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. This article was written for Business 2 Community by Brandon Leuangpaseuth.
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The best of B2C in your inbox every Monday Sign up now. Toggle navigation Business 2 Community. Brandon Leuangpaseuth June 22, You'll qualify for unemployment if you lose your job through no fault of your own and will receive benefits based on your previous wages.
If you're still bringing in income through a side hustle, such as by building websites for clients through Fiverr or selling through your Etsy shop, you'll need to include that when you certify your weekly benefits with your state unemployment office.
Evermore tells CNBC Make It that any taxable earnings , including those made from independent contract or freelance work, will be considered in your unemployment filings. What you make from your side gigs can lower the amount you receive from unemployment that week, or it could deem you ineligible for benefits for the week entirely. Many states allow you to earn up to a certain percentage of your benefit amount through other work, before your payment is reduced. Failure to report income is classified as unemployment insurance fraud.
Consequences vary by state and can include having to pay back benefits plus interest, penalty fees, ineligibility for future benefits and criminal prosecution.
But, if you qualify for traditional unemployment through a job you still have, you won't qualify for PUA for lost income from a side hustle. Sometimes, employers hire contract workers as they do temporary staff — a try-before-you-buy experience. Before you accept a freelance job, knowing the reason the job is short-term is good information for you to have.
You have bills to pay, and contract work can pay those bills. This is an obvious plus even when you are collecting unemployment compensation. If you collect unemployment, you must report any income you earn from work during this time. In the USA, the employer will send you and also the state and federal governments a form at the end of the year instead of the usual W-2 form you received from your employer when you had a permanent job.
Different states have very different rules about how income impacts your unemployment compensation. Do this before you accept any contract work so you can understand how it will impact you.
Freelancer income tends to fluctuate, so you want to provide an accurate and up-to-date snapshot of your earnings. There's no federal timeline for the PUA program. Every state has its own schedule. In Arizona, Illinois, Delaware, and Kansas, for example, online applications opened just in mid May, while in Arkansas, self-employed applications are not yet available. The wait can be frustrating, but all states are expected to come online by the end of May, says Stettner. And "you can use this time to organize everything and do your taxes," suggests Cheng.
The good news for freelancers is once you do apply for PUA and are approved, you'll get your benefits retroactively, says Cheng. For example, some state unemployment applications asks workers whether they're "unable to work because your place [of work] has shut down because of coronavirus," says Espinal. While you're waiting on benefits, Espinal advises freelancers who have lost income "to look for other ways they can apply their skills.
There is a lot of work that's out there that's being created because of the pandemic. After all, if anyone is well-positioned to find new and innovative streams of income, it's independent workers, he says: "Freelancers are known to be very nimble and crafty.
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