As the coronavirus crisis drags on with no clear end in sight, US unemployment levels continue to climb, with the official jobless tally reaching 14.8% in April 2020. The real unemployment rate was 22.8% in April and by some estimates could rise as high as 30% during the pandemic. This rate includes people who are not eligible for regular unemployments benefits, such as self-employed individuals who are currently out of work and people who have had to settle for part-time work due to economic reasons.
Perhaps the one bright spot for American workers is that all Americans who are unemployed due to COVID-19–including even those who do not qualify for traditional unemployment benefits—are likely to qualify for expanded unemployment benefits under the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act that went into effect in March 2020. These federal unemployment benefits, which include the Federal Pandemic Unemployment Compensation (FPUC), Pandemic Unemployment Assistance (PUA), and Pandemic Emergency Unemployment Compensation (PEUC), have a broader umbrella than standard unemployment benefits, and include help for the self-employed, freelancers, independent contractors, and small business owners who are out of work due to coronavirus.
If you are self-employed, read on to learn what type of coronavirus unemployment benefits you may be eligible for.
Who Is Eligible For CARES Act Unemployment?
Provided that you are unemployed or under-employed (working fewer hours than you would like to) due to COVID-19, you are almost certainly eligible for one or more of the CARES Act Unemployment programs.
Former W-2 earners (employees) collecting state unemployment are eligible for FPUC—a $600/week benefit on top of regular unemployment earnings—as well as the PEUC benefit, which continues your unemployment benefits through the end of the year if your unemployment benefits run out before then.
Notably, self-employed individuals—gig workers, independent contractors, small business owners, and sole proprietors—are also eligible for CARES Act Unemployment benefits, but through the PUA program. Self-employed individuals are also eligible for the FPUC $600/week benefit and the PEUC continuation of benefits once their PUA runs out.
Individuals who are out of work due to COVID-19 but are not eligible for regular state unemployment insurance (UI) for pretty much any reason—you were fired from or quit your last job, you didn’t earn enough in the past 18 months to qualify for UI, can also receive PUA and FPUC. As long as you are able and willing to work, but can’t due to COVID-19, you can qualify for these programs.
Now, what does it mean to be out of work due to COVID-19? Here are some possible qualifying reasons:
- You have been laid off, furloughed, or had your hours reduced due to COVID-19.
- Your business is not allowed to operate because of a COVID-19-related order in your state.
- You or a household member has been diagnosed with COVID-19 or has symptoms of COVID-19.
- You have to stay home to care for your child who is out of school due to COVID-19.
- You need to care for a family member who is ill with COVID-19.
- You have become the breadwinner or major supporter for a household because the head of the household has died from COVID-19.Â
The program is pretty broad because pretty much every industry and every type of worker has been impacted. Even if you have never worked before, quit your job before COVID-19, or have been out of work for a long time (too long to qualify for state unemployment insurance), you can still qualify for CARES Act Unemployment.
Can Independent Contractors Collect Unemployment?
Yes, independent contractors who have lost income due to COVID-19 can collect unemployment by applying for PUA, provided that your state is offering these benefits. You can access PUA benefits whether you are out of work entirely, or even if you’re still working a little, but your income has been significantly reduced due to COVID-19.
If you primarily work as an independent contractor but reported some W-2 wages last year, you may still be eligible for PUA; it just depends how much you earned in W-2 wages and whether that amount is sufficient to qualify you for regular UI.
Not all states have implemented PUA yet as of May 14, but all states are expected to in the coming weeks.
A List Of Who Is NOT Eligible For PUA
- You are eligible for regular state unemployment insurance (because you have sufficient wages reported from an employer over the last 18 months that would qualify you for a regular UI claim).
- You are out of work for a reason unrelated to COVID-19.
- You are not authorized to work in the US.
What Are The PUA Benefits?
The PUA provides expanded unemployment compensation for individuals who have traditionally been ineligible for UI benefits, such as independent contractors, self-employed, gig workers, and people who don’t have sufficient recent work history to qualify for regular unemployment.
Specifically, PUA includes up to 39 weeks of unemployment benefits beginning February 2, 2020 (or January 27 in some states), through the week ending December 31, 2020 (or December 26 in some states). The benefits can be retroactive, depending on your last day of work due to COVID-19.
The amount you will receive depends on which state you live in how much you were earning prior to the crisis.
What Are The FPUC Benefits?
Federal Pandemic Unemployment Compensation (FPUC) provides an additional federal unemployment benefit of $600 a week through July 31, 2020Â (July 25 in some states). This benefit is retroactive to the week ending April 4, 2020 (March 25 in some states). Eligible applicants include unemployed or partially employed individuals who are eligible for (or already receiving) regular UI or PUA benefits. This means that both former employees and self-employed individuals can receive this benefit. You will receive FPUC on top of any other unemployment benefits you receive.
All 50 states (and the District of Columbia) are currently paying out the $600/week FPUC benefit.
What Are The PEUC Benefits?
Pandemic Emergency Unemployment Compensation (PEUC) extends unemployment benefits for up to 13 weeks after your benefits are exhausted. If you collect state or federal unemployment compensation (UC or PUA) and are still unemployed after your benefits run out, you can receive PEUC. The amount is equal to the amount you were receiving before your benefits ran out—your UC/PUA, plus the additional $600/week FPUC benefit.
This benefit is available through December 31, 2020. If your benefits aren’t set to expire before the end of the year, then the PEUC will not apply to you.
How Do You Get Federal Unemployment?
Although CARES Act federal unemployment is 100% funded by the federal government, you still have to apply through your state. This is because the state has to determine whether your unemployment claim satisfies the state and/or federal unemployment programs. States are also in charge of disbursing federal unemployment funds, which is why federal unemployment benefits have been rolled out slightly differently, and with different start-dates, in different states.
To get started, go to your state’s website for filing for unemployment benefits. Each state’s website is a little different, but the instructions are usually pretty easy to follow.
How Do I Apply For PUA?
It depends on your state. In some states, applicants must first apply for regular unemployment insurance, and be rejected, in order to be approved for PUA. In other states, you can file for PUA without having to take the extra step of applying for regular unemployment compensation.
Here’s how to get started with your PUA application:
Step 1: Go to your state’s unemployment insurance website. Simply contact your state’s unemployment insurance office, either via their website or over the phone. The easiest way to find this website is to search your state’s name and “unemployment,” e.g., “Oregon unemployment.” You can also find your state’s unemployment insurance department via the U.S. Department of Labor website.
Step 2: Follow your state website’s directions to apply for UI or PUA. On your state’s unemployment insurance website, there will be instructions as to how to apply for PUA and which documents and/or pieces of information you might need to have handy. The website will direct you to an online PUA application, or the online UI application if the state requires you to file for UI before PUA. Usually, there is an online portal where you will have to register with a username and password before you can fill out the application. You should also be able to apply over the phone or mail.
How Do I Apply For FPUC?
If you qualify for the FPUC, the $600 per week benefit will be automatically paid to you in a separate weekly payment. There is no application for FPUC; simply file for UI or PUA.
How Do I Apply for PEUC?
This also depends on your state. Some states are automatically extending benefits while others are requiring participants to apply for PEUC once their unemployment benefits expire. Not all states have released guidance on how to apply for PEUC yet. If you qualify for the PEUC extension of benefits, your state should contact you with instructions about what, if anything, you need to do to apply.
Other Commonly Asked Questions
Will Unemployment Back Pay?
Yes, you can apply for back payment for unemployment benefits dating as far back as February 2 for PUA and April 4 for FPUC. The payments are retroactive back to the week you became unemployed due to COVID-19.
How Long Will It Take To Start Receiving Benefits?
It varies. In states where you have to be rejected for UI before you can apply for PUA, it will take longer. It will also take longer if your initial application is incomplete or has inaccuracies or other issues. All states are receiving way more unemployment applications than usual, so this could also affect how long it will take to start receiving unemployment benefits.
For most people, provided that you are eligible and there aren’t any issues with your application, it should take about 2-3 weeks.
Do I Have To Pay Taxes On Unemployment Payments?
Yes, any unemployment income you receive is taxable income that you will have to report and pay taxes on. This includes state UI, PUA, and FPUC.
Do I Have To Look For Work To Receive COVID-19 Unemployment?
No, not necessarily. If you are unable or unavailable to work due to circumstances related to COVID-19, you do not have to be actively seeking work. For example, you do not have to look for work if you have to care for children at home due to school closures, or if your business can’t reopen due to local coronavirus-related laws forbidding businesses in your industry from operating. The individual state can decide whether there is any requirement to search for work in order to receive federal unemployment funds, but so far, states are temporarily suspending the usual unemployment benefit requirement that applicants be actively seeking work.
However, if you do receive an offer to return to work, and don’t have any extenuating circumstances (such as having to care for a family member or having an underlying condition which predisposes you to COVID infection), you could lose your unemployment benefits if you don’t accept the job. However, this won’t really apply to self-employed individuals who are not employees.
Can I Get Both PUA & PPP?
No. While self-employed individuals, independent contractors, sole-proprietors, and small business owners are eligible for both PUA and PPP (forgivable SBA loan to cover payroll), you cannot receive both. If you’re not sure which is better for your situation, it is probably a good idea to research whether you would get more money from unemployment benefits or from the PPP. If you do not have any employees (other than yourself), you’ll probably get more value out of the PUA.
I hope this article answered all of your questions about how to get COVID-19 federal unemployment benefits if you’re self-employed. If you have more questions, feel free to ask them in the comments and I’ll do my best to answer. If you found this post useful, please check out some of our other related COVID-19 content for small businesses and self-employed resources.
- Paycheck Protection Program (PPP) Loans For Contractors & Freelancers: What The Self-Employed Should Know
- Paycheck Protection Program (PPP) Loans For Sole Proprietors: Where & How To Apply
- How The CARES Act Coronavirus Stimulus Package Could Help Your Small Business & Employees
- Your COVID-Affected Small Business Might Be Eligible For SBA Loan Debt Relief Via The CARES Act
- Self-Employed? You May Qualify For A Business Credit Card
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