Can I Accept Contract Work While Receiving Unemployment?
There’s a common misconception that unemployment claimants can’t receive any income while collecting benefits. The truth is that you can earn some money while on benefits, as long as it doesn’t go over a certain amount. You can pick up contract work while collecting unemployment, as long as you report your wages to the state.
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Contract Work
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Contract work provided to an individual based on a contracted agreement. Independent contractors are self-employed, not traditional employees. Often, the only requirement is to complete the work with the desired results by the time indicated on the contract. At the end of the year, independent contractors receive 1099 tax forms instead of the W-2 tax forms.
Income on Unemployment
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While independent contract work isn’t insured by unemployment insurance programs, it’s still possible to get benefits if you worked other insured jobs during the 15 to 18 months before you filed your claim. Once on unemployment, your weekly benefit amount is based on the idea that you aren’t earning any income. If you take contract work during your claim, your state can reduce your weekly payment based on the compensation amount.
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Partial Payment Calculations
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Each state has an earnings cap applicable for partial unemployment claims. The cap may be a set dollar amount or a percentage of your weekly benefit amount. If your contract work brings in wages up to the cap, you receive your weekly benefit amount unchanged. If your contract work pays more than your earnings cap, everything about the cap gets deducted from your weekly benefit amount. The state pays you whatever is left as your partial payment.
Duty to Report
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You must report any income your receive while collecting unemployment benefits to your state’s labor office. Verifying your eligibility for each week of unemployment is a requirement called certification. During the certification process, you must disclose the income you earned for the week in question. Failure to report your contract work wages to the state can result in disqualification of wages, repayment of any overpayments and even criminal charges if the state determines it was intentional.
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