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Wednesday, January 5, 2011

Maryland Pays Back Unemployment Loan To Avoid Higher Taxes

unemployment loans
Unemployment trust funds ran out for the most part of states as long-term costs on unemployment are adding up on state and government reserves. Thus, Maryland decided to save the state millions of dollars by paying off their federal loan.

Unemployment Loan In the State Of Maryland

About 30 states have been asked to get short term loans from the US Treasury to go on repaying unemployment benefits. Due to provision of the particular stimulus bill, the mentioned loans were interest-free for the last couple of years. Hence, even thogh the trust funds had been out of money to pay off the benefits, these literal advance payday loans helped the state of Maryland keep the unemployment benefits flowing.

Federal Short Term Loans Interest

According to the reports the federal treasury bonds which were paying unemployment benefits will begin to accrue interst on December 31, 2010. However, it doesn't mean that states won't be able to take these short term loans any longer. Though, it means that the daily intrest on these loans will start to accrue and this interest will be owed by the states directly to the US Treasury. Besides, in 2011 the employer obligation for unemployment taxes will be increasing and the minimum insurance rates for unemployment will be also going up by almost 100% in some of the states.

Federal Interest Is Avoided By Maryland

Most of the states which have got the short term loans for keeping their unemployment checks coming will be liable for the loan interest, though, the only way for these states to avoid the interest is to repay the funds borrowed from the federal government. Besides, several states, including Maryland, which unemployment rates were dropping managed to pay off their loans. So, these states are about to be free of the loan interest obligations. Maryland was able to do this only due to the steadily dropping unemployment rate and the most of states just don't have this luxury.
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