Does Investment Property Income Affect Unemployment Benefits in New Jersey?

New Jersey won't offset passive investment income from unemployment benefits.

New Jersey won't offset passive investment income from unemployment benefits.

If you're a New Jersey resident who has recently lost your job, you may file for unemployment benefits through the Department of Labor. The agency will pay benefits out of money collected from an unemployment tax levied on employers. You have to qualify for benefits, and if you earn income from another source, the state may take an offset.

Qualifying for Unemployment

To pay unemployment, New Jersey requires a minimum of 20 weeks of "covered" employment with a minimum wage of $145 per week, or total wages of $7,300 or more, during a base year period. The ending date of the base year depends on the calendar quarter when you file your claim; if you file in April, May or June of 2014, for example, the base year ends on December 31, 2013. New Jersey does not consider investment income in the calculation of your unemployment benefit, which amounts to 60 percent of your average weekly wage during the base year.

Income and Offsets

If you earn money from self-employment while drawing unemployment benefits, New Jersey will offset your unemployment benefit. You can earn up to 20 percent of your unemployment benefit and still collect a full benefit. Over that amount, the benefit will be reduced by the amount of money that you earn. Investment income, from real estate or other property, is not considered employment income unless you are operating a business. The business could be a cooperative, a sole proprietorship, a limited liability corporation or some other structure that returns income from sales, leases or other services.

Passive Property Investments

If you're earning income as a passive investor, New Jersey won't offset your unemployment benefits. An investor in a real estate investment trust, for example, earns annual dividends from a pool of assets used to buy and operate property. Although this income is taxable, New Jersey doesn't consider it self-employment income for unemployment purposes. As an individual co-owner of a property, you also may draw regular income from rents, or from a sale of your interest -- again, it's not self-employment.

Overpayments and Refunds

If you draw unemployment benefits that should have been offset, the state will require you to return the overpayment. The state will take its refund out of your ongoing unemployment benefits; if they've stopped, they will accept an installment agreement. You have the right to appeal any overpayment decision by the state. If you're uncertain whether investment income qualifies as self-employment, contact the Department of Labor.

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