As the COVID-19 pandemic persists, states are offering a new $300 unemployment benefit on top of what you already receive. In fact, President Trump signed an executive order soon after the extra $600 a week for unemployment benefits ran out in July.
The extra funds are coming from the Federal Emergency Management Agency, better known by its acronym FEMA. The program this extra $300 comes from is called Lost Wages Assistance (LWA). The program isn’t automatic for states, who have the choice to opt in or not. Also, states have the option of adding another $100, bringing the total of extra weekly benefits to $400. Both will be retroactive beginning August 1, 2020. This means that even if you stopped collecting unemployment, you will still receive back pay.
How Long will LWA Last?
For three weeks. After that, states may opt to keep paying the extra $300 or $400 until funds run out. It’s been noted, however, that the funds only lasted for four weeks in many states.
Am I Qualified for LWA?
In order to receive the extra benefits from the LWA program, you must be eligible for at least $100 a week in unemployment benefits. You can find out your state’s minimum unemployment benefit amount on their gov website. You must also prove that you have been affected by the COVID-19 pandemic regarding your employment. This is referred to as Pandemic Unemployment Assistance (PUA) and once you certify, you don’t have to apply for LWA. You automatically receive it.
Here are the states that have decided to participate in LWA:
District of Columbia
Kansas (the state is providing an extra $100)
The following states have depleted their LWA program funds offered by FEMA:
At this time, South Dakota is the only state that has opted not to participate in the LWA program. Puerto Rico remains undecided.
When Will I See My LWA Payment?
That depends. Overall, there has been some difficulty for states when setting up the LWA program. It could take several weeks before you see your extra benefits hit your bank account. According to CNBC, Arizona, Louisiana, Missouri, Tennessee, and Texas have all been able to send out LWA benefits.
Do I Pay Tax on LWA Benefits?
Yes. Just like your standard unemployment income, you need to pay taxes on your LWA benefits. Your state may offer an option to withhold taxes for you.
Do I Still Qualify for the LWA Program if I have a PPP Loan?
Generally speaking, no, although it is possible. Self-employed small business owners who claim owner compensation replacement from their PPP loan need to report that income. This income would, in turn, affect your eligibility for unemployment benefits. If partial benefits are allocated, the state will automatically determine if you are eligible for the LWA program.
Do I Need to Record My Unemployment Benefits?
Essentially, no you do not need to record your unemployment benefits as part of your business bookkeeping because your benefits will be automatically deposited into your personal account as not to affect your capital or stakeholder contribution in your business.
If the LWA and PPP rules and regulations are overwhelming. Bluefire Accounting can help. They know you didn’t start your own business to spend all your time creating profit and loss spreadsheets. Outsource your bookkeeping to Bluefire Accounting, and reclaim your time for running your company. Call (704) 979-4334 to schedule a free strategy session today.