Can You Be Self-Employed While Receiving Unemployment in Michigan?

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Michigan unemployment benefits are designed to provide a basic subsistence income to Michigan residents who have become unemployed through no fault of their own. You can be self-employed and still receive unemployment benefits from the Michigan unemployment insurance program in some circumstances. However, you must have earned qualifying income from employment during the wage base period. Work done as an independent contractor does not count towards this wage base.

The Wage Base Period

Michigan unemployment officials calculate unemployment benefits based on a percentage of your earnings from qualifying work during first four quarters of the last five quarters prior to filing an unemployment claim. Specifically, Michigan sets your initial unemployment benefit at 43 percent of the average weekly wages earned during the wage base period. They will add $6 per week for each dependent. Weekly benefits are capped at $362.

Eligibility

To qualify for benefits, you must be able to work and available to work while receiving them. You will need to document your job search activities to Michigan unemployment officials. You can be self-employed, but if you want to receive the weekly unemployment benefits, your self-employment activities cannot interfere with your availability to work.

Wage Offset

Unemployment insurance is intended to provide a floor income for a limited period of time while a displaced worker finds a new way to support himself. It is not intended to allow workers to realize a windfall when they work and collect benefits at the same time. For this reason, you must declare any income you earn while receiving benefits. Some or all of this income will offset unemployment benefits, and you will receive reduced unemployment benefits for that week. If you earn less than your unemployment benefit, your benefits will be reduced by 50 cents for every dollar you earn. If they are greater than your unemployment benefits, they will be subtracted from 150 percent of your benefit. If you earn more than 150 percent of your unemployment benefit, you will not receive benefits for that week.

Self-Employment Income

You may earn self-employment income, but any earnings will result in reduced unemployment benefits. You will also need to pay the self-employment tax on any income from self-employment, which you would not have to pay on unemployment benefits. Both sources, however, are fully taxable via income. However, you may be able to offset self-employment income with business expenses and preserve your unemployment benefits. You will have your eligibility reduced by one week for all weeks in which you receive a single dollar or more of unemployment benefits. You may wish to "bunch" your self-employment income into one week so as not to be docked a week's worth of eligibility.

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