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Can I Apply For Unemployment If Self Employed

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Can 1099 Employees File for Unemployment Benefits?

Unemployment benefits for self-employed workers are generally not available, but the coronavirus pandemic changed this in many states.

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While 1099 employees previously did not qualify for unemployment benefits, the CARES Act has since created new provisions that permit it amidst the COVID-19 pandemic. — Getty Images/AnnaStills

For decades, the unemployment insurance program in the U.S. has helped provide a cushion for those who unexpectedly find themselves out of work. But what about those self-employed workers who lose their business or can't find work?

Traditionally, 1099 workers have not been eligible to receive unemployment benefits. However, the COVID-19 pandemic changed this norm, and federal coronavirus legislation opened the door for some independent workers to receive benefits. Below we answer some of the most common questions surrounding 1099 workers and unemployment benefits that can be obtained.

How does unemployment insurance usually work?

In the United States, federal and state unemployment insurance programs have existed in some form since the 1930s. Unemployment programs are administered at the state level. Still, the system is funded by businesses paying Federal Unemployment Tax Act (FUTA) taxes and State Unemployment Tax Act (SUTA) taxes.

These programs are designed to temporarily provide financial assistance when a worker loses their job and is currently looking for a new one. Workers who are laid off, have lost seasonal work or have been furloughed are allowed to apply for unemployment insurance.

In most U.S. states, laid-off workers are typically able to receive 26 weeks of unemployment benefits and a percentage of their average annual pay. How much a worker can receive depends on how much money they made in their last job and in what state they reside.

Once a worker has been laid off, they can then submit an unemployment claim to their state government. This claim formally notifies the government and the former employer that the worker is seeking unemployment insurance. In some cases — such as the worker being fired for cause — the former employer may deny the unemployment claim.

Can self-employed workers file for unemployment?

Normally, self-employed and 1099 earners — such as sole independent contractors, freelancers, gig workers and sole proprietors — do not qualify for unemployment benefits. However, the federal government created new provisions that allow 1099 earners to tap into unemployment benefits during the ongoing COVID-19 pandemic.

Since the passage of the CARES Act, self-employed people have typically been eligible for unemployment benefits.

How did coronavirus relief legislation change benefits for 1099 earners?

The Coronavirus Aid, Relief and Economic Security (CARES) Act, which was passed in March 2020, allocated funds for expanded unemployment benefits during COVID-19. This included the creation of the Pandemic Unemployment Assistance (PUA) program, Pandemic Unemployment Compensation (PUC), and Pandemic Emergency Unemployment Compensation (PEUC).

Since the passage of the CARES Act, self-employed people have typically been eligible for unemployment benefits. Eligibility has varied from state to state, so it's important to check with your local labor office to see how it has implemented the CARES Act.

States can provide PUA benefits to individuals who are self-employed. However, to qualify, you should not be able to apply for regular state unemployment benefits and be unemployed or unable to work due to circumstances related to the COVID-19 pandemic. The PUA program provides up to 39 weeks of benefits, but the benefits are only authorized through December 31, 2020. Notably, U.S. legislators could still extend PUA benefits in the future so people can use it for longer as the pandemic persists.

If at any point, a self-employed individual that is receiving PUA benefits is able to restart their business or take on new work, they must report that income to their state unemployment office. The benefit amount they receive may decline, but workers do not want to run into legal trouble for receiving benefits while also being back to work.

What do you need to file a claim?

In most states, self-employed or 1099 workers will need to provide the following information when applying for unemployment benefits:

  • Name, full mailing address, and phone number.
  • Driver's license or state ID number.
  • Social Security or Alien Registration number and driver's license number.
  • Proof of income, which can include 1099 tax forms, 1099 pay stubs, Form 1040 tax returns and tax returns.
  • Bank account number and routing number for direct deposit of benefits.

Keep in mind that each state will have specific requirements, so do your research and collect all relevant documents before starting the unemployment application process.

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Published November 13, 2020

Can I Apply For Unemployment If Self Employed

Source: https://www.uschamber.com/co/run/human-resources/1099-employees-unemployment-benefits

Posted by: sosakingstrus89.blogspot.com

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