The so-called gig-economy is booming, and side hustles are becoming more common. However, if you were let go and are receiving unemployment benefits, it’s natural to wonder will working for Instacart will affect unemployment benefits?
I looked into it, and here’s what I discovered:
Working for Instacart will affect unemployment benefits in two ways. First, you will be categorized as a 1099 employee and will have to report your income when received. Second, depending on the amount of your earnings, your benefits may get reduced, though complete elimination of benefits is rare.
But it leaves a lot more questions like what is 1099 employment, and how it impacts the unemployment benefits. Besides, you would also like to know about the possible reductions in unemployment if you are shopping for Instacart.
And just in case you are not aware, Instacart, pairs its customers with personal shoppers, comes within the category. Besides, the grocery delivery guys from Instacart are known as shoppers and not employees. And that’s because they shop the products from Instacart after receiving a list from customers, and delivering them.
So keep reading to get all the answers!
— Danielle Itani (@DanielleItani) September 24, 2019
Who is a 1099 employee?
The 1099 employees are generally independent contract workers who offer their services to the general public than a single employer.
Doctors, real estate agents, lawyers, and accountants may all be 1099 employees. However, they aren’t always easy to classify.
As per the IRS, an individual is considered an independent contractor if the payer has the right to control or direct only the result of the work. But not control what will be done or how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
Working gig jobs, like driving for Uber, or shopping for Instacart, would categorize you as a 1099 employee. These can be great jobs to have because it’s not a typical 9-5. Specifically, as an Instacart employee, you have flexibility over when and how you work.
But being paid as an independent contractor can vary, as it can be weekly or biweekly.
Luckily, Instacart shoppers get weekly payments, on Wednesday via direct deposit. My recent article goes over all of the things you need to know about getting paid while working for Instacart.
Just click on the link to read it on my site.
when a telecom company that made $130b last year wants you to commute to new jersey every day as a 1099 employee pic.twitter.com/FACpDyEBgI
— (@Kevin_Church) November 19, 2019
Does working a 1099 job get reported to unemployment?
There’s a rising popularity of available gig jobs, like being an Instacart shopper. Thus you will likely get the opportunity to work on a contract basis even if you can’t find permanent work.
Contractors don’t earn benefits or have taxes withheld from their wages. So you’ll get 1099 instead of a W-2, at the end of the year. This is why contract workers are often known as 1099 employees.
While collecting unemployment benefits, you will have to look for a new job actively. You also have to report any and every income you earn from working while collecting unemployment.
However, it doesn’t have to be reported until you get the payment in hand. For instance, if you receive partial payment, you would report only that amount. Once you receive the balance payment, you will report it separately.
Working at Instacart, you will be a 1099 employee. Besides, it could be an excellent way to supplement your unemployment benefits. Even if your benefits are reduced slightly, it will be made up for with your Instacart wages.
— TurboTax (@turbotax) February 13, 2017
How does contract work affect unemployment benefits?
Any wages that you make from contract work must be reported to unemployment.
However, this may result in your benefits being slightly reduced. At the same time, since payment for 1099 work is sporadic, your unemployment benefits will likely not be eliminated completely.
Your state’s unemployment commission will reduce your benefit amount based on the amount you actually receive for compensation. Besides, the reduction may not be dollar for dollar.
In Texas, for example, you can earn up to 125% of your regular benefits before your benefit is eliminated completely. Therefore, you must check with your local unemployment office to determine the exact reduction amount.
The good thing is that your benefits will only be reduced or eliminated for that week. So, if you make $500 one week, your benefits will only be eliminated for the week you made $500. And if you earn nothing the next week, you will get no reductions in benefits. You just need to ensure you meet all other requirements for collecting unemployment.
Other requirements include actively looking for work and being available as well. If you’re working a particular schedule at your 1099 job, you won’t be available to work full-time at a permanent-job.
This is why working for Instacart would be a great option. You work when you can on a schedule that you set. So, you can take just a couple of jobs. That’ll leave you more time to look for work. And you’ll be available to take on a full-time position when one comes in.
With my place of employment being closed “indefinitely” and the federal unemployment benefit being cut or reduced drastically I will draw birds for food. pic.twitter.com/za3HoR6zus
— Kevin Barrios (@kevinbforbounce) July 25, 2020
Can I file for unemployment if I get fired from a 1099 job?
Typically, contract workers, freelance workers, and self-employed workers are not eligible for unemployment benefits.
Employers that hire employees contribute funds for unemployment insurance benefits. If you are a contract worker, you aren’t receiving any of the benefits of being a full-time worker. And thus you’ll have to pay self-employment tax.
You might be eligible for unemployment if you were misclassified as an independent contractor when you were an employee.
Each state has its own rules regarding the classification of employees and independent contractors. Generally, if you work on a project basis as in shopping for Instacart, you’d be considered an independent contractor.
On the other hand, if you are attending staff meetings, reporting work hours, you can be an employee. Besides, receiving extensive supervision and training from your employer also counts. This would mean that you were possibly being misclassified as an independent contract worker and should receive unemployment benefits.
So if you are a contract worker, you will not be eligible for unemployment if you were to get fired. This includes working for Instacart, DoorDash, or any other gig work.
— Sol (@SolfromBrooklyn) July 13, 2015
How much will my unemployment check be if I work part-time for Instacart?
This is going to depend on numerous factors. For instance, on how much unemployment you are getting. Or on how much you make while shopping for Instacart.
Unemployment benefits are generally assessed based on wages earned during the last four quarters you worked. Benefits are typically half of the wages earned during that period, with a cap on the amount you can receive. There’s usually a cap on not only the amount you can receive but for how long you can receive it. For example, you may be eligible to receive a total of $8,000 in benefits or for six months. Whichever comes first!
The amount of income you are allowed to make before benefits are reduced or eliminated will vary by state.
In Idaho, for example, someone who works part-time will receive reduced benefits that week as long as their earnings are not 1.5 times or more than the weekly unemployment benefit amount. As long as your wages are less than half of your unemployment benefits, you won’t lose any of your benefits.
Your local unemployment office should have the rules regarding part-time work laid out for you.
Did I answer all you wanted to know about whether working for Instacart will affect unemployment benefits?
While Unemployment benefits seem pleasant, they are only a fraction of what you were making at your previous job.
Taking a contract position, like working for Instacart, may affect your unemployment benefits. So even though it will supplement your income, expect some benefits deductions.
So while working a 1099 job, you need to report your income to the unemployment office. While it may cause some deductions in your unemployment benefits, you will not be ineligible for it. Besides, you cannot file for unemployment if you get fired from a 1099 job. Wishing you good fortune, I hope you make the most of your time and skills.