How Unemployment Works

Unemployment occurs when a person does not have a job, but continues to seek a new job while collecting unemployment compensation. Unemployment compensation is a round of payments made to unemployed people in the United States by the government or other authorized entities after individuals finish filing for unemployment. Unemployment benefits can be acquired by unemployed workers from the national government or from individual state governments. Unemployment in the United States is considered a form of social welfare benefit. The Internal Revenue Code requires that all unemployed people report their unemployment benefits in their gross income when filing their taxes.

Requirements

In order to file for unemployment compensation the worker must have lost his or her job because of someone else’s fault and not their own. For instance, the person applying for unemployment benefits must have been laid off from their job and not fired from their job. A layoff is different from a firing in that the company had to reduce their financial output to save money by laying off some of its workers. A person is usually fired for not properly conducting himself or herself at the workplace. An unemployed worker can receive benefits from the government if he or she meets a series of legal eligibility requirements.

The requirements that must be met for an unemployed worker to receive unemployment benefits include:

• The employee must be monetarily eligible
• The employee must be totally or partially unemployed
• The employee must have an approvable job separation
• The employee must meet certain weekly legal requirements. Weekly requirements include being physically able to work, seeking work, and filing a weekly claim for benefits on time

If an applicant is identified as a person that will exhaust all of the available unemployment benefits allotted to them, they must participate in all assessment interviews, orientation, and referred reemployment services offered by state unemployment agencies

How to Apply

File Yourself

The first way to apply for unemployment benefits is to apply on your own with the state through a state unemployment agency. It typically takes two weeks for unemployment benefits to begin paying the recipient. The first week is a wait period and the second week is the natural time lag. The waiting period week is not reimbursed by the state agency. In some instances, an employer will begin the application process for the employees that they must layoff. The worker must prove to the state that they are available for work, are seeking work, and provide the amount of part-time earnings that they have made.

Legal Help

Contacting an experienced unemployment attorney to help file for unemployment benefits can make the process easier for the person applying. An attorney will be able to answer all questions regarding the process and help the applicant fill out all of the required forms.

Taxation

As it stands right now, unemployment benefits are taxed by the national and state governments of the country. Unemployment benefits started being taxed in 1987 with the passing of Code Section 85 of the Internal Revenue Code. Workers receiving unemployment benefits must report the payments as part of their gross income for the year when filing their taxes. Federal taxes are not withheld from unemployment payments when they are made to the worker but they can be withheld upon the request of the worker if he or she fills out a W-4V form when applying for unemployment benefits. The American Recovery and Reinvestment Act of 2009 exempts the first $2,400 of unemployment payments from being taxed by the federal government. This means that taxpayers do not have to report the first $2,400 of their unemployment payments when they file 2009 IRS tax return in 2010.

• If you need help with an unemployment problem, click here for a Free Case Review from a local Employment Lawyer. The content of this site is provided for informational purposes only, and should not be construed as legal advice. Always seek competent legal counsel for any legal questions.