Whether you were recently laid off or have been out of a job for some time, all states offer unemployment benefits to qualified individuals. This money can be very useful for paying short-term bills and putting food on the table. Although the advantages of filing for unemployment are undeniable, there are a few disadvantages you should take into consideration.
Delays in Payment
Unemployment benefits don't appear out of thin air. Qualified individuals must often wait weeks before receiving their first checks. This is especially true during recessions, when understaffed state offices have trouble processing backlogs of claims.
Taxes
Even though the government pays unemployment benefits, this money is considered wage income by the IRS and subject to federal taxes. Recipients can fill out the W-4V, Voluntary Withholding Request, to have these taxes taken out of their monthly checks.
Some states also assess taxes on unemployment benefits. Filing for unemployment does not entitle you to tax breaks on income from your old job, either.
Self-Esteem
For those proud of living self-sufficiently, filing for unemployment can be embarrassing and take a huge toll on self-esteem. Recipients may view unemployment benefits as a hand-out or think less of themselves for accepting help.
Finding Work
Laws differ between states, but most require that you actively seek work while receiving benefits and keep a record of your job search. People who don't follow this rule, risk losing unemployment.
Some states require that you accept any reasonable job offer. In New York, for example, this includes any job that pays at least 80% of your previous wage. For the first 13 weeks of unemployment you are allowed to accept only jobs in your field of expertise, but after that must take any job you are able to do, regardless of work experience or training.
Limits on Claims
States cap the amount of unemployment you can receive. As a reference, qualified New York residents may collect a maximum of $405 per week for 26 weeks out of the year.
The amount of unemployment you can collect may be further limited if you are working part-time or have other sources of income. Additionally, you must contact the state every week you are eligible for benefits in order to receive payment.
