Unemployment and the CARES Act
Unemployment benefits for workers due to the Corona virus related layoffs are eligible to receive expanded benefits as part of the CARES Act. Under the provisions the unemployed will receive an additional $600 per week in Federal Pandemic Unemployment Compensation (FPUC) funded benefits through July 31 in addition to the standard benefits that are received under the State program.
For example, if a worker receives $400 weekly benefit from the standard State funded unemployment program, then they will see an increase of their weekly benefit from $400 to $1,000 per week through July 31. Unless the Federal government extends the temporary Federal relief provided to unemployed weekly benefits will be reduced back down to the standard benefit provided by the State.
If you live in Ohio you can reference the link provided form the Ohio Department of Job and Family Services to estimate your standard weekly benefit. Ohio UC Weekly Estimator
Additionally, the CARES Act is extending state-level unemployment insurance by an additional 13 weeks therefore an unemployed worker would be eligible to receive standard State level benefits for a total of 39 weeks vs the regular 26 weeks that are normally provided.
What about the self-employed, is there any benefit for them?
The CARES Act also creates a temporary Pandemic Unemployment Assistance program through December 31, 2020, to provide payments to those not traditionally eligible for unemployment benefits who are unable to work as a direct result of the COVID-19 public health emergency. Expanded eligibility would provide benefits to self-employed individuals, independent contractors, “gig economy” workers, and individuals who were unable to start a new job or contract due to the pandemic, this would also include farmers and farm related services.
In order to receive these benefits self-employed individuals would apply for these temporary new federal benefits at the state UC office or on the department website in the same way that employees are required to. Currently the State of Ohio has not provided any guidance on applying for these benefits, so the self-employed are encouraged to regularly check the Ohio Department of Job and Family Services website for regular updates. Ohio Department of Job and Family Services COVID
Will these benefits affect my tax return next year?
Unemployment benefits are taxable income, so it is important to make the appropriate tax withholdings elections as you file for these benefits. Many individuals who file for these benefits fail to make an election to withhold taxes and when they go to file the tax return the following year are surprised to discover that they owe a large tax liability. This income is taxable at the Federal, and State level in Ohio.