Thanks to Freelancers Union for providing information for this post!
On March 27, the Federal government struck a $2 trillion deal on the third bill to respond to COVID-19 – the CARES Act – the largest aid deal ever in our history. The goal of the bill is to help workers and businesses of all sizes who have suffered the effects of the pandemic.
One of the provisions of the bill extends unemployment benefits for individuals who lose jobs or face reduced hours due to the coronavirus crisis and subsequent social distancing measures. Though these benefits are typically for employees only, the bill includes provisions for freelancers and independent contractors. Below is a list of benefits that are available through the CARES Act.
Unemployment Insurance
- Along with employees who lose their jobs, freelancers and contractors are eligible to claim unemployment benefits for an extended period of time (up to four months) and can start receiving them as soon as they qualify.
- Weekly payouts increased by $600.
- Workers can also receive “Emergency Unemployment Compensation” for 13 additional weeks on top of states’ standard programs.
- Application requirements vary by state, for more information click here.
One-Time Stimulus Check
- The law allows individuals who qualify to receive a direct cash payment of up to $1,200 for each adult ($2,400 for couples), plus $500 for each child if they meet the income limit of $75,000.
- The individual checks start to phase out from $75,000 to $99,000 ($150,000 to $198,000 for couples filing jointly).
- Eligibility is calculated on your 2019 income tax returns, or 2018 if your most recent returns are not available.
- The payment will be reconciled with your 2020 tax returns.
Paycheck Protection Program
- Under the CARES Act, this program aims to provide up to eight weeks of cash-flow assistance to small businesses through 100 percent federally guaranteed loans.
- SBA will distribute the $350 billion in loans, and companies that meet certain requirements can have the loans forgiven.
- To help already laid-off workers go back to work, the program is retroactive to February 15, 2020.
- Only companies with fewer than 500 employees will have access to these loans; freelancers, independent contractors, and sole proprietorships are all eligible.
- Businesses can qualify for a maximum loan amount of $10 million, depending on their average monthly payroll costs.
- The loans have a maturity rate of 2 years and an interest rate of 0.5%.
- Businesses can use the funds to cover eight weeks of expenses and payments toward debt obligations. Expenses covered under the program include:
- Payroll
- Employee commissions and tips
- Healthcare benefits
- Business mortgage, rent, and utilities
- Debt obligations on previous loans
- The legislation also temporarily increases the maximum amount for an SBA Express loan from $350,000 to $1 million through December 31, 2020
Paid Sick Leave & Family Leave
- The CARES Act provides a tax credit that is equivalent to paid sick leave for self-employed workers. The credit can be claimed from April 1st until the end of the year and covers 10 days of sick leave – although you don’t need to be ill to claim it.
- If you are unable to work due to caring for someone else, you can claim a smaller sick-leave credit that covers 67 percent of your daily earnings, up to $200 a day.
- The bill also provides a caregiving leave credit for those whose children’s school or childcare has closed. It applies for 67 percent of your daily earnings, up to $200 a day, but can be claimed for 50 days.
Taxes
- If you are self-employed, you are allowed to delay payroll taxes until October 15, 2020.
- Under the CARES Act, self-employed workers are allowed to pay only half of the Social Security portion of their self-employment taxes this year, paying them instead in two installments at the end of 2021 and 2022.
For up-to-date information related to pandemic relief, check out our COVID-19 resource page.