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Dilemma: Unemployed and might be offered a 2 month job... California

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  • Dilemma: Unemployed and might be offered a 2 month job... California

    The firm I worked for for 12 years has recently laid me off. I've been out of work for nearly 2 months and have been told that starting next week they might need me full time, but only for a specific job that will last 2 months. There is a possibility of another job starting after that but its all pie in the sky at this point.

    My boss offered to hire me back or take me on as a contractor. I thought hiring back sounded good (the company didnt offer any benefits but at least theye paid part of my taxes) but... how does that affect my unemployment once I'm out of work again in 2 months?

    Would it be better to just be an independent consultant?

    thanks in advance.
    b

  • #2
    You have two different issues.
    - For UI purposes, it is normally to your advantage to take the gig. Past that your former employer knows that you are on UI. If you turn them down, they (the former employer) can contact the state and tell the state that you turned down the job. The state might at the point cancel your UI benefits.
    - However, the chance that IRS will consider you to be a legitimate independant contractor (IC) is likely not good. IRS already knows that you were an employee in the past, and will likely be very skeptical that the tax fairy dropped some IC dust on you if all you are going to do is to go back to the former employer and do the same work. CA (not the UI people, but the rest of the state government) will likely have the same problem.

    If you really are IC, then you have many customers and are trying to get more. Any work done at your former employer is just because they are one of your many customers. Is this true? If not, this is just your ex-employer playing games. There legally is no such thing as an IC whose only customer is their ex-employer.

    It is probably worth your while to do this anyhow, but be clear, you will become fully responsible for both sides of the FICA, plus all federal and state income taxes withheld. No wages with be reported for UI, WC or DI purposes. And make very sure that you tell state UI what you are doing. If the (the state) find out that you are taking money under the table, you are in deep legal doo-doo. And it is financially in your ex-employers interest to make sure that the state finds out.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

    Comment


    • #3
      i work as a designer, in our profession working on contract is quite normal based on jobs that are available.

      My dilemma has more to do with... will my unemployment benefits end if i take on a job that lasts 2 months?

      I'd love to be an employee, but given a definite timeline it seems more like a contractor.

      So I guess the the Q is... is there a difference UI looks at being an employee v. contractor in regards to restarting the benefits?

      Comment


      • #4
        Ic#

        If you go as an Independent Contractor, I would get an IC tax number ( online from IRS, within minuets) and not have your employer use your SS#. Receive a 1099 end of year, file as a business. I'm waiting to try this now with other employers and see how if it does affect my UI from Ca. And the amount I'll report to Ca. EDD will be my actual income minus business expenses = the $25.00 limit EDD places. As self employed IC no FICA.... you'll file Schedule C,
        nnotsoo
        Junior Member
        Last edited by nnotsoo; 07-05-2009, 01:12 PM. Reason: addition info
        Thank you,


        Please accept my apology for past posts/replies

        Comment


        • #5
          Originally posted by bettyklang View Post
          i work as a designer, in our profession working on contract is quite normal based on jobs that are available.

          My dilemma has more to do with... will my unemployment benefits end if i take on a job that lasts 2 months?

          I'd love to be an employee, but given a definite timeline it seems more like a contractor.

          So I guess the the Q is... is there a difference UI looks at being an employee v. contractor in regards to restarting the benefits?

          I am wondering if you got your answer to your question regarding whether your unemployemnt benefits will end if you take the 2-month job? I would like to know since I am in similar situation.

          Comment

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