Under President Biden’s $1.9 trillion federal coronavirus relief package, enacted as the American Rescue Plan (ARPA), enhanced unemployment benefits have been extended until September 6th, 2021. This includes further extensions to the PUA program, PEUC program, $300 weekly payment under the FPUC program and $100 Mixed Earners (MEUC) program.
The ARPA also contained provisions for Unemployment tax breaks on the first $10,200 of 2020 UI benefits. This would also cover those who faced delays getting their unemployment claims processed and ended up getting paid retroactively in 2021. These claimants can claim this tax break via filing their 2020 return (regular or amended).
With state agencies finally getting caught on up on extended/enhanced unemployment benefit payments, many unemployed or under employed workers who saw large pay cuts due to furloughs, are getting paid for past weeks they were eligible for payments under the PUA and FPUC programs. Some of these retroactive back payments are over $10,000 in many cases, which is a considerable wind fall for those without a steady source of income.
With the recently passed Coronavirus stimulus bill (CARE act) many Americans and the media are focused on the one-time direct cash stimulus payments to low and middle income America. But it’s really the unemployment benefits extension that’s the most significant stimulus payment.
For example a family of four (2 adults and 2 kids) earning less than $100,000 would get the one-time $2,400 stimulus payment and $500 for each kid. That’s a total of $3,400. If one of the parents lose their job due to Coronavirus related reasons they would then be eligible for their states extended unemployment insurance (UI) benefit plus the extra $600 per week supplemental UI stimulus benefit. The extra UI benefit is worth up to $7,800 over the thirteen weeks it is in effect (~approx 4 months). So in total that’s over $10,000. If both parents lose their jobs, the stimulus benefit would be even larger.
Now my point here is not to say that the additional stimulus benefit for unemployed will truly offset actual wages or the other related impacts from losing a job. That is likely far more devastating and longer term than just the four months the extra stimulus payments will be in effect for. But I wanted to emphasize that the true direct payments from the stimulus package is really the unemployment benefits increase and extension and not the one time payment. As the economy gets worse from the Coronavirus induced fallout, it’s the UI stimulus that will matter a lot more over the next few months.
What are your thoughts? Feel free to leave a comment (be polite) on your viewpoint. Should the UI stimulus benefits be extended past July 2020 if the economy is not any better?