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Do Capital Gains Affect My Unemployment Benefits?

by W D Adkins, studioD

Losing a job and the paycheck that goes with it may mean you have to sell off stocks or other assets to pay the bills. At the same time, you may need unemployment benefits to tide you over until you land a new job. Fortunately, cashing in investments and realizing capital gains will not hurt your eligibility for unemployment or cut into the amount for which you qualify.

Only Work Income Counts

There is no means test for eligibility for unemployment compensation. That is, state unemployment agencies don’t look at your assets or investment income when deciding whether you are entitled to unemployment benefits. On the plus side, this means a capital gain realized from cashing in an investment won’t positively affect unemployment. Benefit amounts depend on how much work income you had recently. Some kinds of work-related compensation, such as severance pay, vacation pay and pensions, may reduce benefits or make you ineligible.

More Wages, More Benefits

When you apply for jobless benefits, the state unemployment agency looks at your earnings from work during a base period. The base period is usually the first four quarters of the most recent five complete calendar quarters. Each state has its own formula for deciding whether you are entitled to benefits and the amount you receive. For instance, in 2013, Georgia required you to have at least $858 in wages during one quarter of the base period and total base period pay of at least 150 percent of your wages in the highest-earning quarter. The payment you get is called the weekly benefit amount and is a percentage of your weekly earnings during the base period. All work income counts, so be sure to report pay from a second job on your unemployment application if you had one.

Willing and Able

You can’t just quit a job and receive unemployment. Leaving voluntarily or getting fired for a good reason, such as misconduct, will disqualify you from receiving benefits. You must be able to work. You also have to look for work and take a job if it’s offered to you. Typically, you must turn in a weekly report of your job search efforts to the state unemployment agency. You won’t automatically lose unemployment benefits when you start working. If you make less than the benefit amount, you may still collect a reduced weekly payment.

Uncle Sam's Cut

When you sell assets and the result is a capital gain, it is taxable income in the year of the sale. The IRS also classifies unemployment benefits as taxable income. You can have taxes withheld from your weekly unemployment benefit, although this is optional. You might have to report both capital gains and unemployment benefits received because, either individually or both added together, they may be enough to require filing a tax return.

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

Photo Credits

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