Your Guide to PUA Benefits

States are working overtime to get Pandemic Unemployment Assistance benefits to the newly eligible. Here’s how you can apply.
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© Mariia Korneeva - AdobeStock

Millions of independent contractors and other self-employed individuals, including a large share of the nation’s 1.4 million REALTORS®, may now be eligible for unemployment benefits under the recently passed CARES Act. Through the Pandemic Unemployment Assistance program, you may now qualify for unemployment benefits for up to 39 weeks if you’ve suffered a loss of income, either completely or partially, due to the COVID-19 pandemic.

The federal legislation is brand-new, requiring participating states to expand their existing unemployment programs and resulting in challenges to getting benefits to applicants. Many states have had to build entirely new systems to administer the funds, and all participating states have had to wait for guidance from the federal government in order to disburse the money properly. But now that that the information has been issued, real estate professionals like Carrie Ammons, an agent with RE/MAX Right Choice in Clio, Mich., have successfully navigated the application process. She applied for benefits on April 13, the first day self-employed people were permitted to start applying in her state, and she was accepted on April 22. “I received my first payment on the 23rd,” Ammons said.

Ammons is grateful for the financial lifeline. She’s been unable to pursue much business lately, as real estate is not considered an essential service in Michigan. (Federal guidelines, which include real estate services as essential businesses, do not overrule state orders classifying the industry as nonessential.) And she was well aware of the frustrations many applicants have experienced while seeking benefits. “Since I knew others were also having difficulties, I tried to be patient, but I still checked to see if the status changed a few times a day,” Ammons says. “Once I saw a change in the status go to pending, it gave me hope that things were processing correctly.”

With a combination of good documentation and patience, applicants can improve their chances for a successful outcome. Read on for general tips about the benefits process and how to apply. But check with your state’s website for details about requirements specific to where you live and work. This information is not a substitute for legal or professional financial planning advice applicable to your own circumstances.

How Much Am I Eligible for?

Most self-employed workers eligible under the PUA program will likely receive half the average unemployment benefit available in their state. In February 2020, the average weekly benefit across all states was $387 according to the Center on Budget and Policy Priorities, though this average ranges from a low of $215 in Mississippi to a high of $550 in Massachusetts.

On top of this benefit, eligible workers will receive an additional $600 per week from March 27 through July 31, known as Federal Pandemic Unemployment Compensation. After July 31, the FPUC will cease, and the eligible worker will continue to receive only the first state-administered benefit. For example, an eligible worker who became unemployed on March 27 and remained unemployed through the end of the year could be eligible for the following:

From March 27 to July 31: $193.50 (half the national average; depends on the state) plus $600 for a total of $793.50. From August 1 to December 25 (approximately 39 weeks): $193.50.

Ammons was able to qualify for both the state-administered benefit and the FPUC.

How do I apply for benefits?

First, assemble the documents you will need to apply. Having the right information will help your application to go more smoothly, says Nia Duggins, policy representative for business issues at the National Association of REALTORS®.

Most states recommend that you have basic information available when you begin your application including your Social Security number, state driver’s license or identification card, home address and mailing address (if different), telephone number, email address, bank name, address, account number and routing number for direct deposit, and the last date you worked.

Duggins cites several financial documents you may need for your application: “Some of the key documents that REALTORS® should have on hand when applying for unemployment benefits include prior tax returns, Schedule C, F, SE, or K with the Form 1040, Form 1099 MISC, bank statements, profit and loss statements, business licenses, and other business records that help verify income.”

Keep in mind that this is not an exhaustive list of all required documents when applying for unemployment benefits. Check with your state unemployment agencies for a complete list of what’s needed when applying for unemployment, says Duggins.

Second, go to your state’s unemployment website to begin the application process (see accompanying table for a list of state unemployment agencies). Most states will require you to create an account. If you have questions during the process, you should contact your state’s unemployment assistance office by phone or email. Call wait times to state unemployment offices may be longer than usual. Many states report that they can often offer faster assistance if you use their dedicated email address instead, and many websites feature virtual assistant chat boxes that respond to questions in real time, as well as step-by-step videos that will walk you through the process.

When will my first payment arrive?

States vary in their ability to disburse funds at the moment. As in Ammons’ case, some states are able to disburse funds within 2 weeks of the date of application. Other states can take from 3 to 6 weeks, and some, while they are accepting applications, are unable to say when they will be able to distribute funds. There are also states unable to accept applications at this time as they are still working to update their systems and processes.

If some states are not ready to accept applications yet, will I miss out on my benefits?

PUA applicants will be eligible for back payments of benefits once your application is approved, starting from the date they became unemployed. “Unemployment compensation benefits will be paid retroactively to independent contractors and the self-employed for weeks of unemployment due to the COVID-19 public health emergency for the coverage period of January 27, 2020, until December 31, 2020,” Duggins says.

Will the funds run out?

While states fund their own unemployment programs, they are reimbursed for the full funding of the PUA program. Each state that has entered into an agreement with the U.S. Department of Labor will receive full funding for the program to provide the expanded unemployment benefits to independent contractors and self-employed individuals. “It is recommended that you apply for PUA benefits as soon as you can in your state, as the number of applicants for these benefits are reaching new levels due to the pandemic,” Duggins says.

If I have been turned down for unemployment benefits, can I reapply?

Yes. Some applicants have been turned down simply because their states were not ready to administer funds yet. Under the PUA program, Duggins says, individuals who are denied unemployment benefits under the program must be given a written determination by the state unemployment agency and information regarding their rights to redetermination and potential appeal.

Will I have to pay taxes on my unemployment benefits?

Yes. Unemployment benefits are taxable income on both the state and federal level, and at the time you are applying you can choose to have a portion of your unemployment benefit withheld, or you can choose to receive the full amount and factor in the taxes on your 2020 return.

Can I apply for unemployment benefits if my state has designated real estate as an essential service?

Yes. As NAR’s Pandemic Unemployment Assistance FAQs state, “There is nothing in the CARES Act or federal guidance issued by the U.S. Department of Labor to date that states individuals from ‘essential’ industries would be ineligible to receive unemployment compensation benefits under the PUA program in accordance with a state order. Even if real estate related activities are deemed essential, it does not necessarily mean that an individual is working and receiving compensation.”

Should I apply for the PUA program or a Paycheck Protection Program loan? Can I apply for both?

The PPP offers forgivable loans from the Small Business Administration designed to help small business owners and independent contractors cover payroll for their workers and to provide income for themselves. Whether you should apply for the PUA or the PPP depends on your particular circumstances. It is likely that an independent contractor with no employees, earning $50,000 a year or less (after deducting business expenses), may find the PUA a better choice, while an independent contractor or business owner with multiple employees may find the PPP a better option. However, it is best to consult with a tax adviser or financial professional about the best approach for maximizing benefits.

On the topic of whether an independent contractor can apply for both, it is possible that you could apply for a PPP loan and use the benefits over its stipulated eight weeks and then apply for PUA funds after that benefit period ends. Again, discuss your options with a tax or financial professional.

Even with proper documentation and a good understanding of the process, applicants can still find themselves facing long wait times, payment delays, and application websites that haven’t opened for business yet. However, state unemployment agencies are working diligently to address these issues.

As Alabama Department of Labor Secretary Fitzgerald Washington announced on April 20 in a statement echoing the sentiments of many his counterparts across the country, “We know that there are many who have yet to be paid, and we are working to get those claims processed quickly.”

Learn more from NAR about the Pandemic Unemployment Assistance program. Information is updated regularly. NAR has created a flowchart that can be easily shared showing how the programs works for the self-employed.