$600 unemployment for gig workers and independent contractors

[TAXNJ]

I believe the CARES act left it to the states to implement and administer the benefit. Hence the variance by state how it is implemented. Feds were going to reimburse states the $600 benefit amount that is added on top of the state calculated benefit. BTW the $600 end in July!

No more what you say or think, poster LCP wants to “So my question remains and I guess I'll try to dig thru the CARES act to see how the Federal program is designed if...”

At this point I agree with LCP to do further self research.

[ATSMAN]

I absolutely said both of those things. I can use PUA in my state (MI) as an example.... they did not require any income proof at all to start up! They are paying a minimum of $160 in state benefits plus the Federal $600. If you wanted to prove income you could provide some proof to, at most, double the $160. I advised most of my clients to be happy with the $760 because MI was having a hard enough time dealing with all of the claims.

So my question remains and I guess I'll try to dig thru the CARES act to see how the Federal program is designed if either the state or the Feds ultimately audit income information. Hope this makes more sense,

I believe the CARES act left it to the states to implement and administer the benefit. Hence the variance by state how it is implemented. Feds were going to reimburse states the $600 benefit amount that is added on top of the state calculated benefit. BTW the $600 end in July!

[LCP]

I absolutely said both of those things. I can use PUA in my state (MI) as an example.... they did not require any income proof at all to start up! They are paying a minimum of $160 in state benefits plus the Federal $600. If you wanted to prove income you could provide some proof to, at most, double the $160. I advised most of my clients to be happy with the $760 because MI was having a hard enough time dealing with all of the claims.

So my question remains and I guess I'll try to dig thru the CARES act to see how the Federal program is designed if either the state or the Feds ultimately audit income information. Hope this makes more sense,

[TAXNJ]

Implementation and prob auditing does vary by state...but the $600 is a Federal thing. Can you point me to a list of documents that will need to be submitted by the end of the year?

Think you said it in your Original Post

….. I realize that each state will be interpreting it and administering it…...

The $600 supplement is called Federal Pandemic Unemployment Compensation. This supplement is rolled into your regular state benefits and you don't have to apply separately for it.

So, as you and ATSMANS’ reply posts states, it varies by state. Check the particular state's requirements for documentation.

[ATSMAN]

It varies by state. This is what MA requires:

Applicants will need to provide the following information:

• Your social security number
• If you are not a citizen of the United States, your A Number (USCIS Number)
• Your residential address
• Your mailing address (if different from residential address)
• Your telephone number
• Your email address
• Your birth date
• Your wage records for 2019, which includes:
  • 1099 forms
  • Pay stubs
  • Bank statements
• The social security number(s) and date(s) of birth for your dependent child(ren)
• If you want to use direct deposit for payment, your bank account and routing numbers

[LCP]

It varies by state but in most situations a copy of Sch C and form 1040 is on the list of documents that will need to be submitted before the end of the year. I believe most states started the process with a taxpayer declared under penalty of perjury "self employment income". to be backed up with the documentation later.

Implementation and prob auditing does vary by state...but the $600 is a Federal thing. Can you point me to a list of documents that will need to be submitted by the end of the year?

[ATSMAN]

What if the independent contractor has set up, and 1099s are issued to, a single-member LLC? What if the independent contractor is in partnership with another so that they report income on a 1065?

It varies by state but in most situations a copy of Sch C and form 1040 is on the list of documents that will need to be submitted before the end of the year. I believe most states started the process with a taxpayer declared under penalty of perjury "self employment income". to be backed up with the documentation later.

[LCP]

Almost three weeks later.... I think more states have put this into place now so maybe you all have some experience. My experience is that proof of income isn't required at all to get started.

I have to believe, but I certainly wouldn't bet, that they may do some auditing down the road. They may ask for 1099s received for 2019 or maybe invoices sent out for the first part of 2020. What if the independent contractor has set up, and 1099s are issued to, a single-member LLC? What if the independent contractor is in partnership with another so that they report income on a 1065?

[Rapid Robert]

The classic case would be an independent contractor who gets a 1099 in his name and puts it on a Schedule C. That should be a piece of cake and every state should be able to handle that.

Wouldn't they actually need information from the Schedule C? A 1099-NEC form does not report net earnings from self-employment, nor does every Schedule C filer get a 1099-NEC for all of their revenue. I also doubt the unemployment people in each state get any of this info, unlike the quarterly payroll returns they get for every employee.

[ATSMAN]

My state is suppose to set up a special webpage that is exclusively used for filing UI for self employed. Obviously details are lacking but the DOR assured that regardless of when the claim is filed and approved, eligible taxpayers will be paid retroactively including the special $600 added to the base amount.

In my state the base amount is generally 50% of the weekly gross. I am assuming they will look at the gross for this year compared to last year YTD or some date and make that determination.

[LCP]

Does anyone know how this was designed? I realize that each state will be interpreting it and administering it.

The classic case would be an independent contractor who gets a 1099 in his name and puts it on a Schedule C. That should be a piece of cake and every state should be able to handle that. A slight complication would be if the worker had set up a single member LLC and 1099s were issued that way.

How about independent contractors who are in partnership with others....maybe just a husband/wife situation. Does the law anticipate that and recognize that two people (or more) are involved?

My assumption is that the spirit of the law was to include all "deserving" workers even if they don't work under the employer/employee relationship.