Stimulus Bill: Explaining the Unemployment Benefit for Employees, Self-Employed & Gig Workers

Background

The recent CARES Act – the massive stimulus bill that sends $1,200 to most American – also greatly enhanced the unemployment benefit. I wrote many details about this in our original post and pasted them below at the end of this post.

Briefly, the CARES Act adds $600 per week, on top of what the state gives, through July 31, 2020. It also extends the amount of time one can be on unemployment. It also allows unemployment benefits for furloughed workers, self-employed, and gig workers.

A lot of people will end up getting their full salary. For example, if the state gives $400/week, you’ll now get $1,000 per week. That would be roughly full salary for someone who makes $50,o000 or less per year.

Unemployment benefits are run through each state individually. Google to find your state’s unemployment website. The $600 should eventually get to you as part of your regular unemployment payment from the state, it’s not something you file for separately.

It’ll take a while for each state’s unemployment’s office to sort through all of this and actually get the money sent out, and their websites are all getting slammed making it hard to even file a claim.

Each state offers a different max Unemployment Benefit, ranging from under $200 to over $1,000. Check out this list of amounts in all states here; tack on $600 and you’ll know the max under the new stimulus bill.

Here’s a handy link to find Unemployment Benefits website and information for each state.

Employees

Employees who were fired or furloughed can file for unemployment. Even those who lost partial work can file. For example, if your company reduced everyone’s time and pay by 50%, you should be eligible. That is the standard unemployment rule, per my google search, and should work now too. It’s not clear exactly how the $600 extra will factor in such a case, and likely will have differing results depending how each state enacts it, but certainly worth filing.

Likewise, if you were laid off or furloughed and are working temporarily at a lower income somewhere else, you should able to file, as per standard unemployment rules. Again, exactly how it’ll all play out is unclear, and likely will depend state-by-state on how they enact the CARES Act, but certainly worth a shot.

If your company still has you working full time, at a reduced salary, I’d assume that you can not file since it’ll be treated like any employee who gets their pay cut. If the pay-cut is clearly a temporary thing for a few months, maybe then it would be possible to file for unemployment. Could be worth a shot.

Self-Employed

The CARES Act extends unemployment benefits to the self-employed as well. This included gig workers, such as Uber and Lyft drivers, and would include someone with an Amazon reselling business or a consulting business.

Reuters reports that self-employed are hitting a wall in their efforts to apply for the coronavirus jobless benefits promised by Congress as state agencies say they are not ready to handle a class of workers who are totally new to the U.S. unemployment system.

A lot of states have clear guidance for self-employed telling them to hold off until they have the systems in place to handle those claims. From what I understand, states usually pay out unemployment benefits retroactive to when there was loss of work, irrespective of when you file. So hopefully you’re not losing money due to the fact that you aren’t yet able to file. But it might be that some states only pay out from when you file.

Regardless, it’s probably a good idea to wait until your state issues clear guidance for self-employed; if you try applying by choosing the wrong option it might hold things up further, even after they have the systems in place to deal with self-employed claims.

The issue with self-employed is that they have no steady income and little documentation of income, so it’s very hard for states to issue them unemployment. Let’s take an example of an Uber driver who has good weeks and bad weeks, sometimes earning $200/week and sometimes earning $1,000/week. Do they give them based on the lowest amount? Highest amount?

Uber drivers at least have clear documentation on their history of earnings. But take a consultant who files his earnings annually and has little documentation or clarity on what he earns each week or month. How do you calculate his ‘salary’ to give him the benefit?

I suppose the best way would be to take 2019 income and divide it by 52 to get their weekly income. In any case, the states are obviously grappling with this, plus, they don’t have the systems in place to deal with it. We can only hope it gets sorted out over time, one state at a time.

Partial Work

Another major question is the self-employed who have a partial loss in business. For example, an Uber driver who usually makes $1,000/week and now is making $200/week. Or a consultant who has much less work now. Or an Amazon reseller who is selling much less products how.

Since regular employees are eligible for unemployment when they get their time cut, self-employed who are working less due to lack or work should be eligible for partial unemployment as well. Again, it’s not clear exactly how this will play out, but you can try filing a claim when the states eventually get the benefit working out for self-employed.

Employee + Business

A lot of people are asking about someone who has a W-2 job and also has a business, and they lose or the other, are they eligible for unemployment benefits?

My assumption would be that they would be eligible, similar to what we discussed above about someone who gets cut from full time to part time. And if it works when someone loses they W-2 job while retaining their business, it should work in the reverse scenario as well (under the new stimulus bill which treats self-employed like employees) that if someone loses their self-employment income they would be eligible even if they still have a W-2 job.

Ultimately, it might be up to each state’s unemployment office to address both scenarios. I’d guess that if you still have a full 9-5 job, and just lost your side hustle self-employment income, they would not give you unemployments benefits. However, if you work 20 hours a week for a company as a W-2 employee, and then you are an Uber another 20-30 hours per week, then they might consider it as two part-time jobs and give you unemployment benefit if either of the two is lost, just like someone who went from being a full time employee to a part time employee.

Wrap Up

Please don’t rely on information in this article and do your own research.

I know many people who were laid off partially or fully and are looking into unemployment. Also quite prevalent is the scenario of employees or self-employed who have cut back on hours/pay. Hopefully this article adds a bit to the discussion. More questions than answers in this post, but it’s questions people keep asking and no one is addresses, so I thought it was worth writing up the issues.

Unemployment Enhancements

I’m pasting here many of the details of the enhanced unemployment benefit from our original post:

Increased benefits include:

  • Provides enhanced unemployment benefits through July 31, 2020. This increases your unemployment check by $600/week, on top of what the state regularly gives, for 4 months. (Someone can potentially get their full salary amount after being fired, with no ‘pay cut’, depending on what your salary was. Or even more than their salary.)
  • Extends unemployment 13 weeks longer than usual rules. Most states offer 26 weeks, and that will now be 39 weeks. This continues through December 31, 2020.
  • Extends unemployment to self-employed workers as well. That would include gig workers like Uber drivers. (I assume these workers will file for unemployment through the regular state unemployment website/office, but I’m not certain of this.)
  • Extends unemployment to furloughed employees as well. The added goal here is that businesses should not fire employees, instead leave them on as furloughed.

Other Enhancements

Some other enhancements to unemployment coverage with the new bill:

  • The bill removes the ‘waiting week’ provision to allow unemployed workers to get benefits immediately.
  • Part time workers who are laid off are now eligible for unemployment.
  • Those who did not work long enough and are laid off are eligible as well.
  • Those who are sick, those who must quarantine, and those who must care for a sick family member are eligible.
  • If you children’s school/day-care is shut down and that stops you from being able to go to work, you are eligible for this new unemployment benefit.
  • People who are already on unemployment for reasons outside coronavirus will be eligible for the extra 13 weeks and for the extra $600 as well. People who exhausted their unemployment time limit can sign up again for the extra 13 weeks.
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dan
dan (@guest_962729)
April 22, 2020 23:26

Can someone please help – if one has a W2 job and a rental property, which suffered a loss on the rental property, would she be eligible to file unemployment? She suffered a loss on the rental side but no changes whatsoever on her W-2 job.

Jack
Jack (@guest_962746)
April 22, 2020 23:42

I don’t think so. She’s not a 1099 worker. She would more likely go for PPP or EDIL low interest (some forgivable) loans.

truth
truth (@guest_954644)
April 9, 2020 05:07

My wife is 1099 employee supposed to be qualified under Cares Act, but California EDD says they want “further guidance” even though the US Dept of Labor issued them instructions and 100% federal guarantees. Be prepared for a battle of incompetency.

Celia
Celia (@guest_954667)
April 9, 2020 07:42

Illinois is saying it could be a month or two before us self employed people can apply. I’ve never applied for unemployment, being self employed and all, so don’t know if that means we are shorted as a result.

G
G (@guest_954671)
April 9, 2020 07:54

Not being shorted. Accrued weeks will be paid.

Celia
Celia (@guest_955559)
April 10, 2020 16:35
  G

Thanks. Good to know. Luckily I have reserves that should last me until it gets straightened out.

truth
truth (@guest_955732)
April 10, 2020 22:16
  G

Its not going to be “accrued” if they deny claim. EDD (California )is making their own rules, they are not treating 1099 income as per US Dept of Labor Cares Act. They are requesting her employer reclassify the 1099 to W-2, going against the DOL mandate, they are a mess, using outdated computer and processing systems for verification and they are only open for calls 8-12 pm in a EMERGENCY, lucky for us we have reserves and I am working, but for many others its going to be food lines, its unfortunate EDDs the middle man in this deal

Celia
Celia (@guest_956201)
April 12, 2020 13:09

Didn’t California pass that law that screwed legitimate freelancers? I imagine that is messing with it as well. Illinois is just screwed up overall 🙂

But if they deny it, they deny it. It’ll hurt given how much business I’ve lost but being self employed I’ve gone through similar situations where I’ve lost out on benefits being extended.

Teddy Ruxpin
Teddy Ruxpin (@guest_957497)
April 15, 2020 04:15

you mean 1099-MISC (self employment), and not 1099-INT right?

anne
anne (@guest_956223)
April 12, 2020 15:02

This off topic but I dont know to hashtag Celia. Regarding th the COIN tax import into Turbo Tax, were you able to do it Celia? I asked you in the COIN thread but I guess you do not go there anymore. Husband was so mad when he found out that he had to do it manually for 30 pages! TIA.

Celia
Celia (@guest_957285)
April 14, 2020 17:34

anne (just type the @ symbol and start the person’s name you’re quoting). I have an accountant and he basically put “various” and the amount of divided income on Sched D and the $50 bonus was listed under the interest income. Don’t know if that’s how it came out on the form when he inputted it into his accounting software.

anne
anne (@guest_957364)
April 14, 2020 20:28

@Celia Thank you! I am not sure if my husband can do it but will tell him. Thinking about going to a CPA to ask them to do our tax because of this annoying 29 pages tax.

BlissfulApathy
BlissfulApathy (@guest_957489)
April 15, 2020 03:11

You don’t need to do it manually. You’ll want to select import summary of stock sales, then you can attach the sheet or upload it. COIN sent IRS 1099-B, so you don’t need to enter anything more than cost basis, proceeds, and total gain/loss.

BTW, you would save a lot of money by ditching turbotax and switching to Freetaxusa.

MikeTheCreator
MikeTheCreator (@guest_954113)
April 8, 2020 12:16

“Minnesota is one of the first states in the nation to implement the $600 per week of additional compensation available
under the CARES Act. If you are eligible for any unemployment benefit program, you will automatically receive the $600
additional compensation (beginning the week of March 29).”

“The first week for which you can get the additional $600 is the week beginning March 29th.
You can request the week of March 29th on or after April 5th.
You do not need to do anything to get the additional $600. We will automatically add it to your payment AFTER you request benefits for the week of March 29th (and every week after that you are eligible).
You will not see the $600 payment on your online unemployment account. You will see it as a separate transaction on your bank account or your unemployment debit card statement.
No income tax will be withheld from the $600 payment.
Payments made the week of April 5th may take an additional few days to reach your bank/debit card since so many payments processed at one time.”

Richard
Richard (@guest_954668)
April 9, 2020 07:42

I don’t have a problem them giving an additional $600.00, but why should some people make more on unemployment than working? Tried to get my boss to furlough me until this madness is over, No go. lol

Bill Murray
Bill Murray (@guest_953875)
April 8, 2020 01:21

I have a stressful and strange experience. I am a U.S citizen who is currently stuck / stranded overseas BECAUSE of COVID-19. Like, literally all the flights were cancelled, and I cannot go back, and still looking at options. At this point, it looks like I will be able to possibly get back to the U.S in late May or June.

I have never applied for any unemployment benefits in my life before. I am self-employed and work online, it’s not a huge income, but it was my only income, and has been greatly impacted by COVID-19 and also I was planning on expanding the business in March, but that has been impacted too.

I just realized that Americans overseas do not qualify for unemployment. Considering this is the first time that unemployment has ever been granted for self-employed people, you would think there would be more exceptions. However, what if you are overseas DUE TO the coronavirus situation.. how would this work? Anyone care to guess or speculate? Or anyone with knowledge about unemployment.. etc. want to give any advice for our predicament?

I’m curious if I would be eligible for any benefits at all? What if I wait until I’ll back in the U.S in one or two months, would the benefits still be available? As far as I can tell, most states haven’t even updated their FAQs and application yet for self-employed people.

How about the EIDL grant? Would I be eligible for that $1,000 grant possibly even though we are stuck overseas?

I really have no idea how any of this works? So if anyone wants to give me some ideas about how this may work out I’d greatly appreciate some further insight into it. Because of the 16 hour time difference it’s not even easy to call the U.S and I heard the wait times to get through to unemployment hotline is taking hours to ask a question.

Avi
Avi (@guest_953942)
April 8, 2020 06:54

Bill Murray All I can offer you is speculation, but I think it’s possible they’d make an exception for unemployment and EIDL assuming you normally reside and earn money in the US, and were just away on vacation.

But what I’m reeeeeeeeally curious about is that 16-hour time difference. Maybe I’m just a glass 2/3 full kinda guy, but I prefer to think of it as an 8-hour time difference. Where on Earth could you possibly be?

Bill Murray
Bill Murray (@guest_953943)
April 8, 2020 07:01

I’m in Asia, and have a 16 hour time difference with the west coast, it’s hard even making phone calls.

Karl
Karl (@guest_957310)
April 14, 2020 18:32

24-16=8

Bill Murray
Bill Murray (@guest_957425)
April 14, 2020 23:45

Not sure if you’re trolling or don’t understand time zones or both:
https://24timezones.com/difference/san_francisco/beijing

15 hour time difference here from west coast

Wendy Lawrence
Wendy Lawrence (@guest_953639)
April 7, 2020 18:34

If you don’t have a bank account and you have not filed your taxes yet how can you still get the stimulus check?

Avi
Avi (@guest_953699)
April 7, 2020 19:40

Open a bank account and register here: https://www.doctorofcredit.com/stimulus-checks-people-who-dont-file-taxes-can-register-their-bank-info-with-irs-turbotax-online-portal-to-get-their-1200/

[Edit: Oops, never mind. It says “Important: By registering for the stimulus, we’re filing a minimal tax return on your behalf with the IRS. You can’t submit both a stimulus registration and a full tax return.” If you filed your 2018 taxes, they’ll eventually mail you a check to that address.]

Cal Ripken Jr.
Cal Ripken Jr. (@guest_953828)
April 7, 2020 23:32

Avi should you file this kind of “simple return” if you had any self-employment income? I have a couple thousand of self-employment income, not sure if I can still submit a simple return? Also, if I submit only a simple return would I be excluded from possible self-employed unemployment benefits?

Avi
Avi (@guest_953941)
April 8, 2020 06:41

Cal Ripken Jr. Not sure, but I wouldn’t.

Bryan S
Bryan S (@guest_952711)
April 6, 2020 10:31

What if you have more than one job, say a W-2 primary that has no change and several secondary gig jobs that have dried up?

sybloc
sybloc (@guest_951886)
April 4, 2020 19:07

California unemployment dept is already prepared for self-employed applicants (it’s the “self-employed unemployed” option). Applied Thursday:

https://edd.ca.gov/Unemployment/UI_Online.htm

Chris
Chris (@guest_951667)
April 4, 2020 11:42

I heard those with ITIN won’t get anything as for stimulus bill. Does that impact the rest of the family members with SSN? me and my wife have both SSN and filed married jointly. I added two dependents which are 3yo son who has SSN and 46yo sister who only has ITIN. Are we still eligible for getting $2900 since one adult gets $1200 and a child gets $500?

Jack
Jack (@guest_951670)
April 4, 2020 11:48

That sound right assuming your income parameters are within range.

Chris
Chris (@guest_951696)
April 4, 2020 12:15

https://crsreports.congress.gov/product/pdf/IN/IN11282
Accodring to this link, SSN Requirement: Taxpayers must provide a Social Security number (SSN) for themselves, their spouse (if married filing jointly), and any child for whom they claim the $500 child credit. Adoption taxpayer ID numbers (ATINs) are also acceptable for adopted children. Taxpayers who provide an individual taxpayer identification number (ITIN) are ineligible for the credit. Hence, married couples in which one spouse has an SSN and another has an ITIN are generally ineligible for the credit.
ï‚· The law relaxes these ID requirements for married joint filers in which at least one spouse is a member of the Armed Forces. In those cases, only one spouse must provide an SSN.
I was worried when I read this article. I thought since I had an adult dependnt with ITIN, so I might get $0 instead of $2900.. So you still think I would get $2900 even after reading this article?

Jack
Jack (@guest_951701)
April 4, 2020 12:27

Again, assuming that you are within the income parameters of less than 150K filing jointly, you should get $2400 for you and your spouse and $500 for your 3yo.

IIRC, the lack of stimulus for the ITIN was an issue that came up in 2008 as well. I thought that maybe they would fix it this time around but with this administration I shouldn’t have.

Chris
Chris (@guest_951721)
April 4, 2020 13:13

I am within the income parameters of less than 150K filing jointly, but I didn’t pay federal tax last year. I heard those who didn’t pay federal tax won’t be eligible for pandemic umployment benefits ($600 per week). All I got last year was 1099MISC form (since I am a freelancer I didn’t have W-2) and interest income. I don’t know why but I only had to pay self-emplyment tax (which is social security and medical). Maybe my gross income is too small compared to total number of household.. maybe that is why I didn’t need to pay federal tax for my interest income and 1099 MISC income. So even if my total gross income is less than 150K without paying federal tax in 2019, I am still eligible for getting $2900?

Jack
Jack (@guest_951751)
April 4, 2020 13:45

That is not true about the not paying federal taxes as far as I know. SE Tax is still tax anyway. Those with Social Security income only don’t even file and they will get the stimulus. Fear not. I think you’ll be fine 🙂

Avi
Avi (@guest_951673)
April 4, 2020 11:51

I would think your family would get $2900 if the income on your joint return is $150k or less.

Chris
Chris (@guest_951698)
April 4, 2020 12:16

https://crsreports.congress.gov/product/pdf/IN/IN11282
Accodring to this link, SSN Requirement: Taxpayers must provide a Social Security number (SSN) for themselves, their spouse (if married filing jointly), and any child for whom they claim the $500 child credit. Adoption taxpayer ID numbers (ATINs) are also acceptable for adopted children. Taxpayers who provide an individual taxpayer identification number (ITIN) are ineligible for the credit. Hence, married couples in which one spouse has an SSN and another has an ITIN are generally ineligible for the credit.
ï‚· The law relaxes these ID requirements for married joint filers in which at least one spouse is a member of the Armed Forces. In those cases, only one spouse must provide an SSN.
I was worried when I read this article. I thought since I had an adult dependnt with ITIN, so I might get $0 instead of $2900.. So you still think I would get $2900 even after reading this article?

Avi
Avi (@guest_951702)
April 4, 2020 12:28

Unless you’re married to your sister, I think you should be fine.

Chris
Chris (@guest_951723)
April 4, 2020 13:14

I am within the income parameters of less than 150K filing jointly, but I didn’t pay federal tax last year. I heard those who didn’t pay federal tax won’t be eligible for pandemic umployment benefits ($600 per week). All I got last year was 1099MISC form (since I am a freelancer I didn’t have W-2) and interest income. I don’t know why but I only had to pay self-emplyment tax (which is social security and medical). Maybe my gross income is too small compared to total number of household.. maybe that is why I didn’t need to pay federal tax for my interest income and 1099 MISC income. So even if my total gross income is less than 150K without paying federal tax in 2019, I am still eligible for getting $2900?

Denise Connelly
Denise Connelly (@guest_951614)
April 4, 2020 09:03

My husband has a regular full time job and a per diem job with fed ex he has been with over 2 years. He has had steady employment working on average 2-3 days per wk on the second job. Fed ex had to stop working him due lack of steady work. Can you receive unemployment on a second job with no work available?

Taylor
Taylor (@guest_951511)
April 4, 2020 00:03

Does anyone know about how this impacts church employees, who traditionally have immense difficulties in getting unemployment since churches and non-profits often opt out of unemployment insurance? My wife is a preschool director at a church. It’s been two week and my state of Arkansas still doesn’t know what to do with her.