Starting to feel the strain of being self-employed? We understand the stress of these uncertain times and are here to support you. Read on for a short list of financial aid that might be available for you and your family, but remember—we can frame a shot, but we’re not tax professionals. Be sure to consult your accountant if you have additional questions.
The recently passed Coronavirus Assistance package is a $2.2 trillion economic stimulus bill designed to assist individual taxpayers, small businesses, and those who have recently become unemployed. Some things you need to know:
The recovery rebate for individual taxpayers is a one-time payment of $1,200 per adult and $500 per child. Not everyone qualifies, though—$5 for every $100 of annual income over $75,000 (or $150,000 for a couple) is deducted from the total possible amount. The good news is that there’s nothing you need to do, no forms you need to file, to receive this rebate. It’s based on your 2019 tax return unless you haven’t filed it yet, in which case the government will look at your 2018 return. If you’re further behind than that, your refund amount will be based on your Social Security Benefit Statement.
If you qualify as a small business, you can apply for additional financial assistance. These funds, loaned through approved 7(a) status lenders, can be used for payroll, mortgage payments, insurance premiums and other debts. Loans of up to $10 million are available—based on a payroll formula that your lender will use—and a portion of each loan can be forgiven if there is no workforce reduction. Check with your lender to see if they are 7(a) and if your small business qualifies.
If you’ve recently become unemployed, the federal government will add some extra funds to your state-supplied unemployment benefits. These amounts vary but do apply to those who are self-employed, a change from previous unemployment guidelines. Check with your local state unemployment agency for how to apply for this additional benefit. Tax credits are also available if you were previously self-employed but find yourself out of work. To obtain this credit on your income taxes after you file your 2019 return, you must meet one or more of the following criteria:
1. You are subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. You have been advised by a health care provider to self-quarantine related to COVID-19;
3. You are experiencing COVID-19 symptoms and are seeking a medical diagnosis;
4. You are caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
5. You are caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19; or
6. You are experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury. A substantially similar condition has not yet been identified nor specified. But this provision allows for expansion in the future if a genetic mutation occurs.