Coronavirus Relief Bill: The CARES Act
Congress passed the CARES Act on March 27, 2020 that will provide assistance to households affected by COVID-19. Assistance includes stimulus payments, expanded unemployment benefits and waived student loan payments.
Update - March 2021: The federal government passed new legislation on March 11, 2021 to issue a third stimulus payment, extend Pandemic Unemployment Assistance (PUA) benefits, provide an additional $300 per week to supplement state & federal unemployment benefits until September 4, 2021. See below for more details.
Unemployment Benefits
If you have lost wages or have reduced hours due to COVID-19, you might be eligible for unemployment benefits. Self-employed individuals, independent contractors, and part-time workers are typically not eligible for general unemployment benefits funded by the state. However, under the CARES Act which passed on March 27, 2020, most self-employed individuals, independent contractors and gig workers (also known as 'non-traditional workers') are now be eligible for unemployment benefits via Pandemic Unemployment Assistance (PUA).
Visit Texas Workforce Commission (TWC) for more information and to start the application process. To reach the TWC call center, call 800-939-6631.
Please note: TWC is experiencing incredibly high call volumes due to the pandemic.
Unemployment Benefits + Your 2020 Tax Return
Tax time has begun and unemployment benefits are taxable income that needs to be reported to the IRS. If you received unemployment benefits in 2020, you should receive a Form 1099-G from the Texas Workforce Commission. Be sure to include this form with the rest of your income documents for tax preparation.
Remember: Foundation Communities’ Prosper Tax Help program is offering free online tax prep services.
Pandemic Unemployment Assistance (PUA) Benefits Extended & Additional $300
The American Rescue Plan was passed in March 2021 that extends PUA benefits until September 4, 2021 for eligible claimants. The Texas Workforce Commission (TWC) has advised that you do not need to submit a new claim. Instead, TWC will review existing PUA claims and will notify applicants when their claims have been updated. At that time, PUA recipients may begin requesting benefit payments again.
Continue to check your Correspondence Inbox in your TWC account for more information. View TWC’s press release.
The new legislation extends the additional $300 per week to supplement all state and federal unemployment benefits until September 4, 2021. This includes both regular unemployment benefit recipients and PUA recipients.
Mixed Earner Unemployment Compensation
The Mixed Earner Unemployment Compensation (MEUC) benefit is designed to provide additional assistance to individuals who had both W2 employment and self-employment/freelance/gig work prior to the pandemic. These individuals technically only qualified for regular unemployment benefits and were unintentionally left out of the Federal Pandemic Unemployment Assistance (FPUA) program.
Eligible individuals in this category, who earned more than $5,000 in self-employment income in 2019, can receive an additional $100 per week. Keep an eye out for correspondence from TWC about the MEUC program requesting action from you to start this benefit. Click here for more information.
Work-Search Requirements Reinstated
The Texas Workforce Commission is reinstating work search requirements for unemployment benefit recipients, starting November 1, 2020.
The guidelines for work search requirements depend on your primary source of income. Therefore, if your primary source of income is from W2 employment, then you will be required to complete work-search activities on November 1st.
If your primary source of income is self-employment or as an independent contractor, then you should be exempt from completing work search activities, as long as you are working to 'reopen your business'.
What does this mean? Actions you can take to work on 'reopening your business' are things like:
Updating your website
Posting on social media
Networking with others in your industry
Searching for new clients/opportunities
These actions towards 'reopening your business' will need to be documented in with your bi-weekly payment requests (starting in November) in order to continue receiving benefits. Check your Correspondence Inbox in your TWC account for more information.
Note: Active labor union members, such as the Austin Federation of Musicians, are also exempt from completing work search requirements.
Non-Traditional Applicants
TWC is informing non-traditional applicants (self-employed, contractors, gig workers) that they will initially be denied for general unemployment benefits. However, there is no need to reapply. TWC will automatically review your application for PUA eligibility. Continue to check your mail and TWC online account for updates.
The base weekly benefit amount for 'non-traditional workers' is $207.
If you received an initial denial of general unemployment benefits, your claim will still be reviewed for PUA eligibility - TWC will do this automatically. View the 'Request Payment' option on the left side menu and continue to request payment every two weeks, even if you are still waiting for a final determination.
Requesting Payment
While you're waiting for a determination from TWC, you should continue to request payment every 2 weeks on your designated filing/request day. Don't wait for TWC to notify you of eligibility! If you miss your payment request window, this could delay when you receive payment. Be sure to check your TWC account regularly for any message or required actions in your "Correspondence Inbox".
Unemployment Benefits Are Taxable
Unemployment benefits must be reported on your federal tax return. You will receive a Form 1099-G from the Texas Workforce Commission in January 2021 with the amount of unemployment benefits you received in 2020. Click here for more information to make sure you have the right tax withheld.
Returning to Work
If your employer is reopening and you have been asked to return to work, you may be exempt from returning if you have an eligible reason. Talk with your employer about why you are unable to return to work and see if they are able to make accommodations.
When you request your next payment from TWC, indicate that you were offered work and refused - your employer will report this information as well. TWC will investigate your case and contact both you and your employer. You will continue to receive payments while the investigation takes place.
Looking for Work?
If you are currently looking for work, check out WorkInTexas.com and Workforce Solutions Capital Area for available job openings.
Stimulus Payments
Third Stimulus Payment (March 2021): The federal government issued a third stimulus payment of $1,400 per eligible individual, or $2,800 per eligible couple filing jointly. Individuals will also receive an additional $1,400 per dependent child.
Check the status of your second stimulus check with the IRS Get My Payment Tool
Second Stimulus Payment (January 2021): Legislation was passed at the end of December 2020 approving a second stimulus payment. Eligible recipients will receive a payment of up to $600 for an individual or up to $1,200 per married couple. If you have children under the age of 17, you will receive an additional $600 per child. The second stimulus payment will be sent via direct deposit or a paper check or EIP card (prepaid debit card) in the mail.
The IRS is supposed to have all second stimulus payments sent out by January 15th. If you don’t receive your second payment, then you might have to claim your money when you file your 2020 tax return.
First Stimulus Payment (April 2020): Eligible recipients will receive $1,200, one-time payment. For each child age 16 or under, the payment will be an additional $500. You are ineligible for a payment if someone claims you as a dependent, even if you are an adult.
Student Loans
If you are paying federal student loans, the government has waived payments and interest until at least September 30, 2021. Eligible loans are federal, direct loans, taken out within the past 10 years. You should receive a notice regarding the status of your federal loan(s) and can contact the loan servicer with questions.
Per the legislation, this payment suspension will not affect your participation in a loan forgiveness or rehabilitation program. However, pay close attention to your loan account for fees at the end of the suspension period - this should not occur. More information here.
Update - March 2021: As part of the American Rescue Plan, student loan forgiveness is now tax-free through December 31, 2025.