In the midst of this unprecedented crisis, the US government passed on March 27th the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) to support the American public and economy. Here’s a breakdown of what it means for freelancers like you:
One-Time Stimulus Payment
The most immediate action taken by the government to help the American people is to issue a one-time payment to US citizens and US legal permanent residents. Your eligibility and the amount you will receive is determined by your latest tax return (if you haven’t filed your 2019 return yet, your 2018 tax return will be taken into consideration).
- If you filed as a single person and declared less than $75,000 of taxable income, you’re eligible to receive $1,200. If you made between $75,000 and $99,000, you will still receive a payment but it will be a lower amount.
- If you filed as a married couple with no children and declared less than $150,000 of taxable income, you’re eligible to receive $2,400. If you made between 150,000 and 198,000, you will still receive a payment but it will be a lower amount.
- If you filed as head of household, and reported less than $112,500, you will be eligible for the full payment.
- For every qualifying child under 16, you will receive an extra $500.
Note that if someone is declared you as a dependent on their tax return, you’re not eligible to receive the payment.
The IRS released a registration tool for US citizens and eligible permanent residents who did not file a tax return in either 2018 or 2019. This portal will allow Non-Filers to enter their personal and bank account information to receive the payment.
The IRS also launched Get My Payment, which allows you to update your payment method, bank account information and track the status of your money. The good news is if you choose to receive your Stimulus Cash Payment in your Lili account, you’ll be able to receive it up to two days early thanks to our Early Payment for Direct Deposit feature.
Expanded unemployment coverage
Because you don’t usually qualify for unemployment benefits under regular circumstances, the United States Congress created the Pandemic Unemployment Assistance (PUA) to ensure that freelancers and self-employed workers are eligible for unemployment benefits if they are unable to work due to the Covid-19 pandemic (whether it’s because your childcare provider is closed or because you or a member of your family are sick). PUA can be claimed for a maximum of 39 weeks between January 27th and December 31st 2020. (Note: you can apply for a benefit retroactively from the day you first lost work.) The maximum amount you can receive changes by state, but with the CARES Act, the federal government is increasing whatever the states pay by $600/week, until July 31st. Visit your state’s unemployment portal to apply. Read the bill here (Sec. 2102 on page 89)
You can apply for a small business loan through the Paycheck Protection Program
Self-employed workers and freelancers are eligible for a small business loan under the Paycheck Protection Program. If you’re operating a sole proprietorship, you can apply now. For independent contractors and self-employed, applications will open on April 10th. These loans, managed by Small Business Approved private banks, but overseen by the Federal Government, are meant to help small businesses bridge the gap during this difficult time. The total amount is meant to cover 8 weeks of overhead. That 8-week period can be taken anytime between February 15th and June 30th. These loans have a 1% interest rate and require no personal guarantee. You won’t have to start paying back the loan for 6 months. All or a portion of a loan is eligible to be forgiven (meaning you wouldn’t need to pay it back ever) if it is used to cover payroll, rent, mortgage interest and/or utility bills. For more information, check out our blog on the topic and the SBA’s website. You can start by filling the application form here and contact an SBA-back lender. Read the bill here (Section 1102 on page 8).
More time to do your taxes
Federal tax returns and extension requests for 2019 and your estimated taxes for Q1 and Q2 of 2020 (originally due on April 15 and June 15) are now both due on July 15. State taxes ARE NOT included in this extension (although many states are also providing an extension). You should contact your state tax bureau for more information about specifics in your state and visit this page on the IRS website for the most up-to-date details.