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Tax Law (Questions About Taxes)/Unemployment and 1099 in California

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Question
Hello,

I know it may vary from state to state, so I'd like to first clarify this is for California.

Someone I know was laid off in Feb 2013. He then filed for Unemployment and began collecting. He is still collecting checks.

Recently, about 2 months, he was offered a freelance job, which he signed a 1099 form for.

The question is; Is he still legally qualified to receive those unemployment checks? If not, what are the penalties and should be done now?

Note: this persons employer treats him as a formal employee not a contractor. He is required to go into an office to work a regular schedule. Can he be penalized for this as well?

Any information is appreciated. Thank you.

Answer
Nay,

Thanks for your question.

He can't be penalized  but his employer can get into trouble with the IRS for misclassifying him as a contractor when he is indeed an employer.

Since he is self-employed he no longer qualifies for unemployment.  If he continues to draw it, he is guilty of fraud.  I do not know what penalties there are in CA for this, but it could involve a jail term or a hefty fine.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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