Unemployment benefits in the U.S. are a collaborative payment system by the Federal and state governments to compensative income for those who lost their employment. All 50 state as well as the District of Columbia, US Virgin Islands and Puerto Rico implements the unemployment insurance. The Social Security Act of 1935 encouraged all states and territories to establish the current unemployment benefits system through insurance.
The current program provides benefits up to 99 weeks for those out of work employees and the benefits will expire at the end of the specified period. Each state decides the length of time of benefits subject to Federal guidelines. As a result, most states now provide benefits only for 26 weeks and extended benefits may kick in at the end of the initial period. States also set the maximum amount of benefits which is paid on weekly basis.
Expiration of benefits not only impact individuals who received it but also widespread economic impacts due to reduce consumption, credit constrains, reduce demand and additional layoffs. Some argue that benefits encourage the unemployed to stay on benefits for the longest possible time.
Unemployment benefits are included as income for the beneficiary and therefore, taxable under the Internal Revenue Code.