Americans are reacting to new unemployment benefits a year after the pandemic

With the passage of the $ 1.9 trillion US rescue plan, unemployed Americans will continue to receive additional $ 300 a week in unemployment benefits and will be able to remain in key pandemic programs for concert workers. traditionally eligible, the long-term unemployed and mixed employees until 6 September. More than 20 million people have been receiving unemployment benefits since mid-February.

A new policy adds a federal tax exemption for the first $ 10,200 of benefits paid to individuals in 2020 and up to $ 20,400 for married couples who file together, with an adjusted gross income of $ 150,000 or less. About 40 million people received unemployment benefits last year.

Now, tens of millions of Americans and their families are waiting for the latest changes to appear in their bank accounts.

In Renton, Washington, 61-year-old Don McDowall told CNBC Make It that he was able to make debt-free groceries due to federal supplements in addition to his state’s “fairly generous” unemployment benefits. . However, he managed to do so “as long as I did not pay in the health insurance market”.

“Interestingly interesting,” says McDowall, who was fired from his car job in April 2020. man. “

Due to a basic condition, he waited to receive the Covid-19 vaccine before taking a new job in person. At this point, McDowall is coming to the end of its 52-week benefit period and will be able to continue aid through extensive pandemic emergency unemployment compensation, which provides long-term unemployment assistance.

“This PEUC extension will keep me afloat, barely,” he says.

In Austin, Texas, Ruth Caporello, 35, says the new tax exemption included in the rescue package could make a big difference in her household’s finances. Both she and her husband lost their jobs at nonprofits last year and only she qualified for unemployment insurance.

She received just over $ 10,200 in 2020 and did not know that the benefits would be taxed. She has already filed her taxes online and now she is not sure how she will recover her money.

“This is the first year in a while, we will get a refund,” says Caporello, “but now I wonder if there will be a delay.”

The IRS has not yet issued official guidance on how the waiver will be applied and what taxpayers should do if they have already filed their return. According to The Century Foundation, those who have already filed their returns and received a refund will likely need to file an amended statement to claim the $ 10,200 exemption. For returns that are being processed, taxpayers will likely see a delay in processing and refunding them if they wait for one. However, after taking into account the $ 10,200 tax exemption, their reimbursement may be higher than initially expected.

For her part, Caporello, who has three children under the age of 5, says their family has become accustomed to not relying on government funds to move. Her husband, a filmmaker, started her own business after losing her job last spring. She is working on a master’s degree in clinical counseling in the field of mental health.

She says she is also encouraged by several discussions about whether unemployment benefits should be taxed at all. The new $ 10,200 exemption applies to federal income taxes, and states must decide whether to offer a break in income taxes. Some, such as California, Montana, New Jersey, Pennsylvania and Virginia, are already exempt from unemployment taxes. Seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – do not collect state income taxes.

“It’s a good thing to come back more,” says Caporello. “Every bit helps. But we are in that season of life, with three small children, I try to go through undergraduate school and we try to buy a house. I don’t know when I will receive my refund or how much it will be, but I know I just can’t rely on it. “

Biden renewed pandemic unemployment programs before they expired on March 14. But as states may take a few weeks to reschedule their unemployment insurance schemes, some families may see a two-week delay in their ongoing assistance this spring.

Another important source of future delays: Many people who have not worked since the beginning of the pandemic reach the end of the year with 52-week benefits. The start of a new claim could take several weeks to process, for which 41-year-old Brandy Odie from Douglassville, Georgia, is already preparing.

Her husband lost his job as a recruiter in March 2020, and is now the only winner in her household. They have heard from online forums that it could take up to five weeks to process a new application in Georgia and continue to collect benefits.

In addition, their benefits may be less than what they currently receive.

When someone starts a new year of benefits, they usually have to recalculate their payments based on the most recent earnings. The latest rescue package says that if you are on PEUC and recalculating your benefits would reduce your aid by $ 25 or more, you can continue to receive the same weekly amount for a further period of 52 weeks.

However, this rule does not apply to those receiving unemployment assistance in the event of a pandemic or extended benefits, the federally funded program that triggers “activation” for certain states during periods of high unemployment.

Odie’s husband benefits from PUA. “We may have to use our credit cards for a cash advance to pay our bills,” says Odie. Her family already had to rely on credit when her husband’s unemployment was cut in January after President Trump was late in signing the December stimulus package.

She is grateful that she still brings in income to cover some of their bills, but in terms of taking over the debts until her husband’s benefit is certain: “That’s all we can do.”

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