An informational form, the 1099 MISC documents self-employment or business income. In some cases, filing this form with your tax return might prevent you from collecting unemployment benefits. The activity that necessitates the 1099, rather than the form itself, leads to the denial of benefits, however.
Unemployment is a federal-state program designed to provide temporary financial assistance to people who've lost their jobs through no fault of their own. This usually means people laid off or fired for reasons other than misconduct. To be eligible, you'll have to meet your state's requirements, which will likely include having proof that you worked within a specific base period. According to the United States Department of Labor, this base period often consists of four of the previous five quarters.
If you filed a 1099 because you were primarily self-employed, you probably won't be eligible for unemployment. In most states, companies pay a tax to cover unemployment insurance so that separated employees can benefit from it. If you own a business or work as an independent contractor, such contributions are unlikely to apply to you. But if you're eligible for unemployment because you worked full time as an employee but also received a 1099 for part-time, nonemployee work you performed on the side, you might still meet eligibility requirements.
You might have a right to unemployment if you're a corporate officer of a corporation you own or are a primary shareholder of. In such a case, your state might consider you a corporation employee and upon your separation from the company grant you employment benefits. Each state sets its own rules and exceptions for such situations. For instance, Hawaii won't pay benefits to an owner-shareholder who causes his own unemployment, while Michigan limits benefit payments to seven weeks if you were the corporate officer of a family corporation and you or your immediate family member had more than 50 percent interest in the company.
Disaster Unemployment Eligibility
You might be eligible for a special type of unemployment if you filed a 1099 and are unemployed because of a disaster. If you can't perform expected work, can't get to the work site or suffer an injury that interferes with your work as the direct result of a disaster, you might be eligible for disaster unemployment benefits. The benefits typically last up to 26 weeks after the president declares a disaster.
If you're eligible for unemployment through your state and want to become self-employed, determine whether your state offers a self-employment assistance program. According to the Department of Labor, as of 2013, only a few states offered this program, which helps dislocated workers starting their own businesses or taking advantage of self-employment opportunities. If you benefit from this program, you'll receive a weekly allowance rather than regular unemployment checks.
- United States Department of Labor: State Unemployment Insurance Benefits
- United States Department of Labor: Self-Employment Assistance
- United States Department of Labor: Unemployment Insurance Tax Topic:
- United States Department of Labor: Comparison of State Unemployment Laws: Chapter 1
- United States Department of Labor: Disaster Unemployment Assistance (DUA)
- Nolo.com: Unemployment Benefits: What If You're Fired?
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