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Nearly everyone is facing some sort of hardship during the COVID-19 pandemic. Those on the front lines, such as healthcare workers, may be quarantined from their families to avoid transmitting the virus. Small businesses have closed. Independent contractors have lost anchor clients. Entire industries have shut down.
The government has stepped in with a financial aid package, the Coronavirus Aid, Relief and Economic Security (CARES) Act. The $2 trillion package is designed to help small and large businesses, as well as independent contractors and individual taxpayers.
Take a look at our COVID-19 Financial Relief Guide to see what programs can help you through the upcoming economic speed bumps.
The IRS has strict regulations determining whether a worker is a 1099 independent contractor (freelancer) or an employee. Under normal circumstances, employees have withholding taxes deducted from their paychecks, and are entitled to certain benefits, including unemployment insurance if they are laid off.
Just like individual taxpayers, freelancers may be able to borrow from their IRA without tax penalties and may qualify for student loan deferral. Independent contractors may also qualify for the direct-deposit tax credit individual taxpayers will receive, and the above-the-line deduction for charitable contributions.
Under the CARES Act, independent contractors may now be eligible to collect unemployment insurance if their income has dropped substantially as a result of COVID-19. For instance, an Uber driver who can no longer work may be able to file for unemployment.
Just like employees, gig workers may receive up to $600 weekly from the federal government, plus whatever amount is determined by the unemployment department in the worker’s state.
The April 15 deadline for estimated quarterly tax payments has been extended to October 15, 2020, making all estimated payments (including those for April and July) due on that date with a single payment.
The “Paycheck Protection Program” that is part of the CARES Act makes SBA loans available to self-employed individuals as well as small businesses. These loans can fund payroll, healthcare benefits, rent, utilities, and other operating costs at interest rates below 4%. Loan terms are up to 10 years.
The IRS announced they are extending the 2020 tax deadline to July 15.
The “Coronavirus Bill” being passed through Congress includes measures to help various sectors of society, including a clause that would help independent contractors and gig economy workers take advantage of unemployment benefits. If the bill passes, it would allow workers to get an additional $600/week.
Wondering what’s inside the Senate’s $2 trillion dollar stimulus package? See it broken down here.
We’ve rounded up the best resources online to help you stay afloat during this difficult time.
If you’re self-employed or a small business owner you could qualify for the Paycheck Protection Program, aimed at helping those whose business’ are affected by the COVID crisis.
Setting up a GoFundMe is a great way to get your community involved and get support through this difficult time. Loyal patrons of your business will be eager to donate, share your message and lift you up while business is slow.
The Small Business Administration has just announced disaster relief lending to help make businesses more resilient during these times. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; the interest rate for non-profits is 2.75%. SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Please visit the following SBA links for more detailed information:
Disclaimer: Solvable is not your CPA. We don’t know your particular situation. The information we’re sharing in this article is just information, not individual advice. Don’t act on anything without working with your CPA or other professional first.