What Happens if You Get a Job While on Unemployment?

How Do Unemployment Benefits Work?

Unemployment benefits provide temporary financial assistance to workers who lose their jobs due to circumstances beyond their control, like layoffs or a lack of work. These benefits are managed by state unemployment insurance programs with oversight from the federal government. 

To qualify for unemployment benefits, you usually need to meet eligibility requirements, such as earning enough wages during your base period (the past 12 months divided into calendar quarters) and actively searching for work. Some states offer an alternate base period if you don’t qualify under the standard timeline. 

When you file an initial claim, you’ll provide personal information, including your Social Security number and details about your former employer. After filing, you’ll receive a monetary determination that outlines your weekly unemployment benefit amount, the number of weeks of benefits you qualify for, and your maximum benefit amount for your benefit year (a 52-week period).

To continue receiving benefits, you must file weekly or bi-weekly claims and report any work income, such as wages from part-time jobs or gig work, as well as other payments like vacation pay. Benefits are typically distributed via direct deposit or a debit card and are calculated as a percentage of your past wages, up to a state-set limit. Most states provide up to 26 weeks of benefits under normal circumstances.

Can You Work and Still Receive Unemployment Benefits?

If you get a job while you’re on unemployment, you’re usually still eligible for unemployment benefits if the job is part time and/or you’re making less than your weekly unemployment benefit amount. If you get a full-time job or you’re otherwise making more than your weekly benefit amount, you probably won’t continue to receive unemployment benefit payments.

It’s important to note that state laws vary on this, so you need to check with your state’s unemployment agency to see if and how much you can work and still receive your unemployment benefit. You can find your state office using this quick finder tool from the U.S. Department of Labor.

Let’s look at how work impacts unemployment benefits based on the type of job you take—whether it’s full-time, part-time, or temporary work

Full-Time Work & Unemployment

If your work search pays off and you land a full-time job, congratulations! Starting a full-time job usually means you won’t qualify for unemployment benefits anymore because your income will exceed your state’s eligibility threshold. Landing a job is an important step forward, but it’s also crucial to take the right steps to transition out of the unemployment system to avoid overpayments or penalties.

In many states, you can simply stop filing your weekly or bi-weekly unemployment claims once you start a full-time job. This signals to the unemployment office that you no longer need benefits. However, some states require you to formally report your new job and last day of unemployment. This can often be done online or by contacting your state’s unemployment office directly. Be sure to double-check your state’s specific rules so you remain in compliance.

Failing to report your new job, especially if you continue to claim benefits, could result in an overpayment. If this happens, you may have to repay the extra funds and could even face penalties or disqualification from receiving future benefits. If you’re unsure about your state’s process, it’s always a good idea to reach out to the unemployment office for guidance. Taking the time to report your new employment correctly ensures a smooth transition and keeps you on solid ground as you move forward in your new role. 

Part-Time Work & Unemployment

If you recently got a part-time job or you make less than your monthly benefit amount, then you still may be eligible for partial unemployment benefits. Keep track of your gross earnings (your income before taxes are taken out) and continue filing your unemployment claim for weekly benefits. The state unemployment insurance program will then determine whether or not you're eligible for further benefits.

Temp Work & Unemployment

If your new job is a temporary job, no matter whether it's part-time or full-time temporary work, you should still make your weekly or bi-weekly claim. This will ensure that you will receive unemployment benefits without gaps after your temp job ends and help you keep a steady income stream for you and your family while you’re unemployed or partially employed. Your unemployment insurance benefit is based on the work you do during your base period, so it doesn’t matter if it’s work for one employer or several employers.

What Happens if You Don’t Report Work Income to the Unemployment Office?

If you accept a job offer, whether it’s for part-time work, full-time work, temporary work, or freelance work, it’s important to include this information in your weekly or bi-weekly reporting. 

If you don’t report your earnings from work, you may get an overpayment from the unemployment agency. If this happens, you could be on the hook to return money to the agency. If you intentionally work and don’t disclose this information, you put yourself at risk of becoming disqualified for unemployment benefits in the future.

Do You Have To Tell the Unemployment Office You Got a Job? 

In a majority of states, you don’t need to notify the unemployment office if you get a full-time job and no longer plan to continue collecting benefits. You can just stop filing your weekly claim to stop your unemployment payments. Most states advise claimants to stop filing immediately after they start working full time, but Texas allows claimants to do so after the first full week of work.

A few states require you to notify them once you get a new full-time job and no longer need to collect unemployment benefits, including:

• Alabama: Report your return to work by answering “yes” to the “return to work” question on your weekly benefits as soon as you start work (don’t wait until you get your first paycheck).

• Delaware: “You must indicate reemployment status on your weekly claim request and report gross wages earned during the benefit week.” 

• Georgia: As soon as you begin working, notify your GDOL career center. Failure to do so may result in you having to repay any benefits you received while fully employed.

• Illinois: As soon as you begin working, notify IDES if you plan to continue claiming unemployment benefits.

• Ohio: Encourages users to file the final weekly claim and enter their return to work date and earned wages for that week.

• Pennsylvania: Notify the UC service center immediately if you return to work.

• Rhode Island: You do not need to contact UI Online if you have returned to work full time. Instead, you are required to complete and mail the Return to Work Form sent to you when you filed your claim.

• Virginia: “If you are now earning more than your weekly benefit amount your unemployment benefits must cease. Simply report your return to work date and stop making your weekly call or online filing for benefits.”

Keep reading to learn more about state-specific reporting requirements and to find links to each state’s official unemployment website.

Understanding State-Specific Reporting Requirements

Reporting requirements vary from state to state. It’s helpful to check your state’s reporting requirement for when a claimant gets a full-time job while receiving unemployment benefits. Your state’s unemployment insurance agency or your state’s department of labor has handbooks, FAQs, and resources available online as well as in the unemployment office and your local workforce center.

You can find your state office using this quick finder tool from the U.S. Department of Labor. 

Keep Track of Your Benefits

When you are receiving unemployment benefits, most states require you to keep records of your work search contacts, including applications submitted and interviews attended, as part of ongoing eligibility. Along with your job searches, you should also record your work activities — including dates that you started or ended work — hours worked, gross earnings, and taxes taken out of your earnings.

This will be helpful when you certify your weekly or bi-weekly unemployment claim or benefits request. In some states there is a waiting period (usually one week) before you can receive your unemployment benefits. 

Make sure you go through your benefits claim step by step. Work through the claim process slowly to be sure you understand what you are reporting. Being accurate and truthful on your claim will help you to avoid an overpayment or an underpayment of your unemployment compensation.

When you receive your benefits, if something doesn’t seem right, look into it. If you receive an overpayment, don’t spend that money. There can be serious consequences if you do. You could be disqualified from receiving unemployment benefits in the future or even be fined or face other penalties. If you receive an overpayment, you should contact your state’s unemployment insurance agency and ask how to return the extra funds. 

How Does Unemployment Income Affect Your Taxes?

Unemployment benefits are considered taxable income, so they are subject to federal income tax by the IRS. Depending on your state’s tax laws, they may also be subject to state income taxes. However, unemployment benefits are not subject to Social Security or Medicare taxes. It’s important to remember that taxes aren’t automatically withheld from unemployment payments unless you choose to have them deducted.

If you don’t have taxes withheld, you could end up owing money when you file your tax return. To avoid surprises, consider requesting voluntary withholding by filing Form W-4V with your state unemployment office, which allows them to withhold 10% of your benefits for federal taxes. This can help you avoid scrambling to pay a large tax bill later.

Let’s Summarize...

Landing a new job is a big milestone. As you transition back to work, make sure you follow your state’s unemployment reporting rules to avoid any issues. If you’re working part time or in a temporary role, continue tracking your hours and income so you only claim the benefits you’re eligible for. If you’ve started a full-time job, stop filing unemployment claims or notify your state’s unemployment office if required. Staying organized and compliant ensures a smooth transition while avoiding potential penalties.