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Where should you file for unemployment if you are a telecommuter?

by Julie S
(Indiana or Arizona unemployment benefits)

I worked for a company, as a W-2 consultant, from June 2011 until the end of December 2011 when the assignment ended for the client I was working on.

The company that hired me is Head Quartered in AZ, the client is located in TX, and I worked remotely from home in IN.

I originally filed for UI benefits in IN, which was denied due to "No record of wages in my base period." I contacted the State of IN, and I was told that since the company that hired me is located in AZ, I should file for UI benefits in AZ.

I am confused, as I thought that the state you file for unemployment benefits in was the state that had state payroll taxes withheld (in my case, IN state taxes where withheld).

Did I received the correct information from IN and I should file for UI benefits in AZ?

Thank you for any information to clarify this for me.

Response To: Where should you file for unemployment if you are a telecommuter?

Hi, I changed your question because I think it might more appropriately reflect what the source of the problem.

Telecommuting presents tax issues confusion for most everyone I think, and I'm no tax specialist .. so I'm no exception.

However, since Indiana has already denied your claim, you certainly can and should file in AZ.

If your employer paid UI taxes in AZ on your wages they should show up as long as the wages are located in the base period attached to your claim for benefits.

However, I'm a little curious as to why Indiana didn't treat your claim as interstate and contact AZ to locate those wage credits.

What I know about telecommuting is it's full of opportunity for issues about benefits due to confusion about tax issues of all kinds .. including unemployment and the benefits and court rulings are unsettling to me.

New York was the state that ruled an employer didn't have to pay unemployment tax or pay benefits to an employee of a NY company that telecommuted from Florida because she wasn't physically located in NY while doing the work.

I also believe NY is the same state that ruled a telecommuting TN man had to pay NY income tax on 100 percent of income earned even though he only worked in NY physically, 25 percent of the time.

But, I've not read anything rotten about telecommuting in connection with AZ or IN .. yet.

Let me know what AZ tells you. Telecommuting issues are evolving and changing as I type.

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Jan 30, 2012
UI Benefit Update
by: Julie S

I wanted post an update on my on-going quest in obtaining UI Benefits, being a telecommuter.

I contacted my last employer's payroll department, out of frustration of the time it is taking hearing back from AZ and running out of money. I wish I would have done this sooner, as the payroll department emailed me my W-2 and the UI Form they submitted to the State of Indiana. They did pay in Indiana and that is where I should have applied. Thus, it appears that Indiana gave me inaccurate information when they told me I need to file in AZ, where my employer was located.

I am now in the process of reopening my claim, with the State of IN, including the supporting documents I received from my last employer. I was told to call back the State of IN in 2 business days, to "get the ball rolling" after they had a chance to review the information I submitted.

This still is not a resolved issue, but at least I feel I am finally moving forward in the right direction ....

Jan 19, 2012
Additional Information
by: Julie S

Thank you so much for responding to my question. Telecommuting does seem to be a murky area, as I have noticed it can be handled different ways by different states.

I did call back the State of IN this morning, to verify the information I received yesterday was correct. Again, IN told me that I needed to file for UI benefits in the State of AZ, where the employer is located.

I did file in AZ, and it gets more interesting as my application for UI benefits is proceeding. AZ doesn't show any record of wages, in the base period, under my social security number. Their base period ends 9/30/11, and I was definitely earning wages, for this employer, at that time.

AZ filed a Wage Protest against my employer, and now I have to wait until the employer responds.

I will keep you updated as this proceeds, as I am curious how this is all going to turn out.

The only defense the employer will have as far as I can see .. is that you were an independent contractor .. i.e., self employed.

Get prepared, understand he tests used by the state of AZ for determining "employee" or not.


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