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WalletPrep worksheet · Work and income

How do unemployment benefits work?

Name ____________________ Date __________

Key ideas

  1. File in the state where you worked. Each state runs its own program. Find yours through the Department of Labor's CareerOneStop finder and file right away.
  2. Benefits replace only part of your pay. States pay a share of your recent wages, up to a weekly maximum. Many states pay up to 26 weeks.
  3. Unemployment checks are taxable income. You get Form 1099-G in January. Ask the state to withhold 10% for federal tax so you don't owe later.

Vocabulary

Unemployment insurance
A state program that pays part of your old wages for a limited time after you lose a job through no fault of your own.
Base period
The stretch of past work your state looks at to decide whether you qualify for unemployment and how much you get.
Gross income
Your total pay before any taxes or deductions are taken out. Salary offers and loan applications usually ask for this number.

Work it out

Jada earned $1,100 a week before a layoff. Assume her state pays half of her old weekly pay, under its maximum. Her essentials are $2,600 a month.

  1. Old weekly pay
  2. Weekly benefit (half)
  3. 10% federal withholding
  4. Weekly check
  5. Monthly essentials
  6. Benefits per month
  7. Monthly gap

Check yourself

  1. You live in one state but worked in another. Where do you usually file for unemployment?

    • A. The state where you live
    • B. The state where you worked
    • C. With the federal government
    • D. Either one, whichever pays more

  2. Your weekly benefit is $400 and you choose federal withholding. What lands in your account?

    • A. $400
    • B. $352
    • C. $360
    • D. $312

  3. Which of these usually makes you ineligible for unemployment?

    • A. Being fired for misconduct
    • B. Being laid off when your team was cut
    • C. Having your hours cut
    • D. Your employer closing

Your turn

Open the CareerOneStop Unemployment Benefits Finder, pick the state where you worked and save its claim page. If you've lost your job, file today and choose the 10% federal withholding.

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Answer key

How do unemployment benefits work?

Work it out

  1. Old weekly pay$1,100
  2. Weekly benefit (half)$550
  3. 10% federal withholding− $55
  4. Weekly check= $495
  5. Monthly essentials$2,600
  6. Benefits per month− $2,145
  7. Monthly gap= $455
  1. Her benefit is $1,100 ÷ 2 = $550 a week. She withholds 10% for federal tax: $550 − $55 = $495 a week.
  2. Weeks don't line up with months, so she uses 52 weeks ÷ 12: $495 × 52 ÷ 12 = $2,145 a month.
  3. Her essentials are $2,600, so she needs $2,600 − $2,145 = $455 a month from savings while she job hunts.

Check yourself

  1. B. The state where you worked The Department of Labor says to file with the unemployment program in the state where you worked.
  2. C. $360 The only withholding rate allowed on unemployment is 10%. $400 × 10% = $40, so $400 − $40 = $360.
  3. A. Being fired for misconduct Benefits are for people out of work through no fault of their own. Each state defines misconduct, but it usually disqualifies you.