Unemployment insurance touches every business and organization but understanding what everything means can be challenging if you’ve never dealt with it before. Benefit charges are one area that may leave unsure. Instead of staying in the dark, learn more about them through some of the most frequently asked questions about benefit charges.
First of all, what are they?
Benefit charges are unemployment benefits that were paid to former employees who successfully filed a claim. To back it up, you pay specific taxes into an unemployment insurance fund every year. When an employee who was let go at no fault of their own files a claim and is approved for UI, the money comes from this fund, and a benefit charge tracks how much is used.
How do I learn about benefit charges?
You will regularly receive a statement of benefit charges showing the employees who received UI and how much. These typically come quarterly and should be checked to ensure that everyone listed is a former employee who qualifies for benefits. Unemployment insurance fraud is real, and you don’t want to overpay because of an oversight.
Do benefit charges affect my tax rate?
Like we mentioned, how much you pay into your UI fund is determined by a tax rate. There are both federal and state taxes that have specific parameters, but your unemployment record also contributes to the rate. The more benefit charges you have, the more your tax rate will increase. This is done because it assumes you will need more money to cover former employees and allocates more funding to cover this.
Am I supposed to pay anything when I receive the benefit charges statement?
No, the statement is just for your information and to review. The money is automatically withdrawn from your unemployment insurance fund and has been paid. This doesn’t mean you should disregard the information. As mentioned before, take the time to verify the employees and read through, so you are aware of who is currently receiving UI.
If I notice someone who shouldn’t be there, can I do anything?
Yes, if there’s an employee who you feel doesn’t qualify, you can apply for the relief of charges. Typically, this is done because either the employee quit voluntarily, or you let you go due to their own misconduct. You will need to check with your specific state about how to submit this request. Once received, it will be processed and either approved or denied.
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