Freelancer, independent contractor, gig worker — whatever you call it, entrepreneurial work is an advantageous work arrangement. You can set your own schedule and work on your terms. But working as an independent contractor isn’t all daisies; in fact, sometimes it can be a thorny rose.
In times of hardship, unemployment benefits are a nice safety net. However, for contractors, this adds a new layer of complexity to their finances.
How much can you make on unemployment? Does your 1099 get reported to unemployment if you qualify? Can you even file for unemployment if you are a 1099 worker?
These are all valid questions, and we’re going to answer them for you. Read on to learn the answers to these questions and more.
What is a 1099?
First things first, if you’re a newcomer to independent contracting or just need the basics, this refresher is for you. Don’t worry — these terms make even the most seasoned professionals cringe.
A 1099 is a form or set of forms that the Internal Revenue Service (IRS) uses to keep track of self-employment earnings.
Take note that 1099 forms differ from W-2 forms based on the type of employment you are completing.
Any time you have a source of income that is not from a full-time employer, you should receive a 1099 form to file for unemployment and your taxes. Most commonly, freelancers and independent contractors use 1099 forms to record their yearly income. However, you don’t have to claim your 1099 form until you receive the full payment you agreed to.
Design a colleague’s website? 1099. Cater an independent event? 1099. Tutor a client? 1099.
And, in case it wasn’t clear, consider this scenario:
You accept a swanky banquet server position or decide to roll up your sleeves and bust suds in a dishwasher position you found on a gig economy app. You earn some money on the side — great — but did you get a 1099?
Get a 1099 for any paid work — end of the story.
Does a 1099 Get Reported to Unemployment?
Now for the all-important question: Can freelancers apply for unemployment?
Typically, gig workers or self-employed individuals do not qualify for unemployment.
However, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed in 2020, these individuals can temporarily receive unemployment along with their part-time or temporary income. When the act expires on September 6, 2021, independent contractors will no longer qualify for unemployment again. Likewise, if you are offered a suitable job and deny it to receive unemployment, you will no longer be eligible for unemployment benefits.
So, can freelancers apply for unemployment? Yes, but you’re going to have to act fast.
Does that 1099 get reported to unemployment?
Yes, a 1099 is reported to unemployment.
When collecting unemployment, you are required to report any source of income you receive. Whether you’re a self-employed entrepreneur or a gig worker, the earnings you make must be submitted to unemployment. Once you’ve filed that money on your unemployment claim, you’ll likely see that your unemployment benefits pause or decrease momentarily during the weeks you made money depending on the amount.
Unemployment Vs. Gig Work
Unemployment. Gig work. There are quite a few differences between these two forms of income. And, luckily for you, you don’t have to find the differences for yourself. We’ve done the leg work for you. Let’s take a look at the distinctions between collecting unemployment and accepting gig work shifts.
Let’s not be shy about it: How much can you really make on unemployment?
The short answer is unemployment benefits vary depending on where you live. Bummer. Each state uses its own formula to determine the percentage of your previous wage that you will receive from unemployment services.
Currently, the majority of states pay no more than $500 per week for unemployment, with a few exceptions that pay upwards of that amount. However, with the CARES Act, unemployment benefit recipients can expect an extra $300 weekly. Although, it’s important to note that many states have withdrawn from this program as the economy recovers from the COVID-19 pandemic. In this case, you should not expect a bonus of $300.
Gig Work Benefits
Making the decision to work gig shifts comes with more than enough benefits. With apps like Qwick, you have the freedom to set your hours and create a schedule that best fits your needs.
On top of that, you have your choice of positions with gig work. If you have a strong interest in bartending, you can use convenient gig apps to select that interest and find jobs that suit what you’re looking for. Individuals passionate about expanding their skill sets can select from various hospitality and event services to learn more about the industry as a whole. With gig work, the possibilities are endless.
Lastly, the rate of income is higher with gig shifts compared to unemployment. The $500 weekly unemployment benefit roughly equates to $12 an hour in a traditional 40-hour workweek. Top Qwick Professionals average $20 per hour per shift, amounting to $3,452 per month — pretty amazing for gig work that allows autonomy.
So what do you say? $12 versus $20 — which allows you to take more cash home, continue to grow your professional network, and build valuable skills? We know which one sounds like the better deal. That’s roughly double what you can make on unemployment each week, all while working with companies that fuel your passion for your chosen industry.
Start Earning an Income with Qwick
Though unemployment can be beneficial in the immediate aftermath of job loss, gig work offers the income and schedule flexibility to fit your needs in the long-term. With Qwick, the shifts come right to you. Once you’ve registered and attended orientation, Qwick matches your qualifications with available openings and alerts you via text. The gig economy app offers you the freedom to decide when and where you work, so you have the opportunity to focus on your specific needs.
Sign up with Qwick to start earning today, and don’t forget to get a 1099!