6 Mistakes That Could Cost You Your Unemployment Benefits

Source: Thinkstock

Source: Thinkstock

If your employer recently showed you the door, your first thought is probably about how you’re going to pay your bills and eat for the next couple of months. And when the unemployment payments start coming in, you might be tempted to stretch the truth so you can get more benefits than you’re entitled to. Don’t do it. Unless you want a rap sheet, it’s in your best interest to remain honest.

The latest jobs report shows a slight improvement in the unemployment rate. Statistics reveal the current rate is at 5.5%, a modest change from 5.7% a month earlier. Despite this morsel of good news, roughly 2.7 million people remain among the ranks of the long-term unemployed (those who have been out of work for 27 weeks or longer). This is compounded by the fact that hiring is slightly down. The U.S. Bureau of Labor Statistics’ most recent hiring report shows there were 5.0 million hires in January, a decrease from 5.1 million in December.

If you’re currently out work, you’re probably depending on unemployment distributions to supplement your savings. It’s important to know there are some missteps that could lower, inflate, or even suspend your benefits. There are also major blunders that could get you in legal trouble.

Here are six tips for staying out of hot water when it comes to claiming benefits.


1. Know what qualifies as work

You’ll likely want to pick up odd jobs here and there while you’re looking for more permanent work. However, be aware that even if you only work for one hour, the U.S. Department of Labor considers this to be a full day’s work.  If you don’t report that you worked that day, you could get an overpayment of benefits.

You are even required to report work you didn’t get paid for. Some of the examples the labor department gives include on-the-job training, a job orientation, an internship or externship, and self-employment or freelance work. Activities that don’t count as work include managing a single-family rental unit or serving on a jury.

2. Don’t try to claim benefits while overseas

If you’re planning a quick trip outside the country for some rest and relaxation, be sure to claim your benefits before you pack your straw hat and sunglasses. The Department of Labor says you can’t claim benefits while you’re in another county. However, this rule doesn’t apply if you’re traveling to Canada.


3. Don’t neglect to report severance pay

If your employer provides you with severance pay, don’t conveniently forget to report this to the labor department. Refrain from this urge and include your severance pay in your initial application for benefits.

If you haven’t received severance payments yet, you’ll still be eligible for unemployment payments during the time you are waiting for the payout. However, you cannot collect both severance and unemployment benefits at the same time (unless each severance payment is less than your weekly benefit amount or you did not receive your first payment until 30 days after your last day of work). So make sure to report the weeks that you do receive severance so that you won’t receive an overpayment of benefits.


4. Keep your contact information updated

Before you open those housewarming gifts and test out your new toaster, make sure to notify the Department of Labor if your address or phone number changes. If you move without updating the labor department, you could lose or be denied benefits because you won’t be able to receive important notices, such as a request for additional information. The Post Office does not forward mail received from the Department of Labor. Your mailing address or telephone number can be updated when you claim your benefits online. You can also call your state’s unemployment office directly.


5. Don’t lie about looking for work

The Department of Labor is strict about work-search rules. You’ll be asked to document your efforts on a work-search record, which will be mailed to you. You’ll generally be required to complete a minimum of three work search activities each week, which can include meeting with a career center adviser and participating in workshops. Proof must be provided upon request. If you can’t offer sufficient proof of your search, your benefits could disappear faster than your job did.


6. Control your greed — or go to jail

The labor department considers intentionally failing to report income a fraudulent act and you’ll pay for being dishonest. Generally, you’ll be asked to pay a fine and repay the money obtained fraudulently. Fines differ based on your state of residence. If you don’t pay up, you could be sued by the Department of Labor, forfeit future days of unemployment benefits, face criminal charges, and even face jail time.

That doesn’t sound fun, does it? You’ve been warned.

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