Renting an apartment, applying for a home loan or medical insurance, or seeking unemployment benefits all require proof of income as part of the eligibility requirements. If a person doesn't have a job and applies for unemployment insurance (UI) benefits, they can verify their income by presenting documents such as pay stubs and tax forms. This applies to federal PUA benefits as well as the UI benefits claimants would normally receive.
Income Verification for Unemployment Claims
Anyone filing for unemployment in their state must give its unemployment agency proof of income. The department needs this information to calculate the amount of benefits that will go to the claimant. It also estimates the number of weeks the unemployed person will receive benefits. Verification also works to ensure against fraudulent claims; if a claimant cannot provide their income, it is unlikely they will receive benefit payments.
States calculate benefits on what they call a base period. Only applicants who have held jobs in the recent past can collect benefits. Those who have been out of work for a long time, such as stay-at-home parents who have not held a job in several years, can't collect.
Nearly all states calculate this by looking at the first four of five total quarters of a calendar year of the claimant's most recent job. As an example, applicants who filed at the start of the pandemic in March 2020 would have a base period between October 1, 2018 and September 30, 2019.
Alternative Base Period Calculations
In most instances, states don't count the months right before the claimant filed for benefits. However, they do make an exception for applicants who don't have the required hours or earnings in their base period. In this instance, they calculate from the applicant's last four calendar quarters. UI refers to this as an alternative base period.
Some states make an exception for claimants who have been without work for a more extended period due to job-related illnesses, disability or injury. States may calculate their earnings in the time before these events occurred, even if they were outside of the standard base period. This varies from state to state, so applicants should check with their unemployment agency to get further details. Additionally, some states may require claimants to have worked for a specific amount of time, usually a minimum of two calendar quarters, during the base period.
COVID-19 and Additional Unemployment Insurance Benefits
In March 2020, the COVID-19 pandemic caused millions worldwide to lose their jobs overnight. To curb the coronavirus's spread, states shuttered everything but essential businesses. This caused high unemployment and Congress stepped in with additional funding through the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.
For example, Pandemic Unemployment Assistance (PUA) gave independent contractors and people impacted by the coronavirus who wouldn't usually get UI under normal circumstances the opportunity to receive benefits. Claimants initially verified their income through self-attestation, but due to widespread fraud, they must now prove their eligibility by providing verification documents. This requirement began on January 31, 2021, and is not retroactive for anyone already receiving PUA.
PUA and additional CARES Act programs ended on March 13, 2021, but Congress has extended them under the Biden Administration's American Rescue Plan Act. This Act will continue funding claims with an additional $300 a week to UI and PUA recipients and ends in September 2020. Also included is a $1,400 stimulus check, which started going out to eligible Americans in March 2021.
Proof of Income for Standard Unemployment Compensation
According to the California Employment Development Department, workers can show their eligibility for UI benefits through their pay stubs. All applicants should check with their state employment department before submission, but this information on a pay stub or statement is generally what agencies need to process a claim:
- An issue date within the past 12 months before the applicant filed for UI.
- Applicant's first and last name.
- Last four digits of the applicant's Social Security number or employee identification number (EIN).
- Employer's name.
- Pay period or date on which the employer issued payment.
- Pay stubs showing quarterly earnings (optional).
Applicants can also submit their most recent W-2 tax forms. However, as claimants file taxes only once a year, tax forms may not be accurate in showing a person's most recent earnings. Applicants who work more than one job need to provide W-2 forms for each employer to document their income accurately. W-2 documents must show an applicant's gross income.
Proof of Income Sources for PUA
PUA recipients have 21 days from the date of the email or letter sent to them from their employment department to provide documents that prove a decrease in their income from the coronavirus pandemic. This will also allow them to avoid a reduction in their weekly benefit amount. Their income tax documents should be from 2019 and should include one or more:
- Federal tax return (Internal Revenue Service (IRS) Form 1040, Schedule C or F).
- State tax return.
- W-2 form if they worked as an independent contractor and employee.
- Pay stubs or statements.
- Payroll history.
- Bank statements.
- Business records.
- Contracts for work.
- Invoices and applicable documents.
These documents must show the applicant's net income. Those who partake in self-employment and regular employment can provide records showing both net and gross income. State agencies will review these to determine what the applicant's weekly benefits should be. PUA applicants should not include IRS Form 1099-MISC to prove their income, as it is not acceptable.
Income Documents for UI and PUA
Applicants submitting documents for UI or PUA should upload them to their UI account. Those who wish to mail them should include their account number clearly written on each document. Applicants who submit documents online do not need to also mail them – sending them in twice can delay processing. If an applicant receives express instructions on how to submit income verification from their state, they should follow those instructions accordingly. Once the state gets the documents, it will review them and make any necessary adjustments to the claimant's benefits.
If a PUA applicant does not have the necessary income verification documents, they will check "no" when asked if they have anything to upload. If they receive a paper notice, they can write "No income documents for 2019" and sign and date the notice before returning it. The unemployment agency will then review their claim and make a decision regarding their benefits.
- NOLO: Unemployment Compensation: Understanding the Base Period
- Department of Labor: U.S. Department of Labor Announces New Cares Act Guidance on Unemployment Insurance to States in Response to COVID-19 Crisis
- CNBC: Biden Signs $1.9 Trillion Stimulus Package. Here’s What It Includes for Unemployment
- California Employment Development Department: Income Documentation: Pandemic Unemployment Assistance
- CA Employment Development Department: Acceptable Documents for Identity Verification
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.