Managing Your Job Loss

by WSCPA | May 19, 2020
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More than 30 million Americans have lost their jobs so far this year. The COVID-19 virus is still a threat and the economy will take time to recover. Things may seem scary or bleak right now, but CPAs from the Washington Society of CPAs have tips to help you minimize the financial damage and prepare for a new position and opportunities.

Fill the income gap

There are a few sources of income to consider, including any severance, unpaid time, unemployment benefits and part-time work. Before you leave your current position, ask about severance benefits and compensation for unused vacation or sick days. Details are likely clarified in your employee handbook.

Apply for unemployment benefits immediately; it may take some time before you start receiving benefits. Learn about the process at the Washington State Department of Labor & Industries website. Unemployment benefits last 26 weeks. Also, the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act supplements state unemployment with $600 per week for up to four months. Keep in mind that you can’t receive unemployment benefits if you quit or were fired due to a performance or other problem.

Also look to temporary or part-time positions or start your own business. It will be trickier due to the impact of the current environment, but there may be some options. The Small Business Administration has programs that offer advice to people who want to start their own businesses.

Run the numbers for your 2019 tax return and file your taxes now if you are owed a refund. And be sure to collect your federal Economic Impact Grant, aka “Stimulus check.” The federal government will automatically deposit payments into the accounts for those who use direct deposit for their taxes. Others will receive checks by mail. You can check the status of your payment at irs.gov.

Revise your budget and spending

It’s important to start considering your spending and budgeting. Cut the easy expenses, such as dining out or a daily cup of coffee and make sure you’re not being charged for services you can no longer use, such as gym memberships, children’s summer camps or sports leagues, or season passes to performances or amusement parks. You may also find smaller savings that will add up if you review cable, phone and internet plans or subscription services.

Check to see if your state or community has implemented rent freezes or talk with your landlord about reducing or deferring payment. You might also consider moving in with friends or family temporarily or taking in a roommate, if feasible. If you have debt, such as a mortgage, car loan or credit card, reach out to your lender to see about loan forbearance or interest rate reductions. Currently, the federal government has deferred payments and interest accrual on federal student loans. If you can pay those, continue doing so as it will cut down on the interest paid over the life of the loan.

Start your 2020 tax planning

The federal government and Washington tax unemployment benefits as ordinary income (like wages), but you do not have to pay Social Security and Medicare taxes. Avoid a surprise tax bill by having up to 10% of your unemployment benefit withheld. You can ask to have taxes withheld when you apply for benefits, or you can file IRS Form W-4V, Voluntary Withholding with your state unemployment office.

You'll receive a Form 1099-G from your state unemployment division next January reporting the total unemployment compensation you received for 2020 (and whether you had any federal tax withheld from your payments), which you'll report on Schedule 1 of your 1040 when you file your federal income taxes.

Look for a new job

The job market may be difficult to navigate right now, but you should still start your job search. Update your resume and post it to online job search sites and reach out to all contacts who may be able to help with a job, including colleagues or supervisors from past positions. Be prepared to talk about the skills and expertise you can offer. Also, join or become more active in professional networks or associations in your field to stay current and make new contacts. In addition, the Department of Labor also offers many resources for job seekers.

Remember, more than 30,000 small businesses in Washington have applied for Paycheck Protection Program loans through the CARES Act and must have the same employee headcount on June 30 as prior to the pandemic for loan forgiveness. So many small businesses will be rehiring.

Look after your mental health

It’s important to remind yourself of the value of taking a break and enjoying yourself. If you give yourself the chance to relax and have fun some of the time, your job search will seem easier. Social opportunities may be limited, but there are still several things you can do to remain active. Consider taking a jog, walking the dog or riding bikes with children, or use this time to read a new book, develop new skills or learn another language. Free apps, websites and videos can help you refine the skills you have or learn some new ones haven’t had the time to develop. Some of these skills may prove useful in finding a new position or career path.

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