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$300 bonus unemployment checks: Will you have to pay taxes? What you should know

The extra federal unemployment insurance payments are set to expire soon, but some recipients may need to pay taxes on the money.

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More federal unemployment checks are still coming. 

Sarah Tew/CNET

President Joe Biden's $1.9 trillion COVID-19 relief plan passed the US House early Saturday morning, and will head to the Senate next. Unemployed workers will receive more money if the bill becomes law, along with a third stimulus check for $1,400. Unfortunately, the extra money might have to be used for this year's tax bill

Unemployment checks count as taxable income, but some states didn't withhold federal taxes, according to a report from The Century Foundation. The organization says millions of unemployed workers could find themselves owing money on April 15 Tax Day. Sen. Dick Durbin, a Democrat from Illinois, and Rep. Cindy Axne, a Democrat from Iowa, introduced a bill on Feb. 2 to provide tax relief for those who received unemployment benefits. On Thursday, 12 members of Congress signed a letter (PDF) to ask House leaders to include the relief in Biden's American Rescue Plan

Thursday also saw changes to which workers can receive unemployment benefits. The Dept. of Labor, as directed by President Biden, updated its eligibility requirements allowing people who refused to return to work due to unsafe coronavirus standards. Workers will qualify for Pandemic Unemployment Assistance (PUA) when it goes into effect by the end of March. We're here to answer as many questions as we can, given the current information available, including whether the weekly unemployment bonus includes retroactive payments, and who meets the eligibility requirements. 

When will there be another COVID-19 relief package?

That's a good question. After weeks of debates in Congress, Biden's American Rescue Plan made it to the House through a parliamentary tool called budget reconciliation. The House voted Saturday to pass the legislation meaning it will go to the Senate next. Once there, it will be debated and then voted on. If the Senate approves the bill in any form (even after amendments), it will head to Biden for his signature. 

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How long will the $300 bonus unemployment payments last?

The December stimulus package added 11 weeks of unemployment with an expiration date of March 14. There's an overflow period that lasts until April 5 for those who exhausted their state's benefits before the expiration date. 

Are the $300 bonus payments retroactive?

Though the language of the stimulus bill doesn't specify whether the unemployment bonus is retroactive, that doesn't appear to be the case, The Washington Post reported. Observers don't expect that we'll see a federally instituted lump sum payment to make up for previous weeks of not receiving a $300 check.

What is Mixed Earner Unemployment Compensation and do I qualify?

The original CARES Act had unemployed workers either get their benefits from the state through unemployment insurance or through a federal program called Pandemic Unemployment Assistance, or PUA. Someone who was self-employed or who worked as a gig worker, freelancer or contractor who doesn't typically receive unemployment benefits after being laid off could receive PUA instead. 

In the language of the new bill, however, someone who earned a combination of income from a traditional job and employment as a contractor would either receive the unemployment insurance payment or the PUA, but not a combination of both. 

With Mixed Earner Unemployment Compensation, a person who made more money from self-employment or a contracting job -- that requires a 1099 form -- could receive an extra $100 a week. For example, let's say you made $50,000 in 2019, which was split with $30,000 coming from a contractor job and $20,000 from a part-time job at a company. If you were laid off, the state unemployment office would calculate whether you'd receive benefits for the $30,000 via PUA or $20,000 via unemployment insurance but not a combination of the two. 

Though someone who works a traditional job and makes $50,000 a year in New York would receive $480 a week from unemployment insurance, by having a mix of the two, you'd get the greater of the two different amounts, which would be the PUA of $288 a week rather than the $280 from unemployment. 

Mixed Earner Unemployment Compensation will now give that person an extra $100, but only if the state participates. It may be some time before states will determine whether they will or not after the bill gets passed. 

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The clock is ticking on the current round of unemployment checks. 

Sarah Tew/CNET

What are the qualifications to receive the $300 bonus checks? 

If you've been laid off or furloughed, you're qualified to apply for unemployment benefits from the state where you live. Once the state approves your claim, you can apply to receive whatever state benefits you're entitled to. Because states cover 30% to 50% of a person's wages, there's no single sum you could expect on a national basis.  

When the CARES Act passed in March, it provided unemployed workers with a weekly bonus check of $600 on top of the amount the state was offering, but those payments ended in July. Trump's executive memo signed on Aug. 8 reinstated a bonus weekly check for a reduced $300 funded by the federal government through the Federal Emergency Management Agency. These were offered for only six weeks to states that applied (which means all except South Dakota). Those receiving PUA would also receive the $300 bonus. 

Do I qualify for the additional federal unemployment insurance?

Eligibility criteria vary from state to state, but the general rule is that you should apply if you've lost your job or been furloughed through no fault of your own. This would include a job lost directly or indirectly because of the coronavirus pandemic

How does my state calculate unemployment benefit amounts?

The state determines how much each applicant receives, usually based on an individual's gross income. It varies from state to state but is typically between $300 and $600. 

How do states handle unemployment payments?

Most states provide up to 26 weeks of funding, though others, such as Georgia, limited benefits to 12 weeks. On the other hand, Delaware extended benefits for up to 30 weeks. 

The weekly benefit amount depends on an applicant's gross income when employed and ranges between $300 and $600, with some exceptions. Mississippi had paid up to $235, while Massachusetts' maximum has been $1,220. Pandemic Emergency Unemployment Compensation from the CARES Act added an additional 13 weeks funded by the federal government, but another stimulus bill with unemployment insurance would need to pass in order to extend it further. The latest COVID-19 relief package would add another 11 weeks of PEUC. 

How can I see my state's unemployment insurance policy?

Each state's labor office provides information about its particular unemployment benefits.