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Unemployment Benefits for the Self-Employed: How It Works

April 30, 2020

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22 million Americans filed for unemployment benefits in mid-April 2020 because of COVID-19 crisis. For the first time, independent and self-employed workers are eligible for unemployment insurance thanks to COVID-19 emergency assistance.

Here’s a look at how unemployment insurance benefits work for the self-employed with recently updated guidelines. 

The CARES Act, for Self-Employed Workers

Passed by Congress in late March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a comprehensive relief plan for individuals and businesses in the wake of the COVID-19 crisis. This plan expands unemployment benefits and sick leave for full-time workers and extends benefits to the self-employed, independent contractors, and gig workers who were traditionally excluded from these programs.

The CARES Act offers expanded coverage by getting rid of barriers to unemployment insurance in a few areas:

Broader eligibility
Employers pay into state funds for unemployment benefits, and since self-employed individuals typically don’t operate with employees, they often bypass this program and surrender eligibility. Contractors working under 1099s—even if they were long-standing contributors to a company—were not considered an employee and would therefore not be eligible for unemployment. 

In the new ruling, self-employed workers are acknowledged by previous income, just like full-time workers.

Waiting periods
In a typical unemployment benefits application cycle, the period between your last working day and when you can file your first claim is typically known as your “waiting week.” As part of the CARES Act and expanding unemployment benefits for the self-employed and full-time workers, states have been incentivized to waive this period. 

Benefits typically withheld during this week will be financed at a federal level, but workers will need to apply for assistance as soon as possible within their state guidelines. The waiting week does not include processing time, which likely increase with the influx of recent applications. 

$600 weekly increase in benefits
The amount you’re paid by unemployment insurance is determined by your application and set at the state level. Most workers find their packages to reflect about 50% of their former salary

Under the CARES Act, eligible individuals can collect an additional $600 per week. This additional $2400 per month will be available through July 31st, 2020. 

Longer periods to claim benefits
Prior to the passing of the CARES Act, most state-set limits for claiming benefits maxed out at 26 weeks. With these new additions, if you’re still looking for comparable work after six months of unemployment, you’re eligible to submit claims for 13 more weeks (about three months).

How to Apply for Benefits

Because of the new processes, some self-employed Americans are struggling to get their benefits. Many states are still updating their systems to accept the new documentation required for filing a claim. 

If your state’s unemployment office is prepared to accept applications from self-employed filings, start your claim by locating their digital portal in the state where you worked. If you live in a different state than your former employer is based (or worked in multiple states), consult with your home state’s unemployment office.

To complete your application, you’ll want to gather your contact and banking information, as well as materials to document your recent assignments, clients, or gigs. 

    • State-recognized photo identification (driver’s license)


    • Home and mailing address


    • Social security number


    • Your phone number and email



    • Proof of income: 

        • 1099 tax forms

        • W-2 tax forms

        • Pay stubs

        • Tax returns

You may also be asked if you’d like taxes withheld from your unemployment check, so keep in mind that you’ll be responsible for federal income tax as a part of your benefits allowance. 

Part-Time Work While Receiving Unemployment Benefits

Self-employed people get income differently from full-time employees. You’ll need to express need based on your normal assignment load. 

Similar to working a part-time position, if you’re trying to work your reduced client load, you need to report any income on your weekly claims. Follow your state’s guidelines.

These systems are new, so it will take patience to navigate them. Overall, it’s a step in the right direction for self-employed Americans to be offered unemployment benefits to support their families.

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Kayla Moses

Kayla Moses

Kayla Moses is a CX designer and freelance writer based in Austin, Texas. Her work spans a variety of industries, including personal finance, business, and real estate. See more of her personal projects and experience at her website:

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