Difference Between Stimulus Check and Unemployment Benefits (With Table)

A cornucopia of people across the globe is still fighting the aftermath of the pandemic. Not only has it crippled us physically, but it has also taken away a lot of our jobs. At present, keeping pace with the latest developments to help the unemployed section is grabbing quite the attention in the U.S. after the implementation of the Stimulus Check and Unemployment Benefits.

Stimulus Check vs Unemployment Benefits

The difference between Stimulus Check and Unemployment Benefits is that while both have been recently introduced under the CARES Act, the former is a financial aid that will be extended to an unemployed person and his family on a one-time basis, the latter is a weekly benefit that will be provided to those who were laid off or were self-employed but have lost their source of income during the pandemic.

Stimulus Check has made quite the headline in the US. The aftermath of the pandemic was so devastating that the Biden-led Government considered it befitting to introduce this one-time financial aid to ameliorate the plight of the unemployed and their family members. However, not all are eligible under this scheme.

Unemployment Benefits, or as it is now introduced under the CARES ACT- Enhanced Unemployment Benefit, comprises of two programs that are aimed to better the financial predicament of those who were laid off or were self-employed but lost their source of income due to the havoc that was unleashed by COVID-19.

Comparison Table Between Stimulus Check and Unemployment Benefits

Parameters of ComparisonStimulus CheckUnemployment Benefits
DescriptionIt is financial aid that will be extended to an unemployed person and his family on a one-time basisIt is a benefit that will be provided to ones who were laid off or were self-employed
EligibilityOne should have a Social Security Number, must submit their federal tax returnThose who have been laid off or were self-employed but lost their source of income due to the pandemic qualify
NatureThis is a one-time financial aid scheme that is extended to an unemployed person and his childrenThis is a financial aid that is extended to those who are unemployed weekly
TaxableThis is not taxable incomeThis is taxable income and one can either withhold taxes upfront or pay it when filing their returns
Provided ToA certain sum is allocated for every individual in the family.The amount is given to the individual.

What is Stimulus Check?

2020 gave us a peek into what a dystopian world would feel like. Not only did it take a few of our loved ones away from us, but it did cost millions of people their jobs across the globe. To ameliorate the devastating economic shock caused by the pandemic, the Biden-led Government initiated a thoughtful scheme.

The CARES Act came into the picture last year to give much-needed hope and assurance to the Americans. The stimulus check is a package that was made available to American households with no employment by virtue of the aforementioned Act.

Stimulus Check is a one-time financial aid that was extended to unemployed people and their family members. One will be eligible under this scheme only after he meets the espoused requirements. First of all, he should have a Social Security Number. Thereafter he should file the federal tax returns of the preceding two years. In the event of non-filing, the person should submit other payment information. However, there isn’t any income slab that one needs to fall under to qualify for this aid. Thus, anyone without employment can receive stimulus checks on adhering to the requirements. These payments are not taxable income.

What are Unemployment Benefits?

Introduced under the same Act as Stimulus Check, this too is an initiative led by the incumbent Democrats.

The two programs are- the CARES Act and the Pandemic Emergency Unemployment Compensation Program (PEUC Program). The former-mentioned program is aimed at providing people who were laid off from their W-2 jobs a weekly benefit of a certain sum that will ensure that the person can at least buy the essential commodities. The latter-mentioned program is unique as it brings self-employed people under the purview of unemployment benefits, something that was not done previously. Now, even people who were self-employed but lost their source of income due to the pandemic can apply for this and collect a sum every week. However, a person should not be receiving any form of paid leave or should not be in a position to work from home.

The unemployment aid that is provided by the State is not adequate under these testing circumstances, but these federal benefits can come as a great sigh of relief. While the State unemployment benefits were to end in 26 weeks, the benefits under the CARES Act added 13 more weeks to this program. This is taxable income, and one can either withhold taxes upfront or pay it when filing their returns.

 Main Differences Between Stimulus Check and Unemployment Benefits

  1. While Stimulus Check is a financial aid that will be extended to an unemployed person and his family on a one-time basis, Unemployment Benefit is a benefit that will be provided to those who were laid off or were self-employed but lost their source of income.
  2. While the first round of Stimulus Check payments has been made and the second round is on its way but subject to changes, the Unemployment Benefits were extended for a few additional weeks.
  3. Where one has to compulsorily file tax returns for the preceding two years to avail of the Stimulus Check or provide other payment information in the event of non-filing, the only criteria to avail of the Unemployment Benefit is to be unemployed. 
  4. The amount that is received from the Stimulus Check will not be taxed. In contrast, the amount received from the Unemployment Benefit is a taxable income, and one can either withhold taxes upfront or pay it when filing their returns.
  5. While the Stimulus Check is more beneficial to those with disabilities or ones who receive a pension, the Unemployment Benefit has no such reservations.

Conclusion

The world was at the precipice of metaphorical darkness in 2020. This year was marked by deaths in every nook and corner of the world. Where deaths occurred at an unprecedented rate, jobs were also being snatched from several people. The Biden-led Government ushered upon Americans a ray of hope by introducing the CARES Act. This Act includes within it the Stimulus Check and the Unemployment Benefits.

The former is financial aid that will be extended to an unemployed person and his family on a one-time basis. The latter is a weekly benefit that will be provided to those who were laid off or were self-employed but have lost their source of income during the pandemic. While one has to file tax returns for the preceding two years to avail of the Stimulus Check or provide other payment information in the event of non-filing, the only criteria to avail of the Unemployment Benefit are to be unemployed. 

References

  1. https://www.nber.org/papers/w27693
  2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3752834
x
2D vs 3D