Can I pay salary through my company to qualify for Unemployment Insurance?

[msoft]

What is the name of your state? NY

I am a full time employee of my S-corp. I work through my company as a contractor at various clients. I was laid off last year from my contract. Since my skills are legacy and outdated, there are less than 4 jobs for my skill in the whole country making it hard to find a job and so, I am learning new skills.

Last year, my company was approved for a PPP loan that spanned my work/salary across two quarters (1 week in May, whole of June and 1 week in July) and I was qualified for Unemployment Insurance.

This year, the PPP loan was approved a bit early in Jan which spanned my salary Jan-Mar. This will not qualify me for UI because the work is spanning just one quarter. However, two full/partial quarters of work will qualify (like 2 full/partial months work in one quarter and 1 full/partial month work in next quarter - spanning work across two quarters). Since I need to work across 2 quarters to qualify for Unemployment Insurance, can I pay myself salary through my company for a week or two during April to span my work/income across 2 quarters and qualify for UI? Of course, I'll be paying all the taxes on my salary for April.

Is paying salary for a week or two in April through my company as a full time employee without work to qualify for UI legal to do?

Thanks!

 

[adjusterjack]

I think that's fraud. Can't say why. Just something in my gut says so.

 

[msoft]

The reason I asked was, my company is an entity and I’m it’s full time employee. A company can pay salary and benefits to its employees even if there is no work. At least, that is how people on H1B working as FT employees for their staffing agency employers get paid legally - the company is required to pay salary even when there is no work or client project. Not paying H1B employees is actually fraud in the eyes of USCIS.

 

[adjusterjack]

A company can pay salary and benefits to its employees even if there is no work.

True. However, what you propose doesn't pass the smell test.

Read this Employer's Guide to Unemployment Insurance:

https://www.tax.ny.gov/pdf/publications/withholding/nys50.pdf

If you want to go through all that just so you can try to collect, be my guest.

Keep in mind you will still have to withhold federal taxes and FICA on your "employee" and your "employee" will have to file his own income tax returns on his "salary" while you are also paying taxes on income your business generates.

In the end, your "employee" might not qualify for unemployment insurance unless he can attest to and document that he has been looking for work and is available for work, which he obviously won't be.

At worst, it's a scam and the NY UI investigators will figure it out.

At best, it seems like an expensive and complicated way to get UI.

Maybe somebody else will post who knows more about it than I do.

 

[msoft]

Keep in mind you will still have to withhold federal taxes and FICA on your "employee" and your "employee" will have to file his own income tax returns on his "salary" while you are also paying taxes on income your business generates.

In the end, your "employee" might not qualify for unemployment insurance unless he can attest to and document that he has been looking for work and is available for work, which he obviously won't be.

At worst, it's a scam and the NY UI investigators will figure it out.

That's what I said - I'll have to pay taxes on the salary. There is no way around it doing payroll.

I was laid off more than 6 months ago. Not sure why you are presuming that I'm not looking for work and not available for work. I'm looking for work every single day of the week and I'm available for work at any time. I'm not attending school or college - I'm learning new skills reading books and watching videos. That does not make me unavailable unless I'm attending school/college.

I would appreciate if you explain why it is a scam for a company to pay its full time employee when there is no work.

 

[adjusterjack]

I just gave you my two cents worth, not legal advice. If you think it'll work, go for it.

 

[aldaron]

Wait till UI audits his work search activities that need to be documented. All back pay will have to be paid back if not documented with proof of applications submitted and dates. With all the fraud going on that audit is more than likely up to 2 years after claims stop. States owing billions to the feds for borrowed money they're going to claw back as much as they can.

 

[adjusterjack]

Agree.

 

[commentator]

No, you cannot do that. I am someone who collected unemployment taxes from employers, and as it is set up federally, unless you put yourself into your employer's payroll system and paid in not only your salary, but the unemployment taxes owed by this employer on yourself as a salaried employee, this will not work. If you want to get your own employer tax number and call yourself a company and pay in unemployment, it still won't work. Must have employees (other than yourself) to be an employer according to definition. Who do you think you'd be paying your employer taxes on yourself to, if not the unemployment system? If the company puts you on their employer tax account in unemployment and pays it in for you, it will be fraud, and they won't reasonably agree to do this. And WILL be caught up in it if they were to be dumb enough to try, based on the way the employer records are set up. Just doesn't work.