How do I report freelance income while collecting unemployment?
May 21, 2013 11:51 AM Subscribe
I just got laid off from my job, and I've booked a few freelance gigs here and there and have some ongoing freelance writing stuff as well. Do I need to report this income when I earn it, or when I get paid? (This is in California).
Please note: I am not trying to scam CA EDD, I just want to report my claim properly. If you make a mistake, your claim gets stuck in red tape hell, and I would like to avoid that.
So, for example: I wrote a short article a few weeks ago, and I have check coming to me hopefully this week or next. I worked on this article before I filed for unemployment - do I need to report the income? Or would I only need to report it if I worked on it during a week that I am claiming unemployment?
Another example: Let's say I write an article while I am claiming unemployment. Do I report the wages I earned the week that I wrote it, or do I wait until the check arrives?
This is all a labyrinth, and you can never get anyone on the phone. I need the money, though, so I guess it's worth jumping through the hoops.
So, good people of Metafilter, please help me avoid getting in trouble.
Please note: I am not trying to scam CA EDD, I just want to report my claim properly. If you make a mistake, your claim gets stuck in red tape hell, and I would like to avoid that.
So, for example: I wrote a short article a few weeks ago, and I have check coming to me hopefully this week or next. I worked on this article before I filed for unemployment - do I need to report the income? Or would I only need to report it if I worked on it during a week that I am claiming unemployment?
Another example: Let's say I write an article while I am claiming unemployment. Do I report the wages I earned the week that I wrote it, or do I wait until the check arrives?
This is all a labyrinth, and you can never get anyone on the phone. I need the money, though, so I guess it's worth jumping through the hoops.
So, good people of Metafilter, please help me avoid getting in trouble.
Assuming you don't find legal reasons to do things differently, I'd definitely wait to get paid. I "earned" $2,000 for a freelance project I finished in February, and expect to actually receive the money in June. That lag time is a bit on the long side, but not unheard of in my experience. It doesn't seem fair or right that you might miss five months of unemployment benefits while not receiving any other source of income either. For tax purposes, I report money when I receive it, not when I send the invoice.
posted by croutonsupafreak at 1:40 PM on May 21, 2013
posted by croutonsupafreak at 1:40 PM on May 21, 2013
Grain of salt and all that, but here's what I did in Oregon the last time I was taking unemployment insurance and doing some freelancing. Basically, anytime I stopped "reporting," my checks stopped coming. So, if I had work, I would stop reporting. When the work ended, I would re-start my claim, list temporary employment as a freelancer and I believe I listed the income but I can't remember if they asked for that info. So, to recap, I'd claim a week and then not claim for the week I had other work and then restart my claim which usually resulted in another week's lag in terms of when a check would arrive. Sometimes I'd do the gap weeks for when the freelance income actually arrived if I couldn't manage without it.
Don't forget, that unless you are paying taxes as you go, you will owe taxes on the unemployment income *and* your freelance income so be sure to put aside an appropriate amount as you go.
Your jurisdiction may work (very) differently. Keep a spreadsheet that tracks when you are claiming and when you aren't (and why) so that if ever called on to explain, you can.
posted by amanda at 2:02 PM on May 21, 2013
Don't forget, that unless you are paying taxes as you go, you will owe taxes on the unemployment income *and* your freelance income so be sure to put aside an appropriate amount as you go.
Your jurisdiction may work (very) differently. Keep a spreadsheet that tracks when you are claiming and when you aren't (and why) so that if ever called on to explain, you can.
posted by amanda at 2:02 PM on May 21, 2013
Oh, and there is typically a bright line distinction between "self-employed" and "temporary" work. While I was freelancing, I was always looking for full-time work, both for reporting purposes to the unemployment office and in actuality. You can be listed as self-employed but there is a distinct process involved in that.
posted by amanda at 2:05 PM on May 21, 2013
posted by amanda at 2:05 PM on May 21, 2013
Response by poster: It doesn't seem fair or right that you might miss five months of unemployment benefits while not receiving any other source of income either.
Fair has nothing to do with it, and why would I miss five months of unemployment? I'm sorry - I'm confused.
Basically, I just want to avoid losing my unemployment benefits when my checks that I'm waiting for arrive. Like, if I'm not claiming for the week that I worked, do I need to report that income?
posted by ablazingsaddle at 2:09 PM on May 21, 2013
Fair has nothing to do with it, and why would I miss five months of unemployment? I'm sorry - I'm confused.
Basically, I just want to avoid losing my unemployment benefits when my checks that I'm waiting for arrive. Like, if I'm not claiming for the week that I worked, do I need to report that income?
posted by ablazingsaddle at 2:09 PM on May 21, 2013
Be very very effing careful, keep meticulous records beyond what is required by the EC, and honestly, watch watch watch your back regarding what you say to them and what words you use. My experience is in a different state, but I'll tell you that "rules" are often not just labyrinthine, but can be interpreted in some downright disingenuous and catch-22 ways.
It may not be overkill to look into a brief consult with an unemployment compensation lawyer now to make sure your ducks are in a row, in case your file gets flagged for questions about "why you left your new job," your "self-employed" status, and the legitimacy of your clients classifying your work as 1099 income at the end of the tax year. Also ask about how to reconcile the issue of declaring hours worked per week w/r/t the often flaky payment follow-through by freelance clients.
posted by desuetude at 10:24 PM on May 21, 2013
It may not be overkill to look into a brief consult with an unemployment compensation lawyer now to make sure your ducks are in a row, in case your file gets flagged for questions about "why you left your new job," your "self-employed" status, and the legitimacy of your clients classifying your work as 1099 income at the end of the tax year. Also ask about how to reconcile the issue of declaring hours worked per week w/r/t the often flaky payment follow-through by freelance clients.
posted by desuetude at 10:24 PM on May 21, 2013
Ah timely post as I have been through my own recent tangos with EDD. I will agree with the poster that the rules are so arcane, it's like being in a foreign country. I just went through an appeal hearing for a mistake I made from being too diligent/conscientious. And the more I tried to fix the problem, the more I got dragged down the EDD rabbit hole.
I have done some 1 day a month temp work and a 10 hour "freelance" job (1099 instead of W-2) in the past few months while wrangling with EDD over my claim. Here's what I've learned which may be useful to you:
1. Do I report the wages I earned the week that I wrote it, or do I wait until the check arrives?
I report the wages for the week that I did the work based on the wording of the Continued Claim form. Depending on how much you're allotted for each week, they will determine whether or not you can get wages for that week minus what you earned. However what has happened for me so far is that as long as it's below my weekly amount, I just get the balance. Even for the 1099 gig, I reported the wages. Just make sure to designate these jobs as temporary.
2. If you Google around people are constantly finding loopholes to get through to a person. Used to be you could call the Vietnamese line.
If you haven't Googled yet, this post on Yelp and this blog article have been lifesavers for me. I got somebody on the phone this morning! Compared to going through EDD's online web form, it's a critical difference in terms of having somebody who can fully explain everything to you (meaning EDD's arcane rules), get all the background information from you, and take the time to fix or update your claim. I'm sure being here in CA you know about the Sequestration cutting the phone hours from 8a-12p, so this morning I started dialing at the stroke of 8a in order to get through.
Speaking of the Web Form, that's one of the mistakes I've made of late trying to communicate with EDD. If I had to do everything over again, I would've called them instead of going through the Web Form because things would've been handled faster and wouldn't have ended up so convoluted.
Should you run into trouble APPEAL APPEAL APPEAL any decision. I love writing strongly worded letters, so I got myself an appeal hearing with a judge. It took her less than 10 minutes of talking to me see how things got screwed up versus going through the Web Forms and phone interviews where things just got more convoluted. Bonus if you like writing letters, open a report with your State Assembly rep's office to inquire on your behalf b/c then you can .cc- them on the letters you send to EDD (that sometimes helps expedite your issue).
Hang in there! I actually had the agent today keep telling me that I should appeal their denial of my request for a back award (because they stopped sending me forms when I was waiting for my damn appeal and nobody told me you have to keep filing in order to show proof). So that was encouraging, although I was like "yeah except shouldn't I be spending this time actually working on job applications?" In a weird way, dealing with EDD is an exercise in learning to be resourceful and persistent.
posted by green_flash at 11:11 PM on May 21, 2013
I have done some 1 day a month temp work and a 10 hour "freelance" job (1099 instead of W-2) in the past few months while wrangling with EDD over my claim. Here's what I've learned which may be useful to you:
1. Do I report the wages I earned the week that I wrote it, or do I wait until the check arrives?
I report the wages for the week that I did the work based on the wording of the Continued Claim form. Depending on how much you're allotted for each week, they will determine whether or not you can get wages for that week minus what you earned. However what has happened for me so far is that as long as it's below my weekly amount, I just get the balance. Even for the 1099 gig, I reported the wages. Just make sure to designate these jobs as temporary.
2. If you Google around people are constantly finding loopholes to get through to a person. Used to be you could call the Vietnamese line.
If you haven't Googled yet, this post on Yelp and this blog article have been lifesavers for me. I got somebody on the phone this morning! Compared to going through EDD's online web form, it's a critical difference in terms of having somebody who can fully explain everything to you (meaning EDD's arcane rules), get all the background information from you, and take the time to fix or update your claim. I'm sure being here in CA you know about the Sequestration cutting the phone hours from 8a-12p, so this morning I started dialing at the stroke of 8a in order to get through.
Speaking of the Web Form, that's one of the mistakes I've made of late trying to communicate with EDD. If I had to do everything over again, I would've called them instead of going through the Web Form because things would've been handled faster and wouldn't have ended up so convoluted.
Should you run into trouble APPEAL APPEAL APPEAL any decision. I love writing strongly worded letters, so I got myself an appeal hearing with a judge. It took her less than 10 minutes of talking to me see how things got screwed up versus going through the Web Forms and phone interviews where things just got more convoluted. Bonus if you like writing letters, open a report with your State Assembly rep's office to inquire on your behalf b/c then you can .cc- them on the letters you send to EDD (that sometimes helps expedite your issue).
Hang in there! I actually had the agent today keep telling me that I should appeal their denial of my request for a back award (because they stopped sending me forms when I was waiting for my damn appeal and nobody told me you have to keep filing in order to show proof). So that was encouraging, although I was like "yeah except shouldn't I be spending this time actually working on job applications?" In a weird way, dealing with EDD is an exercise in learning to be resourceful and persistent.
posted by green_flash at 11:11 PM on May 21, 2013
This thread is closed to new comments.
I have lost thousands of dollars because I tried to be a good citizen, was honest about mistakes I made and therefore triggered some "disqualification". CA EDD is the most broken institution I've ever had to deal with
That being said, I know there is a notion in CA EDD of getting 'approved' for self employment, meaning filling out money earned in this way won't trigger your status back to 'employed' and force you to reopen your claim. If you report the income without being 'approved' for self employment, the system might consider you fully employed and you will stop receiving benefits.
So I think you do need to tackle the phone system of death. If you Google around people are constantly finding loopholes to get through to a person. Used to be you could call the Vietnamese line. Good luck, do not give them any more information than they ask for.
posted by hamsterdam at 12:18 PM on May 21, 2013