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Can I Collect Unemployment Insurance If I Have Passive Income?

Can I collect unemployment insurance
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My friend and I have both developed a healthy amount of passive income over the years. We are talking true passive income where we don’t have to do any work to make money.  It gets us excited thinking about passive income because we have the optionality of quitting our jobs, moving to some tropical paradise, and not die alone if we don’t want to! But can you collect unemployment insurance benefits if you have passive income or investment income?

My definition of passive income comes directly from CD interest income. With an average yield of 4% (7-yr CD’s), my passive income isn’t sexy by any means. But, it’s a great feeling knowing the principle will still be there and then some years from now.  



Collecting dividends is not my idea of generating passive income. The reason is because you have to actively manage the portfolio and you could blow yourself up in a downturn.

Does Passive Income Affect Unemployment Benefits?

My friend and I got to talking about the article, “Don’t Quit, Get Laid Off Instead.” We began to wonder what if we successfully engineered our own layoffs?

Would we be able to collect ~$1,800 a month in unemployment income while generating five figures a year in passive income?



In my research I spoke with people in human resources, a couple of unemployed folks, the CA unemployment office, and did extensive searching online. The conclusion is it doesn’t matter if you make passive income. You CAN collect unemployment benefits if you have passive income.

There’s no limit either. You can make $1,000 a year or $100,000 a year in (unearned) passive income and still collect unemployment insurance benefits! As long as you didn’t perform any work, you can be eligible to get unemployment benefits.

Example Where Collecting Unemployment Benefits is Perfectly Fine

Let’s say you work for 20 years and diligently save a majority of your after tax income every year. You somehow amass $2.5 million and decide to go really conservative.

So you buy ten, $250,000, 7-year CD’s with a 4% interest rate. The reason why you buy ten, $250,000 CD’s is because of the $250,000 FDIC guarantee limit ($500,000 for couples per account). Fair enough.



You love your job, but due to a restructuring, you are let go. The $100,000 a year you earn in passive income has no bearing on your ability to collect unemployment insurance benefits.

Investment Income And Unemployment Insurance

Why can you collect unemployment insurance if you have investment income? The $100,000 a year from investment income is separate from your job compensation. You are not working to make that money. That money is now working for you.

Your company could technically refute the unemployment benefit claim upon realizing you earn six figures in interest income. However, you don’t have to reveal your personal finances to your employer. And if they were to deny your unemployment claim, you have recourse.

Perhaps the more interesting question is, “Should you collect $1,800/month in unemployment benefits if you have enough passive/unearned income to live?



My answer is, absolutely yes. Just look at your W2 and see all the federal and state income taxes you pay each month. Fair warning – you might feel sick when you see how much comes out for taxes.

Passive Income Is Not Employment Income

The simple way to understand what type of income could deny or reduce an unemployment insurance claim is employment. Did you receive your investment income or passive income in exchange for work or employment? Nope! So it doesn’t count against your unemployment benefits claim.

There really isn’t a moral question to taking unemployment insurance while earning enough money passively to survive. You and your company paid for unemployment insurance all the years you’ve worked. And if you’ve found yourself out of a job for reasons no more than performance related, then you deserve to collect some money back for once!

Finally, if you can, always try and get laid off rather than quit. You’ll receive severance, unemployment benefits, and ongoing training. If you just up and quit your job voluntarily, you get nothing!

Passive Income X Factor – Start A Website

It’s been over ten years years since I started ONIG Financial Blog. And fortunately, I’ve worked hard to build a good passive income stream online. 



I never thought I’d be able to quit my job in 2012 just three years after starting ONIG Financial Blog. But it just took getting started one financial crisis day in 2009. Now it’s over a decade later and ONIG Financial Blog is still going strong.

Do you enjoy writing, connecting with people online, and want more freedom? Learn how you can set up a WordPress blog like mine in 15 minutes with Bluehost.

Brand yourself online, connect with like-minded people, and find new consulting gigs. You have the potential to make a good amount of income online one day.

For example, you can sell your own products or recommending others’. Not a day goes by where I’m not thankful for starting ONIG Financial Blog in 2009. Sign up for the Financial Newsletter here.

Blogging For A Living Income Example: $300,000+
A real income statement example from a blogger. Look at all the income possibilities! CLICK the graph to learn how to start your own site.

Updated for 2021 and beyond.



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