Coronavirus stimulus: What you need to know about unemployment benefits
After the Senate and House of Representatives passed the $ 1.9 trillion stimulus agreement and the legislation waits to be signed by the president this week, Americans who are unemployed or sometime in 2020 would benefit from this round of relief .
Under the new legislation, unemployed Americans would receive an additional $ 300 a week through September 6, while three other major unemployment programs would be extended. Millions of Americans would also get a tax break on their unemployment benefits.
"This stimulus package really puts the economic relief on those who need it," Andrew Stettner, unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "While benefits were a little more generous in some ways at the start of the pandemic, other things were introduced like the $ 1,400 stimulus check and an increase in the child tax credit."
Even if the legislation is signed by the President this week, after these key programs expire on March 14th, there could be a two-week loss of unemployment benefits.
Of the $ 1.9 trillion laws, around $ 350 billion would go into the unemployment system, according to the Federal Responsible Budget Committee. Everything you need to know is here.
A person walks past a boarded-up store in Oakland, California on February 12, 2021 with a sign that reads "Black Owned". - Racial minorities have carried the brunt of the Covid-19 pandemic in the US, with higher death rates, unemployment and business failure, and less success in obtaining federal government support to remedy the situation. (Photo by JOSH EDELSON / AFP via Getty Images)
Under the plan, unemployed workers would continue to receive an additional $ 300 per week of federal pandemic unemployment benefit (FPUC) through September 6. Workers with Unemployment Insurance (UI), Pandemic Unemployment Assistance (PUA), and Extended Benefits (EB) would also receive the additional payment added to their weekly core unemployment benefit.
"It continues the benefits that have done a great job of keeping people out of poverty and continuing them through at least September 6," said Stettner, "to a point where the vaccination program should move forward and I think that the job opportunities will really open up above. "
The PUA and PEUC (Pandemic Emergency Unemployment Compensation) programs expire on March 14th. This would mean that around 11.4 million unemployed would remain without unemployment benefits this spring. Both programs would be extended under the new bill.
PUA currently offers benefits to more than 7.3 million employees who would otherwise not be entitled to regular benefits, such as contractors, self-employed and other employees. The program would be extended for an additional 25 weeks through September 6, so these unemployed Americans could get a maximum of 75 weeks under the program.
The PEUC program, which benefits those who have exhausted their benefits under the UI and PUA, would also be extended by 25 weeks, bringing the total number of weeks under this program to 49. Currently 4.5 million Americans rely on PEUC.
The legislation would also expand the MEUC (Mixed Earner Supplement) program. Among them, some "mixed income" earners who receive income from both traditional (W-2) and self-employed (1099) sources would receive an additional $ 100 in addition to the additional $ 300 per week by September 6.
Both regular unemployment benefits and unemployment benefits under the Economic Act are subject to income tax. However, the newly added tax exemption applies to the first $ 10,200 in unemployment benefits. Services above this threshold would be taxable. The break would apply for the 2020 tax year and only for households earning up to $ 150,000.
35 states are expected to collect additional state income taxes totaling $ 12.7 billion from unemployment benefits. Nine states have no state income tax, while another six exempt unemployment benefits from their income tax. Graphic: David Foster / Yahoo Finance
The interruption would increase a taxpayer's tax refund by approximately $ 1,000, according to Stettner's estimates, or decrease their tax liability by the same amount.
"The surprising tax burden that many people received from unemployment was really disappointing and confusing and created fear," he said. "Simplifying that, I think, can currently help a lot of people psychologically."
Withholding tax on your unemployment benefit is voluntary. Recipients can withhold a lump sum of 10% of their unemployment benefit. If you have not chosen to withhold taxes, you must pay it when filing your taxes.
If you already filed your taxes and they were processed by the IRS before the legislation went into effect, you would likely need to file an amended tax return to get the tax break.
"If you have not yet submitted and this is important for your tax picture, you probably want to wait with the submission," said Stettner.
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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