Freelancing and Unemployment insurance: Yipe!

Yes, check with your state's unemployment office. In Oregon, people who are out of work can fulfill their "must look for work" requirements by trying to start their own business. (There's more to it than that, of course, and I don't know the details, but I'm aware that there is something there that's worth looking into.)

Why don't you get the unemployment benefits right away and keep them, untouched, in the highest-interest but still-accessibly savings account you can find until you need that money? You end up with more money that way (if slightly at today's interest rates) and you don't have to worry about the defering? That said, I have no idea how freelancing works into that/affects it at all, but it always seems better to get the money now, and control it yourself, if you can.

To answer question two, unemployment awards are based on earnings in the past year. So you can get a one-year claim based on your old job you got laid off from. However, if you only freelanced for a year, didn't earn anything on a W2, and tried to file another claim next year, I'm pretty sure you'd be out of luck, because there is no real "employer" to pay for the benefits. (Note that if you work freelance through a temp/contracting agency, they tend to pay on a W2, so you can collect unemployment based on those earnings. You don't have to "quit" the agency either- you can collect unemployment during periods where they are trying to find you a gig, but can't.)

@spacewrnech - Thank you ... I will look into this @brainmouse - From the amount that I have read I think I would have to report the freelance income and it would be deducted from any unemployment. I am fine with this however I am concerned that I would be deemed "self employed" and therefore not eligible for any unemployment. Sort of a catch-22. @drjummy11 - I was wondering if this is the way it worked. This would be great as I could use the unemployment if needed but try and make it by with freelance work for as long as possible.

I know from personal experience that is how it works in CA. Check with your state to make sure, they probably have all the info on a website.

Actually it's completely different in Ohio, so you should definitely check. In Ohio, you get awarded a fraction of your average pay at your most recent job (W-2, natch) for between 20 and 26 weeks, depending on how many weeks you worked during a certain period of time (your "benefit window"). Each week, you file a claim. Then they ask you how much you earned that week, if anything; if you freelanced, did odd jobs, etc, you report that money. If it's more than 20% of your weekly benefit amount, they deduct anything above that 20% from your benefit. If you make more than 120% of your benefit they don't pay you at all that week. Not clear whether it's deducted from your total award or not. If you are an officer of a corporation, I think that kicks you off unemployment entirely. I am just an underemployed freelancer, not a lawyer. (Not an underemployed freelancing lawyer, either.) In other words, it is probably a new and brilliant bureaucratic nightmare in each state. Enjoy.

It works similarly in New York, though you can file your claim online. You also file your claim each week instead of every two weeks. Note that New York's unemployment insurance payout sucks the big one and is barely enough to pay rent with each month. Don't expect to have any excess money. You may also try to find some work that will pay you under-the-table, so that income is not considered taxable (unless you are really really honest with the IRS). Legally, you need to pay taxes on such income but with the economy and the unemployment being what they are right now I think it's a fairly safe risk to take.

you absolutely must look into this with your state's unemployment office. here in pa, if you take steps toward being self-employed (and the definition of this really, really varies) you lose your unemployment and have to pay anything back you might have earned. however, some freelancing work is okay, and as long as you declare what you earn, you're still eligible for unemployment. so you might get partial payments one week, no payments the next week because you earned too much freelancing, etc. it REALLY varies here in pa. it's fucked up and confusing and they come down on you HARD if you do it wrong. so check with your state. call them or go in, don't rely on their website. talk to someone and ask really specific questions.

It varies *widely* by state. You need to post your state to receive relevant advice, and discount any advice given by anyone who does not have recent personal experience/knowledge of your state's unemployment benefits system.