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Let's say you are laid off with a month of severance. In the second week of the severance period, you take up a temp job hanging drywall or something like that, that pays you 1099 with no benefits, and do it that week only. This job is not proper employment with all the strings attached, just freelancing.

Are you obligated to report that income when filing for unemployment towards the end of the severance period, when you become eligible for it once the severance runs out? I understand if it were during unemployment, you would have to report it and your weekly claim would be adjusted. You also have to report severance so the unemployment agency can calculate your eligibility date. But this is 1099 income earned during the severance period.

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It depends on the nature of your severance package, and ultimately on how the unemployment agency decides to count that.

The easiest way to handle this is to wait for your determination of eligibility. If you earned 1099 income before the date it is determined you are/were eligible to claim unemployment then it does not have to be reported to the unemployment agency. However, if earned after your unemployment eligibility date then you do have to report it.

  • i specifically asked if it is during the severance period during which i am not collecting unemployment. i know the protocol for during the claiming period – amphibient Sep 28 '15 at 21:23
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    If they have declared you to be "employed" during your "severance period" then that's the answer. The unemployment agency decides based on looking at the terms of your severance whether your "severance period" counts as a period of "employment" or "unemployment." The rules for this vary so much by state and circumstances that you really just have to let them decide when you are "unemployed." – feetwet Sep 28 '15 at 21:25
  • so you mean that you can be considered unemployed even during a severance period and eligible to collect? i didn't know that. – amphibient Sep 28 '15 at 21:27
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    @amphibient - maybe it would be more accurate to say that "there are severance packages that don't count as employment," but yes, depending on the state and terms of severance you could "feel" like you're being paid by your former employer while legally collecting unemployment. – feetwet Sep 28 '15 at 21:47

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