Paying Back an Overpayment of Unemployment Benefits
Sometimes you get unemployment benefits when you are not supposed to. You will have to pay them back. How can this happen?
Let's say you apply for benefits. You win benefits after the fact-finding interview. You start getting unemployment benefits. The employer has ten days to appeal the decision. The employer does appeal. An administrative law judge is now going to hear your case. If the judge says you should not get benefits, you will have to pay the unemployment benefits back. There can be many different reasons why you are not eligible to get unemployment benefits. You are not eligible to get benefits if you quit your job without a good reason. You are not eligible if your employer fires you and has a good reason for firing you.
You could end up with an overpayment even if an administrative law judge awards you benefits. If you lost at your fact-finding interview, you could appeal. If you appeal, you will have a hearing before an administrative law judge. If you win at your hearing before the administrative law judge, you will start to get benefits. The employer can appeal the decision of the administrative law judge to the Employment Appeal Board. You will get benefits while you are waiting for the Employment Appeal Board to decide the appeal. The Employment Appeal Board could decide that you are not eligible for benefits. If they decide that you are not eligible for benefits, you will have an overpayment.
Iowa Workforce Development is required by law to try to get overpayments paid back. The only exception is that if you win at two straight levels of the appeal process you do not have to pay back an overpayment. If you win at your fact-finding interview and at your hearing before the administrative law judge, you will not have an overpayment. This is true even if the Employment Appeal Board decides that you should not get benefits. If you win at your hearing before the administrative law judge and the Employment Appeal Board decides that you are eligible for benefits, you will not have an overpayment. This is true even if a court later decides that you should not get benefits.
There are two main ways that Iowa Workforce Development gets back overpayments. First, Iowa Workforce Development will hold money from future unemployment benefits to recover an overpayment. Iowa Workforce Development will keep all or part of your benefits to pay back the overpayment. Iowa Workforce Development will keep all of your benefits until the overpayment is paid back unless you work out a payment plan. Iowa Workforce Development may be willing to work out a payment plan with you so that you can get some of your benefits each week. If you have an overpayment and are otherwise due to get benefits, you should contact Iowa Workforce Development to try to work out a payment plan.
The second main way Iowa Workforce Development gets overpayments back is by taking your State tax refund. It may be possible to avoid having your tax refund taken or to reduce the size of the refund that is taken. If you have an overpayment, you should check to see if you have claimed all possible exemptions from withholding for taxes at your job. You may only claim those exemptions for which you qualify. If you have not claimed all exemptions for which you qualify, you should change your withholding to claim all those exemptions. This will decrease the amount of money that is withheld from your paycheck for taxes. This will either reduce or eliminate your tax refund. Keep in mind that if you do this, you may owe taxes to the State at the end of the year. You should be sure to set aside money from each of your paychecks so that you have money to pay your taxes at the end of the year.
Another way that Iowa Workforce Development gets back overpayments is taking lottery payments. Also, if you do business with the State and have an overpayment, Iowa Workforce Development can take your vendor payments to pay back the overpayment. Iowa Workforce Development does not garnish wages or bank accounts to recover overpayments. If you have an overpayment and have questions about how this might impact you, contact Iowa Legal Aid.
Iowa Legal Aid provides help to low-income Iowans.
To apply for help from Iowa Legal Aid:
- Iowans age 60 and over, call 800-992-8161.
- Apply online at iowalegalaid.org