If you lose your job through no fault of your own, you may be eligible for unemployment insurance benefits. Unemployment benefits provide temporary income while you are seeking another job. When applying for unemployment benefits, you are asked questions about your former employer and income. Employment information for the past two years is typically required. You may also be asked if you filed a 1099 form on your last tax return. The 1099 tax form is used by the Internal Revenue Service to record income not paid by an employer.
1099 Forms for Independent Contractors
A 1099-MISC form is given to an independent contractor as a record of income earned. Trades or businesses are required to issue 1099-MISC forms if they paid a non-employee more than $600 during the year. Actors, artists and freelance writers are some professionals typically compensated on a per-job basis. In the construction field, independent contractors are often hired to carry out specific jobs or projects.
Employee or Contractor
Hiring independent contractors instead of employees helps keep costs down for businesses by eliminating the need to pay into a worker's compensation insurance fund. Employees and independent contractors are distinct for tax purposes. A portion of an employee's income is withheld from each paycheck by the employer to cover taxes, including Social Security, Medicare and unemployment. Independent contractors are responsible for paying their own taxes.
Other Types of 1099 Forms
There are 17 versions of the 1099 form, according to Turbo Tax. For example, a 1099-INT is used to denote interest earnings. A 1099-R reports distributions from retirement plans, including IRAs, annuities and pensions. The 1099-G is used to report the total taxable unemployment compensation issued to you for the year. Unemployment compensation is treated as regular income and is taxable on a federal tax return. State laws vary regarding state income tax laws and unemployment.
Unemployment and 1099 Forms
The processing agency for unemployment insurance benefits asks if you reported a 1099 form to ensure you are not receiving income from any sources. As an independent contractor, you are not employed by a company but can still be receiving income. Federal unemployment compensation eligibility guidelines regarding your current income and employment are specific. Independent contractors are self-employed and ineligible to receive state unemployment compensation benefits. If you worked an an independent contractor and as an employee, you may be entitled to benefits if you lose your job as an employee. You can't collect unemployment compensation while still working as an independent contractor.
- New York State Department of Labor: Independent Contractors
- IRS: 1099-MISC, Independent Contractors, and Self-employed
- Mass Mutual Financial Group: Frequently Asked Questions Regarding Forms 1099
- Philadelphia Area Employment Lawyer: Getting Unemployment Benefits in Pennsylvania? Be Very Careful About Becoming an "Independent Contractor."
- CA.gov: California Tax Service Center
- Turbo Tax: A Closer Look at IRS Form 1099
- Do I Need to File Taxes If I Was Unemployed?
- The Advantages of Nontaxable Income
- Is Workers' Compensation Considered Income When Filing Taxes?
- Can I Still Collect Unemployment Benefits If I Got Money Back on My Tax Return?
- Instructions for Reporting 1099-MISC Income
- Do I Report Gross or Net Pay for Unemployment?
- Do I Have to Pay Income Tax Withholding for Unemployment in the State of Texas?
- Questions About Collecting Unemployment Benefits