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Millennials — who are roughly ages 27 to 42 — are in their prime homebuying years.
While the combination of high home prices and rising interest rates has caused affordability issues for many buyers, the situation is gradually improving.
The median price for an existing house was $366,900 in December, just 2.3% higher than a year earlier and a drop from the $416,000 recorded last June.

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It may come as no surprise that among millennials who have intended to buy a house this year, 92% said in a recent survey that inflation has impacted their goal.
Yet most of them aren’t letting it serve as a roadblock, according to the survey from Real Estate Witch, an education platform owned by real estate data firm Clever.

While 28% of those millennials are delaying their buying plans, the remainder say they’re responding by saving more money for the purchase (59%), spending more than expected (36%), buying a fixer-upper (26%) and buying a smaller home (25%). 
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Millennials — who are roughly ages 27 to 42 — are in their prime homebuying years. The typical first-time buyer was age 36 in 2022, up from age 33 in 2021, according to the National Association of Realtors. 
Last year, first-time buyers made up 26% of home purchases, compared with 34% in 2021. The combination of year-over-year double-digit price jumps for much of 2022 and rising mortgage rates created an affordability problem for many buyers.

Home prices continue heading down from their highs

However, the situation is gradually improving as home prices continue sliding. The median price for an existing house was $366,900 in December, just 2.3% higher than a year earlier and down from $370,700 in November, according to the Realtors association. Last June, the median price was $416,000 — 13.4% higher than in June 2021.

Additionally, interest rates on mortgages have eased. The average for a 30-year fixed-rate loan is 6.21% as of Jan. 24, according to Mortgage News Daily. That compares with 7.32% in late October. As buyers know, the higher the rate, the more their monthly payment is.

5% or 6% may be the ‘new normal’ for mortgage rates

While it’s impossible to predict where rates will be as the year progresses, experts say buyers shouldn’t wait around for mortgage rates to drop to where they were in 2020 and 2021 — below 3% or not much over it — because it’s unlikely to be seen again anytime soon.
Rates were that low due to emergency actions taken by the Federal Reserve to prop up the economy in the wake of the Covid pandemic hitting the U.S. in 2020.

“Those were unusual circumstances,” said Lawrence Yun, chief economist for the National Association of Realtors.
“Buyers should have the mindset that the new normal is a rate of 5% or 6%,” Yun said. 

Houses are still selling quickly

One headwind that buyers may face is limited choices.
As of last month, there was a 2.9-month supply of homes — meaning at the current sales pace, that’s how long it would take to sell all listed houses if no more came on the market. That’s down from 3.3 months in November but up from 1.7 months in December 2021. A balanced market involves a supply of four to five months, according to Redfin. 
“There’s not that much inventory in the marketplace,” Yun said.
“Even with the housing slowdown, days on the market are still less than a month,” he said. “That implies that people in the market to buy are finding a listing they want and snatching it up quickly.”

Homes that sit on the market longer may be a buying opportunity

If you’re hoping to find a seller who’s more likely to come down on price, one strategy is to look for homes that have been on the market longer.
“There’s usually a lot of competition for new listings,” he said. “If you find a home that’s been on the market for at least a month or two, it’s a great opportunity … sometimes sellers will take 10% to 15% off the list price.”

Additionally, be aware that while sellers had been less likely to go under contract with a contingency — i.e., making the final sale contingent upon, say, a home inspection — that dynamic has largely changed.
“Waiving the appraisal and waiving of inspections really walked hand in hand with low interest rates,” said Stephen Rinaldi, founder and president of Rinaldi Group, a mortgage broker based near Philadelphia.

Except for in premium areas, in most cases sellers are back to allowing contingencies.

Stephen Rinaldi
founder and president of Rinaldi Group

“Except for in premium areas, in most cases sellers are back to allowing contingencies,” Rinaldi said.
 Also, if you’re looking at homes close to a city, it may be worth expanding your search radius, Yun said.
“There are always more affordable houses further out,” he said. “And those homes tend to stay on the market for a longer period.”

An adjustable-rate mortgage may be an option

It may also be worth considering an adjustable-rate mortgage if you’re trying to bring the cost down, Yun said.
With an ARM, the appeal is its lower initial rate compared with a traditional fixed-rate mortgage. That rate is fixed for a set amount of time — say, seven years — and then it adjusts up, down or remains the same, depending on where interest rates are at the time.
“Usually the first home isn’t owned for a long period, usually it’s five or seven or 10 years,” Yun said. “So with that in mind, an ARM might make more sense because it offers a lower rate and by the time it’s set to adjust, it’s time to sell the house.”

While there’s a limit to how much the rate can change, experts recommend making sure you’d be able to afford the maximum rate if faced with it down the road. 
You may be able to find an ARM whose introductory rate is at least a percentage point below fixed rates, Rinaldi said.
“I think it’s worth evaluating, depending on the person’s situation,” he said.

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President Joe Biden signed the Inflation Reduction Act in August.
The historic climate law extended and amended a $7,500 tax credit for plug-in electric and fuel cell vehicles.
The IRS is expected to issue guidance for the clean vehicle credit in March. The rules, which carry requirements for car batteries, may temporarily limit which cars qualify for the full credit value.

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Getting a $7,500 tax break for the purchase of a new electric vehicle will likely get harder in a few months — meaning prospective buyers who want the financial incentive may wish to speed up their timeline.  
The Inflation Reduction Act, a historic climate law President Biden signed in August, tweaked rules for an existing tax credit associated with the purchase of “clean” vehicles.

The law, which extended the tax break through 2031, changed some requirements to get the full $7,500 value of the “clean vehicle credit.”
Some tax and auto experts think the tweaks — largely intended to bring more manufacturing and supply chains within U.S. borders and those of allies — will temporarily make it more difficult to qualify for all or part of the credit.

Some rules are on hold until the IRS issues guidance

Some of the tax credit rules took effect on Jan. 1. (More on those, below.) But others pertaining to battery minerals and components — arguably the more challenging to meet — don’t take effect until the IRS issues guidance. The agency expects to do that in March 2023.
At that time, many clean vehicles that currently qualify for the tax break may not anymore — at least, until manufacturers are able to satisfy the new rules.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Consumers who are in the market for a new electric car, truck or SUV likely have a limited time within which they can more easily claim the tax break, experts said.

“There’s almost like a three-month grace period,” Lesley Jantarasami, managing director of the energy program at the Bipartisan Policy Center, said.
Manufacturers have identified 27 all-electric and 12 plug-in hybrid car and truck models that qualify for the tax break based on existing rules, according to IRS data as of Jan. 17. (Buyers must also meet criteria like income requirements.)
Tesla cut prices on some car models this month, helping them qualify for a tax break. There will likely be additions to the vehicle list in coming days and weeks, the IRS said.
After IRS guidance comes through, Jantarasami said, “I don’t think there’s any doubt the list of eligible car models will shrink in the short term.”
If that happens, though, consumers can instead get a separate tax break for buying a used electric car instead of a new one, or perhaps by leasing a car, experts said.

How the $7,500 clean vehicle tax credit works

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The clean vehicle credit is a “nonrefundable” tax credit. That essentially means buyers only get the full benefit if they have an annual federal tax liability of at least $7,500.
Buyers can qualify if the new plug-in electric or fuel-cell vehicle is “placed in service” after Dec. 31, 2022. A car is placed in service when the taxpayer “takes possession” of it, the IRS said; that may differ from the purchase date.
Some rules have already kicked in that limit the qualifying buyers and vehicles:

Income: Married couples don’t qualify for the new-vehicle credit if their modified adjusted gross income on a joint tax return exceeds $300,000. The limit is $150,000 for single tax filers and $225,000 for heads of household. Buyers can use the lesser of their income in the year they take delivery of the car or the prior year.

Vehicle price: The credit is unavailable if a manufacturer’s suggested retail price exceeds $80,000 for vans, sport utility vehicles and pickup trucks or $55,000 for other vehicles. Note: MSRP isn’t necessarily the price you pay for the car.

Manufacturing: The vehicle must have undergone final assembly in North America. Buyers who have a car’s Vehicle Identification Number (VIN) can consult a U.S. Department of Energy website to learn if it qualifies.

The aforementioned list of qualifying cars cited by the IRS are based on these criteria.

‘We don’t know what’s going to happen in March’

Coming IRS guidance — again, expected in March — adds two requirements for car batteries.
The pending rules will tie the $7,500 credit amount to whether a new clean vehicle’s battery meets a critical mineral and a battery component requirement.

Critical minerals: Broadly, the rule requires a certain share of the battery’s critical minerals be “extracted or processed in the United States, or in any country with which [it] has a free trade agreement in effect, or recycled in North America,” according to a Treasury Department document. That share rises over time: 40% or more in 2023; 50% in 2024; 60% in 2025; 70% in 2026; and 80% thereafter.

Battery components: At least half of the vehicle’s battery components (like battery cells and modules) must be manufactured or assembled in North America starting in 2023. That share increases to 60% in 2024 and 2025, and grows gradually to 100% in 2029.

Cars that meet one of these requirements get half the credit ($3,750). Cars that meet both get the full value.
It’s likely that few, if any, new clean vehicles will be eligible for the full $7,500 when these two requirements take effect.
“We’re encouraging consumers interested in buying and in a place to buy right now to jump on it,” said Ingrid Malmgren, policy director at Plug In America, a nonprofit advocacy group for clean vehicles. “Because we don’t know what’s going to happen in March.”
Until March, the credit’s full value is tied instead to a calculation for battery capacity.
Vehicle specs like battery capacity, final assembly location and VIN are listed on the window sticker, the IRS said.

Drivers have other options to snag tax credits

However, there are other options available for buyers if the current list of eligible vehicles is shortened come March.
Households can buy a used clean vehicle and may get a tax break worth up to $4,000, experts said. That tax break, which became available Jan. 1, comes with some requirements for car and buyer but are generally less stringent than the ones for new vehicles, experts said.
Additionally, it’s possible dealers leasing clean cars can pass on some tax savings to consumers. In this case, a dealer claiming a tax credit for commercial clean vehicles might pass on some of its $7,500 tax break in a lease agreement or as a break on the down payment, for example, Malmgren said. This commercial credit isn’t subject to income, battery, assembly or MSRP requirements, she said.
However, consumers should ask dealers before leasing, she added, since it’s not a given such entities would qualify for a tax break or pass on money to consumers in a lease. More

A 2015 expansion of the Military Lending Act extended a cap on annual percentage rates at 36% for revolving credit.
As interest rates on debt climb, Congress may consider implementing a similar policy.
But other changes may better help consumers save, research finds.

Source: Getty Images

Rising credit interest rates have made it even more expensive to carry debts.
But a proposal in Congress that would cap rates on consumer loans at 36% may not be an effective way of curbing those higher costs of borrowing, according to new research from the Urban Institute’s Financial Well-Being Data Hub.

The report examines the effects of a previous policy, the 2015 expansion of the Military Lending Act, which also extended a 36% cap on annual percentage rates for revolving credit such as credit cards and overdraft lines of credit.
But the changes did not effectively result in enhanced consumer protections, the Urban Institute’s research found.
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One key reason why: The average APR on revolving loans was 17%, based on credit bureau data on residents of military communities with subprime credit scores.
The research focused on individuals with subprime credit scores because they are more likely to have higher annual percentage rates when they borrow, and therefore be affected by caps on those rates.

Because lenders were already charging rates at or below 36%, the policy did not affect their rates.
“It was well intentioned,” said Thea Garon, associate director at the Financial Well-Being Data Hub at the Urban Institute.

“Based on research, we found it did not have much of an effect at all on credit and debt outcomes among residents of military communities, specifically those with subprime credit scores,” Garon said.
Military community residents with subprime credit scores did not see meaningful changes in credit card ownership, the research found.
Borrowers with subprime credit scores also did not see a decline in delinquency or collection rates on revolving loans.
Nor did service members with subprime credit scores see changes to their credit scores.

‘Detrimental effects on the most vulnerable’

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Importantly, those with the lowest subprime credit scores of less than 500 may have seen reduced credit access.
“The policy may have had detrimental effects on the most vulnerable consumers,” Garon said.
A bill put forward in Congress called the Veterans and Consumers Fair Credit Act seeks to implement a 36% cap on debt for veterans and other consumers. The policy would apply to both closed- and open end credit products.
The Democratic proposal has support from a coalition of 188 organizations.

“Extending this 36% APR cap to all forms of revolving credit would be unlikely to improve debt and credit outcomes for all borrowers, not just for those in military communities,” Garon said.
Based on the findings of the research, policy makers may want to consider other changes to boost consumer protections rather than the 36% cap, according to the Urban Institute.
For example, fee disclosures may help borrowers better understand the costs of loans over time, which research has shown may help discourage them from taking payday loans.
Moreover, when payday loan terms allow for installment payments over six months, rather than in one lump sum, borrowers may spend 42% less to repay those debts, according to the report.

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Several of the large banks behind Zelle are teaming up to create their own digital wallet that will take aim at Apple Pay and PayPal.
For consumers, increased competition over digital payments could be a benefit, but there are still risks to consider.

What the war over your wallet means to you

“The pitch for consumers is an easier online checkout experience,” Rossman said. “You won’t need to enter all of your card information because it will already be saved in the system.
“And it will be managed by the banks, which will in theory have better fraud protection than retailers.”

The good news is “they are already a regulated sector,” added Pam Dixon, executive director of the World Privacy Forum, a nonprofit research group, in contrast to the equally popular buy now, pay later programs.
However, “consumers still have to be really careful,” Dixon cautioned. “This is your financial information.”

Digital payments soar in popularity, but are they safe?

During the pandemic, shoppers showed a growing preference for cashless transactions and still do: Peer-to-peer payment apps — known as P2P — such as Zelle and Paypal’s Venmo, which let users store their banking information on their smartphone, have exploded in popularity.
Now, 64% of Americans use peer-to-peer payment apps, although for young adults that jumps to 81%, according to a March 2022 survey by Consumer Reports.
Roughly 40% of the more than 2,000 people polled said they use payment apps at least once a month, while 18% use them at least once a week. 
Digital payments are generally more secure than credit card transactions because there’s a biometric component, Rossman said — “this online solution will likely have some sort of two-factor authentication, like a code sent via text message.”

But it is not without risk. Users are vulnerable to fraud or scams or can lose money if they accidentally send a payment to the wrong person, a Consumer Reports analysis found.
And peer-to-peer payments still have varying degrees of consumer protections, which could cause an issue when it comes to getting a refund.
Trying to get money back into your personal account after it’s been transferred to someone else may require more work compared to requesting a refund with a credit card company, which often reverses charges almost immediately and fights on your behalf. 
“It’s kind of like getting the toothpaste back in the tube,” Rossman said. 

‘Let the buyer beware’

Zelle, in particular, has been the subject of recent criticism. A U.S. Senate report last fall stated that “Zelle is rampant with fraud and theft, and few customers are getting refunded — potentially violating federal laws and consumer rules.”
The Consumer Reports analysis included a call on policymakers to strengthen consumer protections. “There is a lag between the protections available to consumers and the latest technologies for payments,” said Delicia Hand, director of financial fairness for Consumer Reports.
In the meantime, “payment providers can raise the bar for consumer protection by taking more aggressive steps to minimize user risks,” Hand added. 

If you have never used a digital wallet before, make sure you do a couple of test runs and do not send large amounts.

executive director of the World Privacy Forum

Contrary to those findings, “99.9% of the 5 billion transactions processed on the Zelle network in the past five years were sent without any report of fraud or scams,” the American Bankers Association, Bank Policy Institute, Consumer Bankers Association and The Clearing House said in a joint statement. 
And in every instance in which a customer disputes a transaction made via Zelle, banks are obligated under federal law to investigate and provide reimbursement if the transaction was unauthorized, the statement said.
For now, Dixon offers consumers this advice: “Let the buyer beware.”
“If you have never used a digital wallet before, make sure you do a couple of test runs and do not send large amounts.”
Also, adjust your privacy setting to minimize the amount of information that companies are collecting, Hand advised.
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With the fate of the Biden administration’s sweeping student loan forgiveness plan uncertain, borrowers in New York state may have another option for relief.
The Get On Your Feet Loan Forgiveness Program, established in 2015, offers some college graduates loan forgiveness equaling up to 24 months of payments.

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With the fate of the Biden administration’s sweeping student loan forgiveness plan uncertain and headed to the Supreme Court, borrowers in New York state may have another option for relief.
The ‘Get On Your Feet’ Loan Forgiveness Program, rolled out in 2015, is meant to “invest in recent college graduates with student loan debt who opted to invest their futures in New York,” said Angela Liotta, public information officer and director of communications at the New York State Higher Education Services Corp.

Under the program, certain residents of the state may be eligible for student loan forgiveness on up to 24 months of payments.
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There are around 2.5 million people with federal student loan debt in New York, who collectively owe almost $100 billion, according to higher education expert Mark Kantrowitz.
Here’s what borrowers need to know about the program.

You must live and have attended school in New York

The state relief is available to legal residents of New York who have lived in the state for 12 consecutive months or more. If you’re employed, you need to be working in the state, too.

Among other requirements, applicants must have graduated from a New York high school, or have received a New York state high school equivalency diploma, as well as attended a college or university in the state and earned their undergraduate degree in or after December 2014.
You also need to apply for the program within two years of graduating.

An income-driven repayment plan is required

To qualify for the program, borrowers must be enrolled in an income-driven repayment plan, in which their payments are generally capped at 10% of their discretionary income, such as the Pay as You Earn (PAYE) plan, the Revised Pay As You Earn (REPAYE) plan or the Income Based Repayment (IBR) plan.

Eligibility is limited by income, loan type

The program excludes those who have an adjusted gross income of more than $50,000 a year.
Not all student loans qualify for the state relief.
Under the Direct loan program, subsidized and unsubsidized loans are eligible. Federal Family Education Loans (FFEL) may not qualify, although you might be able to consolidate these loans into the Direct program. Private student loans are ineligible.

Meanwhile, loans taken our during graduate school are also typically excluded from the state forgiveness, and to qualify for the program you need to have no more than a bachelor’s degree at the time of applying.
Unsure of what kind of student loans you hold? You can check on Studentaid.gov.

Up to 24 months of student loan payments available

Under the Get On Your Feet Loan Forgiveness Program, New York state may cover your full student loan bill for up to 24 months under a qualifying income-driven repayment plan.
The state makes the payments directly to your student loan servicer.
The loan forgiveness could have tax implications. Recipients will get a 1099 form from the state, and are encouraged to contact a tax professional, the IRS or the New York State Department of Taxation and Finance for more information.

Federal student loan payments have been on pause since March 2020, due to a pandemic-era policy, and will remain suspended until after the litigation around the Biden administration’s student loan forgiveness plan resolves, or by the end of August — whichever comes sooner.
Although you can apply for the Get on Your Feet Loan Forgiveness Program now, applications will be reviewed for eligibility once federal student payments restart, Liotta said. Still, if you believe you qualify, it’s a good idea to request the relief now because of the requirement that you apply within two years of graduation.
Don’t qualify for this program? New York has a list of other state and federal student loan forgiveness programs.

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Tax experts say most IRS audits are different from how they’re portrayed in the movies.
While the Oscar-nominated film “Everything Everywhere All at Once” includes an in-person IRS audit, many happen by mail or remotely, experts say.
If your tax return is accurate and you have supporting documents, “there’s really no reason to worry,” said Michael Prinzo, managing principal of tax at CliftonLarsonAllen.

Michelle Yeoh in “Everything Everywhere All at Once.”
Source: imdb

Tax audits are rare

Tax audits have been a hot-button political issue since the Inflation Reduction Act, passed in August, allocated $79.6 billion to the IRS over the next 10 years, with more than half of the funds earmarked for “enforcement.”   
But audits have been rare, according to Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik. “I have maybe two or three a year, and that’s with 600 clients,” he said. 
Indeed, the IRS audited 3.8 out of every 1,000 returns, or 0.38%, during the fiscal year 2022, down from 0.41% in 2021, according to a recent report from Syracuse University’s Transactional Records Access Clearinghouse.

Typically, the IRS uses software to assign a numeric score to returns, and when the rating is high enough, it may be flagged for an audit, explained Michael Prinzo, managing principal of tax at CliftonLarsonAllen.
“It’s compared to a general population of other returns with similar income or deductions and when there’s an outlier or a number of outliers, it increases the likelihood that one might receive an audit notice,” he said.

Most audits occur by correspondence

While “Everything Everywhere All at Once” shows a nerve-wracking in-person exam, Losi said most audits happen via “correspondence,” or letters that arrive by mail. You have 30 days to respond by phone or mail.
During the fiscal year 2022, 85% of IRS audits occurred by correspondence, according to the Syracuse University report.
Alternatively, you may receive a letter saying you’ve been selected for an audit with an “information document request,” or IDR, and specific questions about the return, Prinzo said. These may require interacting with an agent, either via a phone call or meeting.

Taxpayers are typically scared of IRS exams. There’s really no reason to worry.

Michael Prinzo
managing principal of tax at CliftonLarsonAllen

Even so, many such audits occur remotely, Prinzo said, especially since the beginning of the pandemic. But if it’s an in-person exam and you’re working with a tax professional, that pro typically shifts the location to their own office.
After the audit, the IRS reviews the information provided and may send additional IDRs before deciding whether the return is correct.
If the agency determines the return isn’t accurate, it will propose an adjustment, outlined in a “30-day letter,” which gives the taxpayer one month to respond if they disagree, Prinzo said. But many IRS exams close with no changes, he said.
“Taxpayers are typically scared of IRS exams,” Prinzo said. But if your return is accurate and you have supporting documents, “there’s really no reason to worry,” he said.

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Tax season kicked off for individual filers on Jan. 23, and the deadline for most taxpayers is April 18.
If you’re expecting a refund, there may be ways to get the money faster, tax experts say.

Drakula & Co. | Moment | Getty Images

How soon to expect a tax refund after filing your return

Typically, you will receive a refund within 21 days if you’ve filed an accurate, electronic return with direct deposit for the payment, according to the IRS. Paper filings and errors may extend the timeline. You can check the agency’s refund portal for status updates. 
The timeline changes if you’re claiming the earned income tax credit — a tax break for low- to moderate-income workers — or the additional child tax credit. While the IRS can’t begin issuing these refunds before mid-February, you should receive the funds by Feb. 28 if there are no issues with your return.

Start with a ‘full audit’ of your 2022 financial year 

Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York, advised taxpayers to begin the tax-filing process with a “full audit of your financial year.”

You’ll want to identify all sources of income, major expenses and life changes, such as marriage, divorce or having a baby, which may affect your filing. While your finances may change from year to year, your 2021 tax return may provide a rough guideline of what to expect, she said.

It’s better to ‘get it right than to get it out quickly’

While you may be eager for a refund, the IRS says to wait until you have all the necessary information. “Filing an accurate tax return can help taxpayers avoid delays or later IRS notices,” the agency said in a recent news release. 
The IRS said this is “especially important” if you’re receiving a Form 1099 for unemployment income, capital gains or dividends, pensions or retirement plan distributions.   

It’s more important to get it right than to get it out quickly.

Marianela Collado
CEO of Tobias Financial Advisors

“It’s more important to get it right than to get it out quickly,” said certified financial planner Marianela Collado, CEO of Tobias Financial Advisors in Plantation, Florida. She is also a certified public accountant.
Companies prepare information returns, such as 1099s, every year, with a copy going to the IRS and the taxpayer. If you skip any of these forms, the IRS system automatically flags your return and sends you a notice, which may take time to resolve. 
Of course, you’ll want to double-check the details entered from your tax forms. “I always say haste makes waste,” Collado said.

Always double-check your tax return

Tax return typos are another common reason for processing delays, Wilson said.
Whether you file on your own or work with a professional, it’s critical to review your tax return, including all of your personal information — such as your name, date of birth, Social Security number, address and banking details for direct deposit — to make sure everything is accurate, she said. More

A wave of companies, including Amazon, Google and Spotify, have announced deep cuts to their head count, leaving former employees without a paycheck.
Here’s what they need to know about applying for unemployment benefits.

Iryna Imago | Istock | Getty Images

A wave of companies, including Amazon, Google and Spotify, have announced deep cuts to their head count, leaving former employees without a paycheck.
Fortunately, the unemployment insurance program, created in 1935, offers support to certain people who have lost their job. The federal program is administered by states, and the rules vary based on where you live.

In a handful of states, employees and employers pay into the unemployment insurance program, said Michele Evermore, a senior fellow at The Century Foundation. In the bulk, only employers pay into the program, but it’s a benefit workers have earned, she said.
As a result, she said, laid-off workers shouldn’t be shy about applying for the aid.
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How soon after a layoff can I apply for unemployment?

“As soon as you leave your job, you should be on your way to the unemployment insurance office,” Evermore said.
In some states, it can take weeks for your claim to be approved, so the sooner you file the better.

While most states have a one-week waiting period before they can start paying you benefits, you don’t have to wait to request the relief, Evermore said.

Where do I apply for unemployment?

Do I qualify for unemployment benefits?

Generally, to be eligible for unemployment benefits, you have to have been laid off through no fault of your own, Evermore said. Maybe the job just wasn’t a good fit for you, or your company was downsizing.
But it doesn’t hurt to apply even if you’re unsure if you qualify, Evermore said. Many people prematurely exclude themselves from the program, she said: “There’s a lot of mythology around who qualifies.”

People may be surprised to learn, for example, that in some cases they can qualify for unemployment benefits even if they quit, Evermore explained.
For instance, in some states you’re eligible for the benefit if you made the choice to leave your job after your employer asked you to transfer to a location where your commute would be too long, or if you had to leave your job because your partner’s employment was relocated.

What are the requirements of the program?

To receive and keep receiving unemployment benefits, you have to be able to work and actively be seeking new employment, Evermore said.
States have different ways of making sure you’re looking for work, she added. In some cases, you’ll be responsible for keeping a log of work search efforts on your own, and in other states, you’ll have to call in to the state unemployment office and share what jobs you’ve applied to on a regular basis.
“In some states you may also report work search online,” Evermore added.
When you apply for benefits, make sure you learn about how to fulfil any requirements in your state.

Are unemployment benefits taxable?

Prapass Pulsub | Moment | Getty Images

Yes, Evermore said. The benefits are subject to federal taxes and most states take them, too.
When you start to get unemployment payments, your state will typically give you the option to have taxes withheld.
“I’d always take that option,” Evermore said. “You could be in for a long spell of unemployment and then get hit with a big tax bill.”

What is the typical weekly benefit?

In the third quarter of 2022, the average weekly unemployment benefit was around $385. But there’s a large range in the payments by state. For example, in Washington state, the benefit was nearly $600 during that period. In West Virginia, it was around $305.
There are other resources, too, for people struggling financially due to job loss, Evermore said.
“Unemployment insurance isn’t the only program in the world,” Evermore said, adding that out-of-work people can also try applying for food stamps and other aid.

How long can I get the benefit?

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The standard duration for unemployment benefits is 26 weeks but that timeline varies by state.
For example, Missouri recently slashed its benefit duration and some workers may only receive payments for eight weeks there.

I received unemployment benefits during the pandemic. Could I qualify again?

It’s possible, Evermore said.
Workers are typically eligible for unemployment benefits for a certain amount of weeks per benefit year. Depending on how long has passed since your last period of joblessness, and how many weeks you previously received the benefits, it’s possible you could qualify again after a follow-up job loss for at least some more weeks and possibly another full duration.

I received severance pay. Will that affect my unemployment benefits?

In most states, if your layoff included severance pay, your unemployment benefits will likely be reduced for the period in which you’re still receiving payments from your former employer.
But, again, that depends on your state. In some cases, your severance package will have no impact on your unemployment benefits, Evermore said.
Clarification: In a handful of states, employees and employers pay into the unemployment insurance program. In the bulk, generally employers only pay into the program, but it’s a benefit workers have earned. An earlier version didn’t draw that distinction.

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