Updated: Feb 3
The $2 trillion economic relief package, officially called the CARES act, includes an additional $600 in unemployment benefits. Many people are confused about how it works, who is eligible and how you can start seeing that money in your bank account. You can find all of the rules here, but here’s a quick rundown of how it works:
If you are currently eligible for unemployment benefits (determined by your state), you are automatically eligible to receive the $600 additional weekly payment.
You don’t have to do anything special to receive it; the federal government is automatically adding that $600 weekly payment to your unemployment benefits.
Yes, you read that right. You can technically can receive an additional $2,400 of unemployment benefits in a month (if there is a four-week month). What a blessing!
No, you don’t have to pay your unemployment benefits back.
But yes, you will see the additional $600 payments credited as income next tax season, along with any other unemployment compensation that you receive. What this means is that if you earn $45,000 this year, the $600 payments will be added to your total income plus whatever you received in additional unemployment income. So, if you receive 4 weeks of these $600 payments – a total of $2,400 – that will be added to the $45,000 of income that you earned. Then add whatever you receive in regular unemployment benefits (let’s say its $500 per week for 4 weeks, for a total of $2,000) This means that you will have $49,400 of taxable income (the $45,000 + $2,400 + 2,000). Some may not like hearing that, but I personally think it’s a small factor considering that the money is available now, when you likely need it the most.
I hope this gives you some insight into how the “bonus” unemployment payments work. Please note that they are not technically called “bonus unemployment payments,” but I like to describe them that way because I believe they are a good thing. I’ve also received “bonus unemployment payments” when I was laid off during the Great Recession in 2009, when a similar federal unemployment payment was awarded by President Obama’s administration. It was a great help that truly blessed me financially during that time.
As always, please know that you are not alone and that you can always check here for relevant, timely advice.
Sending love and hope to you always,