What You Need To Know About Coronavirus Relief Options For Taxes, Income, and Small Businesses

What You Need To Know About Coronavirus Relief Options For Taxes, Income, and Small Businesses

Millions of Americans have been left jobless through the spread of coronavirus and many more feeling financially stressed as well. Today we are going to look at the COVID-19 relief programs and options available to individuals and small businesses. Everything from new tax filing deadlines, stimulus checks, unemployment insurance, paid leaves, and more.

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Table of Contents

Coronavirus Relief Options For Taxes

Filing and paying taxes are postponed; not cancelled

Don’t fret if you missed the first filing and tax payment deadline and you forgot to file for an extension prior to April 15th because of all stress and hysteria. The IRS has postponed the deadlines to file and pay 2019 federal income taxes to July 15, 2020.

You still need to file and pay your 2019 taxes, but you have some extra time. Make sure you have everything prepared, filed and paid by July 15, 2020. Or you can file for an extension before July 15, 2020 which will give you until October 15th, 2020 to take care of your 2019 taxes.

You can read more about the new tax deadline, when state income taxes are due, and the impact of your taxes on your stimulus check here from Lexington Law.

Coronavirus Relief Options For Income

Federal, state and local governments have created a number of programs to help people pay their bills, rent, mortgages and put food on the table. Things are constantly changing, but this is a recent overview of all the things you can access to help you based on the latest $2 trillion relief plan enacted by Washington.

Stimulus Checks:

The massive economic stimulus package will enable the federal government to begin making payments to people, though the amount you receive will depend on income and the following:

  • Single adults who have an adjusted gross income of $75,000 or less will get the full $1,200.
  • Married couples with no children and earning $150,000 or less will receive a total of $2,400.
  • For every qualifying child age 16 or under, you get another $500.

However, People who earn more will see their payments decrease until they phase out completely. That happens for:

  • single people earning $99,000, or
  • married people who have no children and earn $198,000.

There are other situations that make certain people ineligible. For example, college-age children who were claimed as dependents on their parents’ returns won’t receive a check. You generally need a valid Social Security number to collect as well.

How and when will I receive my stimulus check?

A lot of people don’t have to do anything to receive the payment. If the Internal Revenue Service already has your bank account information from your 2018 or 2019 tax returns, it will transfer the money to you via direct deposit based on the recent income-tax figures it already has.

Payments started hitting people’s accounts in mid-April, but it could take a few months more for some people to get them; and there have been talks about a second round of stimulus checks, so stay tuned!

If you haven’t received a payment then you can check on the status of your economic impact payment by going to Get My Payment. From here you’ll be able to add your bank account information if they don’t have one on file, or you might have to wait for a check or prepaid card issued by the government to receive your funds.

I also suggest reading this article on the 6 scams to avoid during coronavirus from Lexington Law. It's vital to protect the money you do have during this time and I've heard of some stimulus check scams floating around.

Unemployment Insurance

The good news is there is a new relief package for unemployment insurance (“UI”) that includes big changes to how the system works and increases in benefit amounts; but it is only temporary and expires July 31, 2020. So go take advantage of this while you can if you qualify!

Do I Qualify for UI?

Under this plan, state programs now cover far more people than are usually eligible. If you are one of the many who has lost a substantial amount of income through no fault of your own, you could be eligible for UI. That’s because UI isn’t just reserved for individuals who involuntarily lost their jobs. 

You may qualify for Unemployment Insurance if you meet any of the following criteria:

  • You are self-employed or a part-time worker
  • You are a worker who has been furloughed but are still on your employers’ payrolls
  • Your hours have been significantly reduced and those who’ve quit for fear of exposure to the virus.
  • You are a freelancer and/or a gig economy worker can also now apply, under the third fiscal care package.
  • You are self-employed with a limited liability company or S corporation

The plan also makes exceptions for people who cannot work for a variety of coronavirus related reasons . For instance, you don’t necessarily need to lose your job to qualify. If you’re quarantined or have been furloughed or if you’re not being paid but expect to return to your job eventually you may be able for unemployment insurance.

How much unemployment insurance can I expect to receive?

Typically unemployment replaces roughly 45 percent of your lost income, but some states are more generous than others. States set many of their own rules, including benefit amounts, which are generally calculated as a percentage of your income over the past year, up to a certain maximum. 

Through the CARES ACT, this amount temporarily increases benefits by $600 weekly through July 31, 2020.

How long can I expect to receive unemployment insurance?

Most states pay benefits for 26 weeks, though some states have trimmed that back. The CARES Act grants an extra 13 weeks of assistance through July 31, 2020.

Learn more about federal pandemic unemployment compensation from Lexington Law here.

How do I apply for unemployment insurance?

The first thing you should is check your state’s website to understand your area’s specific requirements. Gather all the documentation you'll need to make the process as easy as possible. This may include (but is not limited to):

  • Social security number
  • Driver’s license
  • Employer’s name, address, phone number
  • First and last day worked
  • Home address and mailing address (if different)
  • Proof of loss of income
  • Telephone number and email address
  • Bank name, address, routing and account numbers (for direct deposit)

How long will I wait to receive unemployment insurance benefits?

Once again, this all depends on where you live. It could take a few days to weeks for the UI office to verify your reason for unemployment and confirm everything. Once they've confirmed your eligibility, it'll be about another week before you start receiving benefits.

Paid Sick Leave and Family Leave

The coronavirus emergency relief package gives you the ability to get paid leave if you need to take time off because of the outbreak. But like everything else there are a lot of exceptions and expect policies to continue evolving.

If you're sick:

If you are a worker at a small or midsize company, as well as if you’re a government employee, you can get two weeks of paid sick leave if you are ill or seeking care. You must be employed for 30 days though. You can receive your full pay, or up to $511, whichever is greater.

If you have nobody to watch your kids:

You might also be able to get 12 weeks of paid leave to care for your children whose schools are closed, or if your child care provider is unavailable because of the outbreak. Just be aware that fewer workers qualify for this type of leave. In this situation you can receive two-thirds of your usual pay, up to $200 a day.

But what if I'm self employed, a part-time, and/or a gig economy worker? 

If you are a part-time worker you will be paid the amount you typically earn in a two-week period, up to the daily limits.

People who are self-employed — including gig workers like Uber drivers and Instacart shoppers — can also receive paid leave, but you have to calculate your average daily income and claim it as a tax credit.

I’d suggest finding out more information that might apply to your specific situation by going to the Department of Labor’s website, which has posted a fact sheet for workers and a Q&A.

Coronavirus Relief Options For  Small Businesses

There are now a ton of resources available from the CARES Act to help small businesses. Below are details on the two most popular programs, and several other programs you can look into as well. Things are constantly evolving and changing and it's important for you to consult with an SBA Preferred Lender, your bank, CPA or other professional to ensure you are getting the most up to date information that best applies to your unique situation.

The aim of this section of the act is to provide the critical funding needed to keep small businesses running. These loans are designed to keep employees on payroll and give employers a loan to help them cover operating costs.

What is the Paycheck Protection Program (PPP)?

The Small Business Administration (SBA) Paycheck Protection Program ensures that approved small businesses receive benefits and payroll funds, allowing them to continue operating. You can learn more about how the small business paycheck protection programs help you here from Lexington Law.

It has given out roughly $511 billion of the $659 billion allocated to the Paycheck Protection Program (PPP). This means that less than $148 billion remains, so if you haven’t already applied, you should!

Who qualifies for a PPP Loan?

  • Small businesses with 500 or fewer employees or fall within the SBA’s size standards
  • Restaurant, hotel, or business that falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and each location has 500 or fewer employees
  • Tribal businesses
  • 501(c)(19) veteran organizations
  • 501(c)(3) nonprofits
  • Independently owned franchises with less than 500 employees
  • Sole proprietors, independent contractors, gig economy workers, and self-employed individuals

There is a high potential for all, or the majority, of the loan to be forgiven, which is why this has become such an incredibly popular program.

How much can I qualify for from the PPP?

Whichever is less: 2.5 times your monthly payroll costs (excluding compensation for employees who earn in excess of $100,000) or $10 million. The amount you'll qualify for is based on the last 12 months or your 2019 numbers. 

Can I use PPP for additional business expenses?

Sort of; but not really. Remember all those headlines about businesses who got the PPP Loan then fired the staff? Yep, don't do that. All loans and relief programs should be used solely for what they are intended to do.

Some area the PPP Loan may qualify:

  • Salary, wages, commissions or tips
  • Employee benefits, which includes vacation, parent, family, medical or sick leave, and payments required for provisions of group health care benefits including insurance premiums; and payment of any retirement benefits
  • State and local taxes assessed on compensation.
  • For a sole proprietor or independent contractor; wages, commissions, income or net earnings from self-employment, capped at $100,000 on an annualized bases for each employee

Contact your CPA, banker, or SBA preferred lender for professional guidance and to ensure you are properly distributing the funds if you are unclear.

What will be forgiven under the PPP Loan? 

Currently, the amount you get will be forgiven if:

  • You maintain your full-time employee headcount until June 30, 2020
  • You use the money only for the allowed expenses and 75% of the loan amount for payroll costs
  • You do not decrease wages or salaries more than 25% for any employee that made less than $100,000 annualized in 2019

Economic Injury Disaster Loan Emergency Advance (‘EIDL’)

Even before coronavirus the Small Business Administration (‘SBA’) and EIDL program were providing financial support to small businesses and private non-profit organizations that encountered certain declared disasters. The CARES Act, however, expanded the program to make it easier for borrowers dealing with this pandemic’s fall out to get a loan.

The legislation also authorized $10,000 advances that are forgivable if the proceeds are spent on payroll.

Unfortunately because of the number of applications the SBA ran out of money. They did receive some additional interim funding, so they reopened the EIDL program on a limited basis to agricultural businesses, who just became eligible for the loans and grants.

You can still use the EIDL to get a loan to cover payroll and other operating expenses that could have otherwise been met in a non-disaster economy. However, funds cannot be used for refinancing, making loan payments on other federal debts, to repair physical damages, to pay IRS tax penalties or to pay out dividends.

How much can I borrow through the EIDL Program?

The amount is determined by the SBA on a case-by-case basis after a business applies, but it depends on the amount of economic injury that a business has suffered. Recently, however, the SBA announced that due to the surge of applications, it is limiting disbursements to $10,000 for two months – and it is reportedly capping total loan amounts at $150,000. 

What’s the interest rate on the money I borrow from the EIDL Program?

Interest rates on EIDLs can be as high as 3.75% for companies and 2.75% for nonprofits. Principal and interest payments of EIDLs can be deferred for up to one year.

Other Small Business Relief Programs:

If the PPP or EIDL are not programs that you feel you qualify for or don’t interest you there are a number of other programs available for you to look into and take advantage of. Those are just the two most popular. Here’s a list of some other programs that you should research.

  • SBA Express Bridge Loans
  • SBA Debt Relief
  • Employee Retention Credit
  • Family First Coronavirus Relief Act (FFCRA)

Again, the landscape of relief programs and options is rapidly changing. This is an overview of the current federal programs, but more options may be available to you on a state or local level. It's vital to stay on top of the programs available to support you during this time and your general finances. Learn more about ways banks, mobile providers, and credit card companies are helping here from Lexington Law.

During stressful financial times, fraud has a tendency to increase too. All three credit bureaus are offering free weekly access to your credit report. Now is a good time to get in the habit of monitoring your accounts weekly. If you believe there are unfair, inaccurate, or unsubstantiated items on your credit profile, contact Lexington Law today for your free credit repair consultation here. They've also rounded up some ways banks and credit card companies are helping consumers during the pandemic; read about them here.