Unemployment compensation benefits can alleviate some financial stress if you lose your job through no fault of your own. The temporary benefits won't replace your income, but they could keep you afloat while searching for a new job. Although each state administers a separate unemployment program, the federal government sets the general guidelines.
Do You Have to Pay Back Unemployment Benefits?
The benefits are there to help you get back on your feet, so no, the state does not expect you to pay it back. The only time you'll need to repay anything is if you got them while you were ineligible or you got too much. For instance, if get a new job, you're no longer eligible for unemployment. If you keep taking the state checks, the state will demand that money back and may fine you too.
What Percentage of Unemployment Benefits Are Deducted From Taxes?
Employers pay state and federal taxes to help fund unemployment. As of 2012, the Federal rate was 6 percent of the first $7,000 paid each year to the employee. State unemployment tax rates vary. Newly established employers pay a set rate until they earn an experience rating based on paid unemployment claims and taxable payroll. In New York, for example, new employers pay 4.1 percent on $8,500 of each employee's earnings. The rates for established employers vary from 1.425 percent to 9.825 percent. Most employees don't pay unemployment taxes, unless they work in Alaska, New Jersey or Pennsylvania. As of 2012, those are the only three states that take an unemployment tax out of every worker's pay.
What Percent of Unemployment Benefits Must Be Paid for Federal Taxes?
Unemployment benefits count as taxable income on your federal and state returns. You can choose to have taxes withheld, typically 10 percent of your check. To avoid a hefty tax bill, you can pay quarterly estimated taxes on the unemployment income. If you don't take anything out, the government will take its chunk at the end of the year.
How Much Money Do You Get From Unemployment Benefits?
Unemployment benefits will never match your former paycheck. Each state uses its own method to get at a final figure, but it's a portion of what you previously earned. At the time of publication, the national average weekly unemployment check was around $300. In Montana, the benefits replace 42.5 percent of wages, with an average weekly benefit of $272. In Mississippi, benefits were 29.7 percent of earnings. The state average is only $190. As of 2012, Hawaii had the highest percentage of wage replacement at 54.3 percent. The average weekly benefit was $416.
How Long Does It Take to Process State Unemployment Benefits?
In most states, it takes two to three weeks for the claim to go through and the first check to get to you. Some states, including Illinois and Florida, have a one-week, unpaid waiting period. On the other hand, in California claims are processed the week they're filed.
- IRS: Topic 418 - Unemployment Compensation
- United States Department of Labor: Unemployment Insurance Tax Topic
- New York State: Unemployment Insurance - Current Employer Tax Rates
- Biz Filings: Employer Liability for Unemployment Tax
- Washington Employment Security Department: Frequently Asked Questions About Unemployment Insurance Taxes
- Daily Finance: The 10 Best States for Unemployment Benefits -- and the 10 Worst
- Illinois Department of Employment Security: I Filed My Claim - What Happens Now?
- Employment Development Department of California: Frequently Asked Questions and Helpful Tips for Filing for Unemployment Insurance Benefit
- Florida Department of Economic Opportunity: Florida Reemployment - Nonpaid Waiting Week