers are receiving, the new stimulus bill provides ,400 stimulus checks for most Americans and a higher child tax credit for 2021.
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State unemployment systems often need time to update and reprogram when benefits are extended. So even though the extension passed before the March 14 expiration date, it’s possible that you’ll experience a temporary lapse in benefits. If a gap does occur, any benefits you were eligible for would be paid retroactively.