I’ve been a contractor for 20-odd months and have been laid off. When I went to the local office of employment security, they told me that as a contractor I can’t really get any aid from them, as I didn’t put money into their system. They also can’t find any sources of the company I work with on the employment records (I don’t blame them- the company didn’t even buy a sign for themselves).
I was told that I can bring in my 1099 and self-employment tax forms, but would this provide any difference? What are some resources for contractors looking for unemployment insurance when they’re not working?
I can’t speak for the US, but in Canada you’re not covered by employment insurance unless you pay into the system, and until recently (last 9 months or so) you couldn’t pay in even if you wanted to.
As to your situation, you haven’t paid in recently so I doubt you would qualify. That’s life as a contractor, you make more money than an employee and you need to make sure that you bank some of it away for the dry times.
If you were self-employed and working for yourself, you’re going to be pretty much out of luck. Companies have to pay into the system for their employees to get the unemployment benefits (it’s usually an insurance or a charge back system, depending on the state), and at that point, if you were directly employed you would be eligible.
If you were working regular hours, and are considering yourself “laid off,” you sound like you were more of an employee. I’m not the most experienced on this, but I think that’s not allowed to a certain extent. I’m surprised they even gave you a 1099.
I’m not sure if anyone offers “unemployment insurance,” but I think tke has the right idea…bank some in case you cant find work.
The contract was for 90 days. After that period was over my boss liked my work and I stayed working for him full-time. But technically I was still being paid like a contractor- no taxes and no insurance benefits. Everyone gets paid like this.
In the past few months that switched to PayPal desposits, so it was like being paid under the table. I did manage to save in the bank, but not much. The pay was relatively low for a contractor.
Sounds like a shady way to do business (and possibly borderline illegal), but if you were paid like a contractor (not paying taxes is clincher) then you’re out of luck. AKAIK, only if you’re a W-2 based employee are you eligible for retirement benefits. 1099 employees are not eligible because the employer doesn’t pay into the system for 1099 based employees.
You were a resource, not an employee…and you should have been paid as such. There’s a reason why contractors are paid more - they have to handle their own taxes, pay into Social Security and Major Medical, carry all their own insurances. Next time, don’t accept a low paying job like that.
It sounds like you weren’t laid off, you were contracting and your contract was terminated. Those are very different things.
Also, it sounds like you were bring paid in cash without any withholding, SS, Fica, etc. so it’s true that you weren’t paying into the unemployment fund and it will be hard to get anything out.
There is some possibility that you could claim that you were actually a full time employee rather than a contractor. The IRS loves this because then they get to penalize the employer and force them to back your unemployment and everything else. Of course, the employer isn’t going to just hand over that money without any complaining, and you are also going to be found liable for failing to report your status correctly. Even if you could retroactively change your employment status, it’s going to be hard to do, it’s a sloppy deal and doesn’t guarantee any positive results for you (many complexities).
I would start looking for more work, and be careful to ensure that you absolutely understand your payment/work status before you start!
FYI this is one of the many reasons that experienced contractors are very particular about forming entities, paying SE taxes, or otherwise making sure that your status is clear!
You still have to declare that income on your taxes and don’t think that Paypal isn’t going to report it, a whole ton of ebayers thought that about ebay and they paid the price for it.
I hope you at least managed to save enough to pay your taxes because it doesn’t sound like you did. When I was younger my buddy took a contract job and forgot that he had to save some money for taxes, he ended up having to take out a 25k loan to pay the government the money he owed them, took him two years to dig himself out of that hole.
When I started it was my first job out of college (but not my first full time web development job). I’ve only been lucky enough to get hired at places that cannot afford to pay half of their employees within the sensible salary range in this area. Only small business branches and start-ups have hired me. The next place I work for would have a stronger discipline in how they present themselves as a business. My last company couldn’t afford its own office space or even a sign- it was just a few rooms sublet by a larger company.
I would start looking for more work, and be careful to ensure that you absolutely understand your payment/work status before you start!
FYI this is one of the many reasons that experienced contractors are very particular about forming entities, paying SE taxes, or otherwise making sure that your status is clear!
This job was one of those places in which you couldn’t find out all the facts about them until you’ve worked for them for a while. When I first met them they made it seem like it was contract to perm payment structure, but later on they told me they need to keep everyone paid as a contractor until they grow large enough to pay everyone in the proper manner. In retrospect this feels like they were doing tax evasion, and were making business decisions that suggested they wanted to run before they could properly walk.
I’m guessing so, and if it is, it’s quite a way to screw over your employees when you well know you’re supposed to be paying them as salaried full time ones. If I can make the claim my company was doing this for purposes of tax evasion, would I have a case?
The only problem with your statement is that they aren’t evading taxes in any way. They hired you as a contractor, it’s perfectly legitimate and legal to do so.
I’m guessing so, and if it is, it’s quite a way to screw over your employees when you well know you’re supposed to be paying them as salaried full time ones. If I can make the claim my company was doing this for purposes of tax evasion, would I have a case?
That’s your opinion, you chose to take a contract position, you can’t start screaming tax evasion and the such now.
The job was supposed to be contract to perm. This was the description of the job I was told during my first interview. When my initial 3 months of contract work were over, my boss told me I would be a full time salaried worker. There was no talk about extending my contract for any specific time. At the time I was hired I only signed a contract for those first 3 months.
contracting is a legal loophole for companies to avoid giving out benefits and legal compensation. it should have been in the contract that you signed when you were hired.
I was informed of the rates and limitations during the contract period. $15 an hour seemed low for me even back then but it was the only place I could get hired at. When the contract expired and my boss hired me full time I wanted to flesh out the details of the payment process. He just told me that my position is now permanent, and will be getting paychecks as usual with the same rate. No more legal forms were signed.
After my first paycheck I asked him “why aren’t taxes cut from my wages? This wasn’t mentioned after the contract period” He gave some not-so-sure answers in that he is doing the best he could to get payroll formally established and making promises to give employees benefits down the road. But that never happened. He mostly ends up paying ex-contracted employees with money under the table.