Do I Report Gross or Net Pay for Unemployment?

Unemployment benefits are meant for those who lose their jobs or experience reduced work hours. To receive weekly benefits, you must initiate an unemployment application. After you complete the application, your local unemployment office will determine if you are eligible for benefits based on communications with your current or former employer and your gross earnings.

TL;DR (Too Long; Didn't Read)

The unemployment office looks at your gross wages when considering you for unemployment benefits.

Net and Gross Pay

When you file for unemployment benefits, you must report your gross earnings, which is the total wages earned before deductions such as federal, state and local taxes, insurance, pensions, 401(k) and miscellaneous deductions such as union dues. Net earnings are the pay you bring home after all deductions are subtracted from the gross pay. For instance, if you make $8 per hour and work a 40-hour week, your gross earnings would be $320 per week.

If you work part-time or reduced hours while claiming unemployment benefits, you must file a weekly claim giving the total hours worked for the week in question and the gross earnings.

Filing For Unemployment

Filing for unemployment can be done online or on the phone depending, on your specific state unemployment requirements. You must answer all of the questions asked, which includes your full name, complete address, Social Security number, current and past employers, last day of work, how many hours you worked in the last week and how much your gross earnings were for that last week. After completing the application, you will receive a letter in the mail detailing your benefit amount and the next steps to complete the process.

Federal and State Tax Withholding

While collecting unemployment, you have an option to withhold federal and state taxes. Unemployment is fully taxable. Therefore, if you don’t have taxes withheld, you could owe taxes at the end of the year when you file your returns. If you want to have taxes withheld from your weekly unemployment pay, you must complete Form W-4V, which is used for tax withholding from any payments received from any government.

Error in Reporting Wages

If you work reduced hours or a part-time job and make an error in calculating your gross earnings for any given week, the unemployment office will find out when the employer reports your gross earnings. You can be penalized in different ways depending if it was an error in reporting or intentional.

If it was simply an error, you will repay the money when you file your next weekly claim. If the error is intentional, you can lose benefits for as long as one year, depending on the error and your state guidelines. The unemployment office can also place a lien on your property to repay the benefits received intentionally to reclaim the overpayment.

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