Can You Collect Unemployment If You Still Work As a Freelancer During COVID-19?

Brandon Leuangpaseuth June 22, 2020

Due to COVID-19, in just a few months, millions of people lost their jobs and applied to be on unemployment.

In April 2020, the U.S. Bureau of Labor Statistics reported the unemployment rate peaked at a staggering 14.7%.

In order to help a significant number of people who were financially devastated by the coronavirus, the government made it fairly easy to qualify for unemployment. As more and more cities are opening up, businesses are slowly starting up again. Some people are scared of returning to their unreliable work to lose their stable unemployment benefits. That is a mistaken belief.

In this article, I’m going to walk you through if you can collect unemployment benefits if you are still working part-time as a freelancer.

The Purpose Of Unemployment Benefits

The whole purpose of unemployment is to assist workers temporarily bridge an income gap caused by a loss of employment due to no fault of their own.

Given the circumstances, some people have fewer hours scheduled or are only able to get hired at a workplace part-time after they were laid off. They need to work full-time in order to pay their bills and remain financially stable.

This means that you may still be eligible for unemployment even if you are working part-time. You may also qualify for benefits if you lose your part-time work.

Typically, unemployment was not available for 1099 workers, but due to the unprecedented circumstances, self-employed freelancers are now eligible for unemployment benefits.

Collecting Unemployment As A Freelancer

If a freelancer is able to show that they are unable to work as a direct result of COVID-19, federal guidance provides that freelancers and self-employed workers are indeed eligible for unemployment benefits.

You can even land projects and still be eligible to receive unemployment.

You will not be getting the full perks if you are working part-time, however, you can still get partial unemployment benefits.

Remember, unemployment assistance is meant to help you be financially secure as you seek full-time employment.

It should be noted, however, that if you are a freelancer and you have chosen to scale back your work hours for any personal reasons, you would not qualify for partial unemployment benefits. You must be available for work and actively seeking full-time projects to qualify for partial benefits.

Different states have their own eligibility requirements. You would need to check if you qualify in your state.

Let’s Get Through This

So, you can still pick up projects as a freelancer while collecting unemployment. You would just need to report if you landed any project and collected some sort of income. A fair reminder that all unemployment paid out to you during this time is not exempt from taxes. You still owe taxes on each unemployment payment you receive. So, you would need to add it on top of the untaxed income you receive as a freelancer.

You can use a free online self-employment tax calculator to check how much you will owe in taxes.

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