If you have been laid off, lost your job in a reduction-in-force or were “downsized” for economic reasons, you are likely eligible to collect unemployment through your state. And while these benefits are created to help you have an income while looking for other job opportunities, these funds aren’t available indefinitely, which begs the question: What do you do when your unemployment benefits are drastically reduced or eliminated?
Understand your claim status and extension eligibility
Before your benefits run out, it’s important to understand exactly where you stand with your unemployment claim. There are two main reasons your benefits might end: you’ve exhausted your benefit balance, or you’ve reached the end of your benefit year.
An exhausted balance means you’ve used all the money allocated to your claim, but your benefit year (typically 52 weeks from when you first filed) hasn’t ended yet. If you’re still unemployed, you may qualify for an extension program if one is available in your state. A benefit year end occurs when 52 weeks have passed since you originally filed your claim, regardless of whether you’ve used all your funds. Once your benefit year expires, you cannot continue receiving payments on that claim, even if money remains in your balance.
To check your status, log into your state’s unemployment portal and look for information labeled “claim balance,” “benefit year end date,” or “weeks remaining.” This will tell you which situation applies to you and what steps to take next.
Check for Extended Benefits in your state
When unemployment is high, states may offer Extended Benefits (EB)‡ — extra weeks of payments after your regular benefits run out. These extensions turn on automatically when your state’s unemployment rate hits certain levels: either when the rate goes above 6.5% and is at least 110% higher than the same time in the past two years, or when the rate goes above 8% regardless of previous years.
Each state calculates this differently, and availability can change month to month based on the economy.
How to check if Extended Benefits are available:
- Visit your state’s unemployment website and search for “Extended Benefits” or “EB program”
- Call your state’s unemployment hotline and ask if EB is currently active
- Log into your unemployment account portal to check for automatic notifications
- If EB is available and you’ve exhausted regular benefits, follow your state’s enrollment instructions
How to reopen your claim and manage deadlines
If you found temporary work and stopped certifying for benefits but then became unemployed again within your benefit year, you’ll need to reopen your claim.
Steps to reopen your claim:
- Log in to your state’s unemployment system
- Look for “Reopen Claim” or “Reactivate Claim” option
- Provide information about any work you performed since your last certification
- Report all wages earned during the period you weren’t claiming benefits
- Resume your weekly or biweekly certifications as required
Managing deadlines is crucial to maintaining your benefits. Most states require you to certify benefits every week or every two weeks, and missing these deadlines can result in lost payments.
You typically have seven to 10 days to report any wages earned during a benefit week. If your state requests additional information, respond within the specified timeframe, usually 10-21 days, to avoid claim delays or denials. Set reminders on your phone or calendar for these recurring deadlines.
How to reapply after your benefit year expires
After 52 weeks, your benefits expire, and you need to file a new claim to start over. When you file, your state will look at your base period — the time frame it uses to calculate how much you’ll receive. This is usually the first four of the last five complete quarters before you filed.
Checklist for filing a new claim after your benefit year expires:
- Check your benefit year end date in your unemployment portal
- Wait until your benefit year officially expires before filing
- File a new initial claim through your state’s unemployment system
- Gather employment information for all jobs during the new base period (employer names, dates worked, wages earned)
- Submit the new claim with complete and accurate information
- Wait 2-4 weeks for processing and eligibility determination
- Check if you qualify for an “alternate base period” if denied
Keep in mind that your new benefit amount may differ from your previous claim depending on your earnings during the new base period. If you didn’t work enough or earn enough, you may not qualify for a new claim, though some states allow an alternate base period.
Fix administrative issues and request backdated payments
Sometimes benefits are interrupted due to administrative errors, missed deadlines or misunderstandings. Most states will excuse missed deadlines if you can demonstrate “good cause,” which typically includes serious illness or hospitalization, death in the family, natural disasters, lack of access to internet or phone services, or documented technical problems with the state’s system.
What to do if you missed certifications or deadlines:
- Contact your state unemployment office immediately
- Gather documentation proving your good cause (medical records, death certificates, repair receipts, etc.)
- Explain your situation clearly and provide all supporting documents
- Request that your claim be backdated to cover the weeks you missed
- Keep copies of all correspondence and documentation
- If denied, you can file a written appeal within 10-30 days
- Participate in the appeal hearing and present your evidence
Don’t give up if your first request is denied, as many successful claims are resolved through appeals.
Understand the tax implications of unemployment and side income
Many people don’t realize that unemployment benefits are considered taxable income by the federal government and most states. The IRS considers unemployment compensation as income, just like wages from a job. You will receive a Form 1099-G‡ from your state showing the total amount of unemployment benefits you received during the year. This form is reported directly to the IRS, so the government already knows how much you received.
When you first file for unemployment, most states give you the option to have federal income tax withheld from your payments, typically 10%. You can also make quarterly estimated tax payments to the IRS or pay the full tax amount when you file your annual return, though this may result in a large tax bill.
If you work as an independent contractor for companies like food delivery gigs, seasonal work or as a freelancer, you’ll receive a Form 1099-NEC‡ from each company that paid you $2,000 or more. This income is also reported directly to the IRS. You’re responsible for paying both income tax and self-employment tax, which is approximately 15.3% of your net earnings, in addition to regular income tax.
If you earn income from gig work or contract work, you may need to make quarterly estimated tax payments to avoid penalties. Use IRS Form 1040-ES‡ to calculate and submit estimated payments.
Track all income from side jobs, even if it’s under $2,000, and keep receipts for business expenses like mileage, supplies, and equipment that can reduce your taxable income. Save all 1099 forms you receive and maintain records of earnings and expenses.
Given the complexity of combining unemployment benefits with self-employment income, consider consulting with a tax professional to ensure you meet all your tax obligations and take advantage of available deductions.
When unemployment benefits are cut
If you can’t extend your benefits or file a new claim, there are still some financial steps you can consider to help you stay afloat until you find steady employment again.
Cut expenses
For many people, cutting expenses has been a theme over the past few years, so you may already be very familiar with where your money is going. But, it can still be useful to take another hard look at where you’re spending and consider ways to reduce costs. For example, if you use food delivery or grocery delivery services, you may have noticed an uptick in items you wouldn’t normally purchase as well as the extra costs for upcharges and tips. Impulse buying snacks can be just as easy with a click as it is with tossing items into a cart. Aim to cook more at home or stick to your must-have grocery needs.
And, if you have multiple subscriptions to streaming services such as Netflix and Hulu, pick your favorite and cancel the others. Each of these expense reductions may seem small at first, but they add up over time.
Contact your creditors
Times are tough, and those you owe bills to may be more understanding than you realize. If you don’t think you’ll be able to make your minimum credit card payment, contact that creditor, explain your situation, and find out if they can offer a lower interest rate or minimum payment, or payment deferral.
Similarly, if you don’t think you’ll be able to pay your mortgage or your rent, connect with your landlord or mortgage provider and ask for leniency. You may be surprised how willing people will be to work with you.
Look into part-time or temporary jobs
As you continue to seek long-term work, you could pick up some side jobs in the meantime. Grocery stores and delivery companies are actively hiring in many regions. You could also work as an independent contractor for companies that deliver items, outsource petcare like dog walking, housesitting, and other service options. These side jobs don’t have to become your permanent source of income but could help bridge the gap while you find your next full-time position.
Make sure you check with your tax professional on the paperwork and tax needs for getting started with work like this.
Seek support from other government agencies and nonprofits
Even when federal and state unemployment benefits expire, there are other government programs that can help you stay on your feet during turbulent times. Some of these include:
- The Flex Modification Program‡: This program may be available to borrowers who are experiencing a permanent or long-term hardship and can no longer afford to make regular monthly mortgage payments.
- Temporary Assistance for Needy Families‡: Each state has a Temporary Assistance for Needy Families program, which can help with food stamps, financial support, and job training and searching.
- Supplemental Nutrition Assistance Program (SNAP)‡: This federal food stamp program can help you purchase food and other qualified items.
- Medicaid‡: If you’re unemployed or under-employed, Medicaid can help provide medical benefits and services.
- WIC‡: If you’re an unemployed or low-income woman, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) can help provide food and nutritional support if you’re pregnant, breastfeeding, postpartum or have children under age five.
Nonprofits can be another resource to turn to for help keeping your kitchen stocked, preparing for job interviews, babysitting assistance and other needs. If you’re not sure where to start, the 2-1-1 Call Center‡ can help you identify resources in your area.
At UMB, we’re always here to provide support, guidance and help you navigate difficult situations, so please know that you can reach out to us anytime to discuss financial education or relief measures. Together, we can work through challenging times and enjoy the brighter days ahead.
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