Unemployment benefits for the self-employed – NerdWallet

Update of December 27, 2020: President Trump signed a $ 900 billion relief bill passed by Congress on December 21. The back-up plan included an extension of the pandemic unemployment benefits for the self-employed, entrepreneurs and workers in concert. However, a delay between the vote in Congress and the president’s signing caused some unemployment benefits to expire over the weekend. We will update the information below as details become clear on how relief will be implemented.

Unemployment benefits have traditionally been available only to those who work for an employer and lose their job through no fault of their own.

However, self-employed workers who have had to deal with the financial impacts of the COVID-19 outbreak and business owners who operate as an S corporation may also be eligible for unemployment benefits.

Unemployment benefits under the CARES Act

The federal government has expanded unemployment benefits under the Coronavirus Relief, Relief and Economic Security Act (CARES Act).

Self-employed workers who are generally not eligible for unemployment benefits – including independent contractors, sole proprietors and concert workers – may now be eligible. They may also be entitled to additional money: the new law provides an additional $ 600 per week in unemployment benefits and extends benefits for 13 weeks (for a maximum of 39 weeks of benefits).

Eligibility and guidelines vary by state, and you may be eligible if you are self-employed and have lost income due to coronavirus measures, or if you are unable or unavailable to work for related reasons. to COVID-19, such as quarantine or care. for a sick family member.

Under normal circumstances, states require you to look for work each week you apply, but the CARES Act provides flexibility if you are unable to do so due to COVID-19.

Due to the launch of new unemployment claim systems and the increase in the number of people claiming unemployment benefits in recent weeks, some states are not yet able to process new claims and payments may be delayed. But there are signs that the first obstacles to request for services start to get up.

Contact your state unemployment insurance fund to find out who can receive benefits, how to apply and if delays are expected.

Unemployment benefits in normal times

Under normal circumstances, companies structured as sole proprietorship are not able to collect unemployment benefits because unemployment taxes are not paid if you have no employees.

However, you may be able to receive benefits as S corporation if you treat yourself like an employee. This means that you receive a paycheck from your business that deducts federal and state taxes (including unemployment taxes).

To receive benefits, you must actively look for work each week that you apply. You can file a complaint with the unemployment insurance program of the state where you worked.


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Lois Mendez

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