How to Make Money When You’ve Been Laid Off

A layoff creates an immediate need to secure income. Navigating this period requires a proactive approach, focusing on available support systems and exploring various avenues for generating revenue. This guide outlines practical strategies to help individuals generate income and manage finances after job loss.

Accessing Immediate Financial Support

Upon being laid off, two primary sources of immediate financial support are severance pay and unemployment benefits. Severance pay is financial compensation provided by an employer upon termination of employment, often calculated based on an employee’s tenure and position. Severance agreements may include terms like a release of claims or non-compete clauses.

Severance pay is considered taxable income by the IRS and is classified as supplemental wages. Employers typically withhold federal income tax at a flat rate of 22% from severance payments. Severance is also subject to Social Security tax at 6.2% and Medicare tax at 1.45%. State income taxes on severance vary by location. Receiving severance as a lump sum might place the recipient in a higher tax bracket for that year, while payments spread out over several installments can potentially mitigate the tax impact.

Unemployment benefits serve as temporary wage replacement for eligible workers who lose their jobs through no fault of their own. Eligibility requires individuals to have worked consistently and earned sufficient wages within a specific “base period,” often defined as the first four of the last five completed calendar quarters prior to filing a claim. Claimants must also be able and available for work and actively seeking new employment.

To prepare for an unemployment application, gather essential information and documents. This includes personal identification like a Social Security Number and a valid driver’s license or state ID. An Alien Registration Number may be required for non-U.S. citizens.

Information about your most recent employer is crucial, including their business name, address, phone number, dates of employment, and reason for separation. Details about gross earnings, pay rates, and the employer’s unemployment insurance account number are also requested.

Having bank routing and account numbers ready for direct deposit is advisable. Information regarding any severance or pension income received or expected should also be prepared. State labor department websites are the primary resource for specific application procedures and requirements.

Engaging in Flexible Work

Generating income quickly after a layoff often involves exploring flexible work arrangements, such as the gig economy, freelancing, or temporary staffing. These options provide opportunities to earn money without the commitment of a traditional full-time role. Understanding the processes for engaging in these work types is key to a swift transition.

Gig economy opportunities, facilitated by digital platforms, offer on-demand work. Ridesharing services like Uber and Lyft require drivers to meet criteria, including a minimum age and licensed driving experience. Drivers must possess a valid U.S. driver’s license, use an eligible four-door vehicle, and provide proof of insurance and registration.

The sign-up process involves submitting an application through the platform’s app, providing necessary documents, undergoing a background check, and sometimes a vehicle inspection. Food and grocery delivery services, such as DoorDash, Uber Eats, and Instacart, follow a similar app-based sign-up and background check process, often with less stringent vehicle requirements.

Task-based services, like TaskRabbit or Handy, allow individuals to offer local services ranging from furniture assembly to cleaning. Engaging in these involves creating a profile, highlighting specific skills, and setting personal rates.

Income earned from gig economy activities is considered taxable and classified as self-employment income. Individuals are responsible for reporting their earnings on Schedule C of their federal income tax return. Gig workers are also subject to self-employment tax, which covers Social Security and Medicare taxes at a combined rate of 15.3% of net earnings. If the estimated tax liability for the year is $1,000 or more, quarterly estimated tax payments are required. A significant advantage of self-employment is the ability to deduct ordinary and necessary business expenses, which can help reduce taxable income.

Freelancing and contract work allow individuals to leverage their professional skills for short-term projects. Online marketplaces like Upwork, Fiverr, Freelancer.com, Guru, and PeoplePerHour are common starting points. Professional networking platforms, such as LinkedIn, can also be effective for securing contracts.

To get started, create a detailed profile showcasing skills, experience, and a portfolio of past work. When bidding on projects, craft compelling proposals, understand the client’s needs, and set competitive rates.

Effective communication and a commitment to meeting deadlines are crucial for building a positive reputation and securing repeat business. Common freelance skills include writing, graphic design, web development, virtual assistance, and consulting.

Temporary staffing agencies offer another pathway to quick employment by connecting job seekers with short-term assignments. These agencies act as intermediaries, handling recruitment, vetting, payroll, and contractual aspects of temporary employment.

The process of registering with a staffing agency involves submitting a resume, undergoing interviews, and completing skills assessments. Agencies then match candidates to client needs based on job descriptions and required skills.

Utilizing a temporary staffing agency can lead to rapid placement, provide exposure to various industries, and sometimes open doors to permanent positions.

Leveraging Personal Assets and Skills

Beyond traditional employment or gig work, individuals possess existing personal assets and skills that can be monetized to generate income. This involves identifying available resources and strategically marketing or utilizing them. These avenues can provide flexible income streams during unemployment.

Monetizing personal skills involves identifying abilities in demand and offering them as a service. Marketable skills include academic tutoring, music instruction, specialized consulting, writing, editing, or photography. Practical skills like handyman services, pet sitting, or childcare also present opportunities.

Once a skill is identified, define a clear service offering and set appropriate rates. Market these services through local social media groups, community bulletin boards, word-of-mouth referrals, or specialized online platforms.

Selling unused items around the home can quickly convert dormant assets into cash. Items that often hold value include electronics, designer or vintage clothing, furniture, and collectibles. Various platforms exist for selling these items:
For electronics: eBay, Swappa, Decluttr, Gazelle, Gizmogo, and Amazon Trade-In.
For clothing: Poshmark, ThredUp, Depop, eBay, and The RealReal (for luxury items).
For general items: Facebook Marketplace or Craigslist.

When selling, research similar items to determine realistic pricing and consider the item’s condition. For transactions, prioritize safety by meeting in public places for in-person exchanges and using secure payment methods.

Renting out underutilized assets provides another income stream. This can include spare rooms or entire homes through short-term rental platforms like Airbnb. Vehicles can be rented out via car-sharing services such as Turo, and specialized platforms exist for renting out equipment.

The process involves listing the asset on a relevant platform, providing clear descriptions and photos, and establishing rules for usage. Managing rentals involves communicating with renters, ensuring the asset is clean and well-maintained, and understanding any insurance considerations.

Income from renting assets is taxable and must be reported on Schedule E of Form 1040. Various expenses related to the rental activity, such as mortgage interest, property taxes, operating expenses, depreciation, and repairs, can be deducted to reduce taxable income. Rental income is passive activity for tax purposes.