What Happens if You Get a Job While on Unemployment?

If you’ve been unemployed and are able to find suitable work and accept a job offer, congratulations! Unemployment benefits are meant to be a temporary support until you get back on your feet. Extra congratulations if your new job is full time or pays more than your weekly benefit amount.

If your new job is part-time or pays less than your benefit amount, you should still feel good about what you’ve accomplished. But you might have to stay on top of things for a minute. After all, if your earnings from your new job are less than your weekly unemployment benefit amount, you should still get that money by prepaid debit card or direct deposit into your bank account. You worked for it and you earned it.

Reporting Requirements

Some states require that you notify them once you get a new full-time job and no longer need to collect unemployment benefits. Other states don’t require notice from claimants. They might only require that you stop filing your routine benefits claim or benefits request. This may be a weekly or bi-weekly claim, depending on the state. States like California don’t require you to notify the unemployment office that you went back to work. After a period of inactivity, the unemployment agency will close your unemployment claim. 

If you recently got a part-time job or you make less than your monthly benefit amount, then you still may be eligible for 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.

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.

Reporting requirements vary from state to state. It’s helpful to check your state’s reporting requirement for when a claimant gets a 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.

Pandemic Unemployment Assistance and the CARES Act

Prior to the coronavirus pandemic, independent contractors and self-employed individuals were not eligible for unemployment assistance. However, the Pandemic Unemployment Assistance (PUA) Program and the CARES Act extended benefits to workers in these categories to help them deal with the negative economic effects of the pandemic. Many became eligible to receive at least partial benefits if they were working but earning less than they would in a normal year.

If you’re self-employed or an independent contractor who is covered under the Pandemic Unemployment Assistance (PUA) program, be sure to report your earnings to receive benefits.

The CARES Act also added an additional temporary weekly benefit for unemployed workers. But at this point a lot of states have ended this additional benefit and many are bringing back more restrictive reporting requirements about reemployment activities such as reporting work search contacts or redefining what constitutes suitable work. Stay on top of things and be sure that you are reporting what you are required to so you can avoid unpleasant surprises.

Keep Track of Your Benefits

When you are receiving unemployment benefits, you should stay organized. Keep track of your benefits and your job searches. 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 are making your weekly or bi-weekly unemployment claim or benefits request. In some states there is a waiting period before you can receive your unemployment benefits. Additionally, be sure to accurately report any hours you work at a part-time job. Keep track of how many hours you work each day and report that accurately when you make your benefits request. 

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. 

Be sure you also keep track of your unemployment income. Come tax time you will have to report your unemployment income on your tax return to the IRS and your state’s department of revenue. Currently, you don’t need to pay taxes on the first $10,200 of unemployment benefits you receive. But if you receive more unemployment compensation you may be taxed on those earnings when you do your income tax returns. 

Alternatively, you may consider having a small amount of taxes deducted from your unemployment benefits if you can afford it. It’s possible that you may have had your withholdings set up differently or were expecting to have to pay into the IRS and your state’s department of revenue come tax time. This step may prevent hardship down the road and allow you to spread the amount you owe out over time.

Let’s Summarize...

Way to go getting a new job! Losing a job can be difficult, and you may feel like you’ll never find suitable work and you’re doomed to struggle to get by. So when you find and start a new job after being unemployed, it is certainly something to celebrate. Enjoy and savor it.

After you’ve properly celebrated your new opportunity, make sure you check in with your state unemployment office’s eligibility requirements. You’ll want to see if you have to report getting a job. Continue to keep track of your benefits and the number of hours you work so that you only keep the unemployment benefits that you are legitimately owed. This is especially true if you are only working a part-time job. Keep at it and keep moving forward. Well done!