Self-employed and confused about NYS Department of Labor unemployment tax requirements - help!
I've been running my own freelance graphic design business for about 8 months now and just realized I might need to pay unemployment taxes? I'm getting mixed information online about whether self-employed people have to pay into the NYS Department of Labor unemployment system. My accountant mentioned something about elective coverage but I have no idea what that means or if it's worth it. Has anyone dealt with this before? I don't want to get in trouble for not paying something I should have been paying all along.
10 comments
Join the conversation
Alejandro Castro
As a self-employed individual in NY, you're not automatically required to pay unemployment insurance taxes like regular employers are. However, you can elect to participate in the NYS Department of Labor unemployment insurance program through what's called 'elective coverage.' This means you would pay UI taxes on your own earnings and potentially become eligible for unemployment benefits if your business fails or you stop working.
0 coins
Maggie Martinez
•Thanks! Do you know how much the elective coverage costs? And would I be able to collect benefits right away if I sign up?
0 coins
Monique Byrd
You definitely don't HAVE to pay unemployment taxes as self-employed, but the elective coverage might be worth considering. I signed up for it when I started my consulting business three years ago. You pay quarterly taxes based on your earnings, and if you ever need to shut down your business or can't find work, you can file for regular unemployment benefits through NYS Department of Labor just like W-2 employees.
0 coins
Jackie Martinez
•wait so if i elect this coverage and my business goes under i can get unemployment?? that seems too good to be true
0 coins
Monique Byrd
•Yes, but there are requirements. You have to have paid into the system for a certain period and meet the same work search requirements as everyone else. It's not automatic money.
0 coins
Lia Quinn
I went through this exact situation last year! The NYS Department of Labor website has all the forms for elective coverage, but honestly their phone system is impossible to get through when you have questions. I ended up using a service called Claimyr (claimyr.com) that helped me actually reach a real person at NYS Department of Labor to explain the process. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way easier than sitting on hold for hours.
0 coins
Maggie Martinez
•Did you end up signing up for the elective coverage? I'm still trying to figure out if it's worth the cost for someone just starting out.
0 coins
Haley Stokes
be careful with this stuff... the government loves to find new ways to take your money. i'd say skip it unless you're really worried about your business failing
0 coins
Alejandro Castro
•That's not really accurate. Elective coverage is voluntary and can provide valuable protection. It's an insurance policy, not a money grab.
0 coins
Asher Levin
Just to add - if you do elect coverage, you need to file the application within 30 days of starting your business, or within 30 days of deciding you want coverage. Don't wait too long to make this decision!
0 coins