What if you have worked all year and then started recieving Unemployment in Oct of 2008. Then in the middle of November you opened up a LLC and started working from home. Meanwhile you are still collected unemployment for the full rate and will be getting a 1099 at the end of the year for work you were also doing. I'm currently trying to build my business before I cancel unemployment.

I collected around 6k in unemployment and will be 1099 for around 6k as well.

I'm not sure how to file or what I should do.....:confused:

What would you do????

well hope they don't catch you for fraud on collecting unemployment illegally.

And hope if they do, they don't put you in jail for it, and just give you a large fine ( up to 10,000) I believe.

When you collect unemployment, you are obligated to report any income, that includes self employment income.

You actually owe back to the state the difference between what you should have been paid ( if anything) and what you were paid.

So you should get an attorney to work out a deal to repay this.

What if you have worked all year and then started recieving Unemployment in Oct of 2008. Then in the middle of November you opened up a LLC and started working from home. Meanwhile you are still collected unemployment for the full rate and will be getting a 1099 at the end of the year for work you were also doing. I'm currently trying to build my business before I cancel unemployment.

I collected around 6k in unemployment and will be 1099 for around 6k as well.

I'm not sure how to file or what I should do.....:confused:

What would you do????

Fr Chuck is only half right.

Yes you have to report your self-employment income to the state in which you are collecting unemployment from. But if your business is not yet profitable you very well might not be doing anything wrong or illegal by collecting that unemployment. Also there might be provisions where as if your income from your small business is below a certain level you can still collect unemployment. You need to check the laws in your state and if necessary contact an attorney. Be very careful about this and do not break the law as going to jail will be much worse than not being able to pay your bills.

That being said you need to report all your income when you file your taxes. Any W-2 income from your previous job, the 1099 income from unemployment and any income you made in your own business on the Schedule C of form 1040. Also any interest income, capital gains etc. that you may have earned during the year. If you don’t report it all assume they will catch you and you will have to pay fees, interest and penalties on the taxes you owe.