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What You Need to Know About Unemployment Benefits

Jul 10, 2021 5 min read Sheila Olson

Key takeaways

  • In most cases, you’ll receive only half of your salary in unemployment benefits up to the state maximum; high earners receive significantly less.
  • There may be circumstances in which you can quit your job and still get unemployment benefits.
  • You have a maximum of 26 weeks of unemployment benefits in any 52-week period; some states pay as few as 13 weeks.


When you lose your job, it’s hard not to panic especially if your emergency savings fund is small. Fortunately, if you’re out of work through no fault of your own, you’re probably eligible for unemployment benefits. These benefits won’t completely replace your lost income, but they can give you cash to help keep you going until you find something new.

Here’s what you need to know about collecting unemployment benefits if you’ve lost your job.


What are unemployment benefits?

Unemployment benefits temporarily replace some of your lost income when you lose your job through no fault of your own. Employers pay into unemployment insurance to support these payments.


Who is eligible for unemployment benefits?

Although unemployment insurance is a joint program between federal and state governments, eligibility guidelines are established at the state level, so requirements vary a bit from state to state.



In general, however, you have to meet these two minimum requirements to qualify:

  • You must have lost your job through no fault of your own. Typically, if you were fired or voluntarily quit your job, you won”t be able to collect benefits. Of course, there are exceptions to this rule — if you quit your job due to unsafe working conditions or to care for a seriously ill minor child, for example, you may still be eligible for benefits.
  • You have to work for a minimum period of time or earn a minimum amount of money. This is usually determined by looking at the amount of time you collected wages during your “base period,” which is generally the first 12 months of the last 15 months, or four of the most recent five completed quarters, from the date your claim is filed.

If you file a claim on November 1, 2021, your base period would be April 1, 2020 to July 30, 2021. Texas, for example, requires you to earn wages in at least one quarter of your base period in an amount equal to at least 37 times your weekly unemployment benefit amount.

Most states use some variation of this formula to determine eligibility, but you'll need to check with your state unemployment office for specific information.

How much will I get in unemployment benefits?

Unemployment benefits are only intended to replace a portion of your lost wages, so don’t expect to collect anything close to your full salary. Each state has its own formula to calculate benefits, but they all consider how much you earned before you lost your job. All states also have a maximum cap on benefits, so high earners will receive a much smaller percentage of their lost wages than those at the lower end of the income scale.

Many states simply pay half of the lost wages, up to the state maximum. Some also offer an extra fixed amount if you have dependent children, typically around $25 per dependent per week.

Your benefits may be reduced if you earn any money while you are collecting unemployment, such as earnings from temporary work or a part-time job.

You should also keep in mind that unemployment benefits are taxable; you can elect to have federal withholding taken out of your benefits check. Many states also assess income tax on unemployment benefits, so be sure to check the rules in your state.

How long can I get unemployment benefits?

Most states cap unemployment benefits at 26 weeks during any 52-week period. These aren’t necessarily consecutive weeks. For example, if you are laid off from your job in June and are unemployed and collect benefits for 16 weeks before you find a job, but then you lose your new job in March, you could only collect 10 additional weeks of benefits until June, when you would have to reapply and open a new claim.

Some states pay benefits for fewer than 26 weeks: If you live in Arkansas, Florida, Georgia, Kansas, Michigan, Missouri or North Carolina, you won’t get a full 26 weeks of unemployment benefits.


How are unemployment benefits paid?

The money for unemployment benefits comes from a combination of state and federal taxes paid by employers. Currently, the federal unemployment tax (FUTA) is 6% of the first $7,000 earned by each worker.

Each state sets its own unemployment tax rate and the amount of earnings it’s assessed on.


How do I claim unemployment benefits?

When you apply for benefits, you’ll need a number of documents and pieces of information, which may include:

  • Proof of residence/mailing address
  • Phone number
  • Social Security number
  • Driver's license
  • Name, address and phone number of your last employer or employers, depending on how long you worked at your last job (typically, you'll need to provide your work history for the past two years)
  • Any holiday or vacation pay you may be owed from your last job
  • Reason why you lost your last job/proof of layoff

Once you apply, most states give you credentials to access your account online, and you will need to log in, usually once a week, to file a claim. Be sure you know which day of the week claims are due and file on time, or you may not get paid. Some states have a waiting period before you receive your first check, generally not longer than a week.

Keep in mind that every state requires you to be available and able to work, and actively looking for work or in an approved job training program while you are receiving unemployment benefits; some may even require you to submit a certain number of job contacts each week or sign a statement swearing you are looking for a job in order to collect a check.

Most states pay weekly, although some pay biweekly, and payment is generally made either by direct deposit or via a debit card.

Can I collect unemployment if I'm self-employed?

Prior to the pandemic, most self-employed people were not eligible to collect unemployment benefits ’’unless they incorporated their business and paid unemployment taxes.’’

Some states also offer a self-employment assistance program (SEAP) to individuals who are collecting unemployment benefits to help them launch a business. SEAP doesn’t extend your unemployment benefits; in fact, most states that offer the program require you to have at least 13 weeks of benefits left in order to participate.

There are two main advantages to participating in a SEAP if you are considering starting your own business:

  • You generally don't have to be actively looking for work during the time you’re in the program.
  • Any money you make off your business while you are in the SEAP won't be deducted from your unemployment benefits.

SEAPs aren't available in every state, and the requirements vary from state to state, so if you are interested, contact your state unemployment office as soon as possible.


What you can do next

If you’ve recently lost your job, don’t delay filing for unemployment benefits. Even if you're not sure you're eligible, it’s still a good idea to apply. Although your benefits won’t replace your missing paycheck, you’ll have cash for necessary expenses to help tide you over. Each claimant should visit their state unemployment website for instructions on how to file an unemployment claim.


Sheila Olson is a Charlotte-based freelance writer specializing in investing, personal finance, entrepreneurship, and retirement planning. She is a regular contributor at Investopedia and writes frequently for the banking and consumer credit industry.


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