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Will you have to payback unemployment benefits? Don’t miss this deadline.

Posted on February 8, 2021

It’s not a pleasant thought that you might have to pay back unemployment benefits if you received too much. How do you know what “too much’ looks like? Here’s what to do, according to the CPAs at Teipen CPA Group.

  • New IRS requirements apply to the 3 to 4 million gig workers and independent contractors who received unemployment benefits from the Pandemic Unemployment Assistance (PUA)program that was recently extended through March.
  • Individuals are going to have to substantiate their employment and prove their identity (even if they did not do this in 2020, when they applied for unemployment).
  • The IRS also has new requirements to certify that these gig or independent contract workers are still out of work due to COVID each and every week.

What changed? The new stimulus package that passed in late December 2020 extended the PUA program originally established in the CARES Act (May 2020). The new package extended unemployment benefits to gig workers, independent contractors, and other workers who normally wouldn’t qualify. At issue is a new threshold of proof for individuals to continue or start receiving benefits through the PUA.

So if you’re an Uber driver, freelance writer, consultant, or any other type of independent contractor who has lost work and filed for unemployment, this deadline could apply to you.

Gig workers who applied (or re-applied) for these benefits before Jan. 31, have 90 days to provide this extra documentation, which includes things like W-2s, tax returns, and business receipts. Failure to follow through with this extra verification could result in having to pay back any benefits received since the week of Dec. 27, 2020. 

Those who filed for these extended PUA benefits between Jan. 31 and when they are currently set to expire on March 14, will have 21 days to provide this information.

Federal guidance says individuals must provide the documentation “within 90 days of the application date or the date the individual is instructed to provide such documentation by the state agency (whichever is later).”

The fine print:

  • While every PUA claimant going forward will need to provide this documentation, you might have already submitted many of these documents if you filed to increase your benefit amount through the PUA in May.
  • Some people who qualified for more than the minimum PUA payment (because their loss of income was greater) already had to submit these documents.
  • If you only received the minimum benefit amount from the PUA, (which is 50 percent of what you normally earn), you will likely need to file further documentation with your state to continue receiving benefits and avoid paying back any benefits you’ve already received.

Let Teipen CPA Group help. Since every state has different overpayment recovery procedures, go to Indiana.gov/PUA or contact us to determine the latest information on how Indiana is dealing with this.