I have been going through some experiences dealing with reporting self-employment income to my California Employment Development Department. Most of the advice I am giving pertains to the state of California, but may be applicable to other states, too. I suggest everyone consult their own state's unemployment office for more information.
I just went through a self-employment interview with the California EDD and may be going through a second interview on the same subject because my claim expired and I have to file a new claim. If I hear of anything new after I file a new claim, I will either update this post or delete it.
I am not nor have I ever been a representative for the California EDD.
First of all, I'd like to say that it is possible to make money from self-employment and receive unemployment, too! In California, self-employment while unemployed is often treated like a regular part-time job. But, there are a few hoops you may have to go through before you can report your self-employment without any hassle.
If you are filing a brand new claim for unemployment and are self-employed, make sure you tell them upfront about your work. This does not necessarily disqualify you from getting unemployment. However, unless you've paid into the system, your self-employment will not be factored into your benefit amount.
If you are already receiving benefits and start to engage in self-employment, you should put "self-employment" as the employer and "still working" on the continued claim forms if it's ongoing and put the number of hours you worked that week. Do not put the name of the company that paid you (that would be your client, not your employer) If it is "piece-work" (such as being paid a set amount of each piece of work you do i.e. typing jobs, etc), then that's a different issue and you should ask a representative about it before reporting it.
What should happen next is that EDD will schedule a phone interview with you. Sometimes, they will spit the forms back and say that you did them wrong. If they do that, call them and tell them that you have self-employment to report and that you need to be approved to report it by having an interview. They should schedule you an interview after that, usually within a week.
For most people, the interview will be simple. They will ask about what kind of self-employment you are doing. If it's something like writing for Gather or something else that's intermittent, tell them that you occasionally submit content for websites. Or, if you take surveys, tell them that you sometimes do paid surveys, or whatever you are doing. In general, if it's something that is intermittent, unscheduled, casual, or a hobby, they will generally approve you on the spot without asking any more questions.
However, if you are bound or committed to a set schedule or expected to do a certain amount of work each week, there may be issues. But, if you are working less than 20 hours a week, it might not be a problem. Again, there are some variations of this and each interviewer will determine each issue on a case-by-case- basis.
One thing that they do tend to be hard on and are looking to disqualify are people who are either in the process of setting up their own business or running a home based business that makes them unavailable or unable to look for or accept full-time work. Many people spend 40 hours a week working at a home based business without getting paid or getting paid very little. This may be a problem for EDD as benefits are only given to people who are looking for and are available for full-time work. So, be careful if you are engaging in activities that may make you unavailable for full-time work or make you appear that way.
Another tip for the interview is to have a job-search record on hand with a list of companies you have applied for or contacted, preferably that week or recently. They may not ask about this, but any time you have an EDD interview, it's always good to have this information on hand to show that you really are looking for work.
Finally, be truthful, don't hide anything. I was told to report everything over $1 a week. In the case of sites where you earn less than $1 a week or earn points that you don't know the value of, I was told that you can report it when you cash out or are paid. In California, usually the first $25 or %25 doesn't count, but you still need to report it. Money is supposed to be reported when earned or as soon as you know what you're earned, not when they're paid except in a few unique circumstances.
Also, don't put down an excessive number of hours for your "hours worked" as this may make you appear unavailable for full-time work, but don't be untruthful. Give your best estimate for the number of hours you have put into your self-employment. If possible, limit your self-employment to as few hours as possible while you are receiving unemployment.
In other states, it's critical to find out if self-employment is allowed as some states don't allow it in any way, shape or form. Some states, like New York, don't go by earnings, but deduct a percentage of your benefits based on how many days a week you did work regardless of how many hours you worked that week. It's best to check with them before starting or self-employment or unemployment claim.
Again, like I said, I may be updating this post in the future as I'm still dealing with this issue.