10 Ways to Maximize Your Unemployment Benefits

The first steps are to apply immediately, file often, file correctly, and keep a job search going.

According to the U.S. Department of Labor, it can take about 2–3 weeks from the day you applied to receive your first unemployment payment.¹ So, if you’re eligible to receive unemployment insurance, the sooner you file your claim the sooner you’ll receive your benefits – and the less likely you’ll have to tap into your savings or use a credit card to cover essential expenses. For more on applying for unemployment, read “Tips for Filing Unemployment Claims.”

Once you’ve applied for unemployment and are waiting for your first check, your paperwork isn’t over yet. Most states require you to regularly file for unemployment benefits, usually weekly or bi-weekly.¹ If you don’t continually file, you won’t receive your benefits. This means that for every eligible period you want to receive unemployment benefits, you must file a claim. Be sure to check – and carefully follow – your state’s unemployment laws to ensure your unemployment benefits regularly make it into your bank account or mailbox.

It’s important that every time you file for unemployment claims, you fill everything out correctly. Again, it’s key to carefully follow your state’s requirements. But it’s also important to double check for any errors like typos. Errors can delay payments, and multiple inconsistencies can seem suspicious, jeopardizing your ability to qualify.^2,3

All states have “work search requirements.”⁴ In other words, you’ll regularly need to prove you’re on the hunt for a new job in order to keep receiving your unemployment insurance benefits.^4,5 In New York, for example, those collecting unemployment must have proof of at least three different job search “activities” every week.^1,6 In times of severe economic downturn, this requirement may be eliminated or modified, so it’s a good idea to check with your local unemployment office.⁵

Specifics will depend on your state’s requirements, but work search records typically must include information like the employers contacted, how they were contacted, and on what days.⁷ You can keep your records online or on paper, as long as they can be easily shared with your state’s unemployment agency if and when requested.⁴

The more juice you can squeeze out of your unemployment benefits, the more likely you can cover most – if not all – of your essential expenses while in between jobs. To do so, consider taking time to distinguish your needs from your wants, cut down on discretionary spending, and create a strict budget. If you stick to that budget, you may find you have a bit more breathing room, even if money is tight. For more on budgeting, read “How to Make a Monthly Budget, One Step at a Time.”

If you’re really pressed for cash short-term, you can opt not to have federal income tax withheld from your unemployment payments.^1,8 In other words, each unemployment payment will be the full, gross amount. This means you’ll have every single dollar available to use towards the essentials – for now. Don’t forget that unemployment insurance benefits are taxable income, so you’ll have to pay those taxes come the next tax season. And if you end up owing more than $1,000 in income taxes, you’ll have to pay an underpayment penalty to the IRS.⁹ If you choose to receive your gross unemployment pay and expect to be on unemployment for a while, it may be wise to plan to make estimated tax payments to avoid the underpayment penalty.

Unemployment insurance benefits are temporary. Most states offer 26 weeks, but some offer 13 weeks or fewer.^1,10 If you’ve exhausted your regular unemployment insurance benefits, are still between jobs, and the state you live in is experiencing particularly high levels of unemployment, you may be eligible to receive up to 13 additional weeks or more depending on the state and the circumstances.¹¹ Check with your state and don’t be afraid to apply. It could give you the boost you need while searching for the right job.

Emergency funds are generally reserved for paying essential expenses during unexpected, unlikely circumstances, like being unemployed through no fault of your own. If you find your unemployment benefits aren’t enough to pay for essential costs – think housing, groceries, transportation, and debt – it’s okay to use some of your emergency fund to cover the difference. That’s what it’s there for. To help decide whether to use your emergency savings, read “When to Tap Your Emergency Fund." 

If you’re collecting unemployment benefits, you’re required to search for work. But it can also be a great time to develop your professional skills or acquire new ones. Whether you choose to take an online certification, pick up some classes, or volunteer, upskilling can help you open the door to new opportunities, boost your resume, and maybe even help you find a new job with more pay.

Losing your job can shake up your regular routine and spark some uncertainty in your life. If you’re eligible to collect unemployment benefits – and if you can cover basic expenses while you search for the next step – try to embrace the free time you have. After all, chances are you’ll go back to working full time soon enough. Whether you want to spend time with your immediate family, work on that hobby you’ve been putting aside for months, or simply relax, do it. You deserve it! Just don’t forget to keep up with your job search.

Unemployment insurance benefits can help ease the stress of being unemployed. And with some careful planning, you can make the most out of your benefits. From closely following your state’s requirements to sticking to a budget and making time for yourself, these tips can help you make your time between jobs less stressful and more productive.

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