In most situations, you do not need to pay back unemployment benefits. If you meet the eligibility requirements, those benefits are yours to keep. The exception to this is if an overpayment was issued. In that case, you will need to pay back only the amount that was overpaid to you. It’s also important to note that most unemployment benefits are taxable so your benefits will most likely show up on your federal taxes.
Written by Attorney Kimberly Berson.
Updated April 7, 2023
What Are Unemployment Benefits?
Unemployment insurance benefits (UI benefits) are intended to support workers who have lost a job through no fault of their own. The benefit payments are provided to help pay for rent, food, and other living expenses until you get a new job.
The unemployment insurance program is a state-run program that is supervised by the U.S. Department of Labor. Each state administers its own unemployment program and creates its own eligibility requirements and benefit amounts and terms.
The average weekly benefit amount (as of 2023) is $410.06 while the average duration of UI benefits is 13.75 weeks.
How Do You Apply for UI Benefits?
To receive UI benefits, you’ll need to file an unemployment claim with the unemployment insurance division of your state’s department of labor. The recipient of UI benefits (known as a “claimant”), is required to have worked for a certain length of time and to have earned a certain wage before they are eligible to receive UI benefits.
You usually need to certify that you have been actively job hunting while you are receiving unemployment to continue receiving your benefits.
Most people can collect up to 26 weeks of UI benefits while unemployed. You will be notified of the full amount of unemployment benefits you can receive after you apply. If approved, you receive a weekly benefit payment. The payment amount is based on a percentage of your recent earnings.
If you receive Social Security, this might affect the amount of UI benefits you will be entitled to receive.
Can Anyone Qualify for Unemployment Benefits?
Not everyone qualifies for unemployment. Self-employed people, independent contractors, and students usually aren’t eligible for UI benefits. People who voluntarily leave their job and people who are looking for their first jobs usually do not qualify either.
Every state has their own unemployment qualification “checklist” but usually you can receive unemployment if you:
Are unemployed through no fault of your own
Meet the work and wage requirements for your state
Do You Have To Pay Taxes on Unemployment Benefits?
So long as you don’t receive an overpayment, you shouldn’t have to repay your unemployment compensation. But you are required to pay federal taxes on your UI benefits just like you would for other sources of income.
If you are unsure whether your unemployment benefits are taxable, you can use the Interactive Tax Assistant (ITA) program on IRS.gov.
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What Is a UI Overpayment?
In some cases, the state agency administering the UI benefits will send you more money than you are eligible to receive. This is called an overpayment. If an overpayment occurs, the unemployment office will send you a notice of overpayment requesting that you return the amount of the overpayment.
How Can an Overpayment Happen?
Overpayments can occur in a few different ways. For example, if you accidentally gave the state unemployment office incorrect information or you landed a job after a lengthy work search and forgot to notify the unemployment office, you may receive an overpayment.
If you receive UI benefits while working part-time, something as simple as a clerical error could result in an overpayment. This is why it’s always a good idea to check your weekly deposits.
How Repayment Works
You will receive a written notice in the mail if you got a benefit overpayment. The notice will give you instructions on how to pay the amount due. In some cases, penalties may also be imposed.
If you don’t pay back overpaid benefits, they can be collected from your state or federal income tax refunds. If you owe an unemployment overpayment, it may also affect whether you receive UI benefits in the future or those benefits may be reduced to account for a previous overpayment that wasn’t repaid.
You can contest an overpayment determination by filing an appeal. The Benefit Payment Control Unit of the State Department of Labor investigates and prosecutes benefit overpayments.
You can pay the overpayment in full or request a repayment plan to pay in installments. If you can’t afford to pay back the overpayment, you might be eligible for an overpayment waiver.
Claimants who have received an overpayment of benefits may request a waiver from repayment if you can prove:
You were not at fault for the overpayment
You were not aware you were receiving an overpayment
Paying the overpayment would be contrary to equity and good conscience — this means it would cause an extraordinary financial hardship if forced to pay
It’s important to note that most unemployment offices prefer money orders, checks, and payments directly from your bank account, instead of a credit card payment. If you want to find out where and how to pay the overpayment, you can check the frequently asked questions (FAQ) on your state’s Department of Labor website.
Are There Other Types of Unemployment Benefits?
Besides regular unemployment insurance benefits, there are other programs that can help to provide some financial relief if you find yourself unemployed.
Some people may receive benefits under the federal program called Disaster Unemployment Assistance (DUA). This program provides unemployment benefits to individuals who have become unemployed due to a declared major disaster.
DUA benefits are available to unemployed workers and self-employed people. To be eligible to receive DUA payments:
Your job must have been lost or interrupted because of a presidentially-declared disaster
You can’t be eligible for regular unemployment insurance benefits
The federal government administered many temporary programs during the Covid-19 pandemic, including Pandemic Unemployment Assistance (PUA) created by the CARES Act. These benefits programs have since expired.
Keeping Track of Your Unemployment Benefits
It’s a good idea to keep track of all the paperwork associated with your unemployment benefits. Keep receipts for the unemployment benefits you receive and make sure you know how much you are entitled to receive. If you are receiving more than you are supposed to receive, you will be required to return the overpayment so alert your state’s unemployment office ASAP.
You can also reach out to a non-profit in your area or contact an attorney for help understanding the unemployment process.