What Does the $2 Trillion Relief Bill Mean for 1099 Workers?
As many of us self-isolate during the COVID-19 pandemic, millions of Americans — including many gig workers whose jobs require them to interact in-person with customers — are suddenly bringing home little to zero income.
Some good news? Many people will qualify for financial aid over the next few months as a result of the federal government’s 2 trillion Coronavirus Stimulus Package (CARES Act).
Stimulus Checks: Cash Sent to You
As part of the Coronavirus Stimulus Package, the federal government is sending money directly to many Americans. If you’re eligible, you’ll receive one payment based on your family size and income.
Your check is essentially a 2020 tax credit paid to you in advance, which means you will not be taxed on the money you receive.
Who Gets a Check – And For How Much?
Eligibility for your stimulus check depends on your family size and income. The IRS will find this information in either your 2018 or 2019 tax return, whichever is most recent.
How the Payments Work
If you are single, married filing separately, or a widower:
If you are married filing jointly:
You can use this subsidy calculator for an idea of how much your family will receive.
In addition to income, your family will need to meet a few requirements:
Social Security Numbers: Everyone in your family must have a Social Security Number. Exceptions apply to adopted children who have an Adoption Taxpayer ID Number and married members of US Armed Forces.
Children Age Limits: Children are only eligible for a stimulus money if they are also eligible for the Child Tax Credit. This means they are age 16 or younger.
If you haven’t filed your 2019 taxes yet and the government bases your check on your 2018 income, you may receive less money that you should have. Don’t worry: All discrepancies will be cleared up when you file your taxes in 2020, and you’ll receive the money later on.
How Will I Get the Check?
The IRS will use your tax returns to find your banking information and deposit your relief money directly into your bank account. If the direct deposit is rejected, the IRS will then send you a paper check in the mail.
Mailed checks will be delivered to your most recent address on-file with the IRS. If you have moved since last tax season, file a Form 882 with the IRS, as well as a change of address notice with USPS, to ensure your check is sent to the right place.
Warning: Watch Out for Scams!
The IRS does not contact taxpayers via calls, texts, or emails. If anyone demands that you share personal or financial information in order to get your check, it is a scam. You can read this FBI press release about other possible COVID-19 scams to avoid.
Unemployment Assistance: New Support for Gig Workers
Gig workers and freelancers are not typically eligible for unemployment benefits. However, under the Coronavirus Stimulus Package, 1099 workers can temporarily apply for unemployment insurance. Also called Federal Pandemic Unemployment Compensation, this benefit offers up to 13 weeks of financial support; it includes an extra $600 (in addition to whatever money your state offers you) for every week you don’t make money.
Example: Let’s say you qualify for $200/week in unemployment insurance from your state. The federal government will contribute an additional $600. That means you’ll start receiving $800 per week that you are unemployed.
The amount of unemployment insurance you qualify for depends on your income, as well as your state’s unemployment laws. Keep in mind that as this regulation is quite new; most states are still waiting for guidance on how to administer unemployment insurance to gig workers. Reach out to your state’s agency for more information.
What Is An Economic Injury Disaster Loan?
The Small Business Administration’s new Economic Injury Disaster Loans (EIDL) are designed to provide economic relief to small businesses during this pandemic. Independent contractors are eligible for these loans, too!
When you apply for the EIDL, you can request a $10,000 “advance grant.” This is money you will receive whether or not your loan application is approved, and you will not need to pay it back.
Loans can provide up to $2 million of financial assistance. If you are approved for a loan greater than the advance grant, you must pay it back at 2.75 to 3.75 percent over 10 to 30 years. You may need collateral or personal guarantees depending on the loan size. Payments can be deferred for up to one year.
How can I use my EIDL?
EIDLs must be used for:
Paid sick leave to employees
Maintaining payroll (including your own income)
Increased costs and unmet obligations
Rent or mortgage payments
How do I apply for an EIDL?
You can apply on the SBA website here. The application process will take about two hours. We recommend completing your application as soon as possible since funds are limited!
You will be asked to provide:
Personal financial information, including sources of income, personal assets (home, cars, etc.), and debts (mortgages, loans, etc.)
Business information, including the money you’ve earned this year minus business expenses
Business owner information, including Social Security Numbers, birthdays, citizenship status, in order to request your tax returns
Your business’s federal tax return
Bank account information
Be sure to check the box indicating you’d like the $10,000 advance before submitting the application!
If you have additional questions about the application process, the SBA has a step-by-step visual guide available here.
Get the Help You Need
In addition to your stimulus check and unemployment insurance, there are several programs available to support you financially and physically during this difficult time. This includes extended sick pay from platforms like Lyft and Instacart. View your resources in our COVID-19 guide here.
You can also reach out to our team anytime with health insurance and/or tax questions.
For additional COVID-19 resources, please visit our guide here.
