Unemployment for Independent Contractors Under New CoronaTax Rules | USTaxAid

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Unemployment for Independent Contractors Under New CoronaTax Rules

Written by Diane Kennedy, CPA on April 9, 2020

If you’re an independent contractor, gigworker, self-employed or the like than you have options under the CoronaTax Acts. 

Primarily, the possibilities are the Paycheck Protection Plan (PPP), Economic Injury Disaster Loan (EIDL) or unemployment. 

Today, let’s look at the options for unemployment for a self-employment person. We’ve recently gotten the DOL (Department of Labor) instructions to states. The states will be the source for the unemployment. Some of the money comes from states but most will come from the feds.

Here are the rules we were given originally for unemployment compensation for self-employed people.  

In order to qualify, self-employed independent contractors, gig workers and part-time employees will need to show that they have exhausted their unemployment benefits under current law and self-certify that they are unemployed, partially unemployed or unable to control their work because: 


  • They have been diagnosed with COVID-19 or are experiencing symptoms of COVID-19 that require a medical diagnosis,
  • A member of their household has been diagnosed with COVID-19,
  • They are providing care for a family member or member of their household who has been diagnosed with COVID-19,
  • A member of their household for which they have primary caregiving responsibility is unable to attend school or another facility that has been closed as a direct result of the COVID-19 public health emergency and because of this closure they are unable to work,
  • They are unable to work because of a quarantine imposed as a result of the COVID-19 public health emergency,
  • They are unable to work because they have been advised to self-quarantine by a health care provider,
  • They were scheduled to start a job but are unable to do so as a result of the COVID-19 public health emergency,
  • They have become a “major support for a household” because the breadwinner in the household has died as a direct result of COVID-19,
  • They quit their job as a direct result of COVID-19.


If you’re reading this so far and think, “This could be me!” There are a few stipulations. 

If you’re able to telework with pay or have received paid sick leave or other leave, you cannot receive any Unemployment Insurance (UI) under this program. (Presumably once the paid leave runs out, you can apply.)

You can receive UI for a maximum of 39 weeks, which includes weeks that you may have received UI under regular Federal or State law. 

In April 2020, the Department of Labor (DOL) finally gave guidance to the states so that they could begin to disburse the promised enhanced unemployment funds. They clarified how much self-employed people would receive (at a minimum, the lowest minimum per state). They also took a firm stance in identifying when self-employed persons could qualify.

For example, gigworkers that provide rides like Uber or Lyft were determined to have a place of business inside their vehicle. That meant, in their viewpoint, that they could easily continue working despite concerns with COVID-19.

They also determined that if the reason someone couldn’t work was because children were home from school, they would only receive unemployment during regular school weeks. If the kids would have been home from school anyway with spring break or summer vacation, then the unemployment insurance would not be applicable.

For those eligible, the federal additions to unemployment (additional classes of people eligible and additional $600/week) will start on the day of eligibility or 3/28/2020, whichever is later 

When all is said and done, the states are slowly putting the rules into place. They are often undermanned and dealing with their own issues from Coronavirus. That means the states may not work as quickly as we would like. It does mean that there is Unemployment coming if you qualify. 

The question for the self-employed person, though, is often which program is best? On one hand, they may qualify for a loan or grant for their business, which would pay them. That’s if they view themselves as the business owner. On the other hand, they are also a worker who was laid off and if they qualify under CARES, they will get Unemployment payments. 

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