The Authors Guild continues to engage with federal and state governments to draw attention to the enormous economic pressures that authors and journalists are facing and urge assistance under the various economic stimulus packages as well as with federal and state orders promulgated to deal with the COVID-19 crisis. This is an unprecedented time for all of us and we want to make sure that authors get the aid they deserve like all other workers. In the meantime, we want to inform you about benefits that you may qualify for under the $2 trillion Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was passed on March 27.
In addition to relief from the federal government, some states such as New York are looking to extend unemployment benefits during the crisis to freelancers. While we will do our best to update you on information about state-level relief as it becomes available, we will not be able to track the details of every program in each state and advise you to follow developments in your state.
As always, if you have questions, you can contact us.
I. Assistance for Individuals and Families
Direct Individual Payments
All U.S. residents or citizens with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security number, are eligible for the full $1,200 ($2,400 married) rebate. They are also eligible for an additional $500 per child. A typical family of four is eligible for a $3,400 recovery rebate.
If the Internal Revenue Service already has your bank account information from your 2019 or 2018 returns, it will transfer the money to you via direct deposit based on the recent income-tax figures it already has. If the individual’s direct deposit information has changed or if they want to add it for the first time, please monitor the IRS Economic Impact Payments page for the launch of the Treasury’s web-based portal for individuals to provide their banking information to the IRS to receive checks via direct deposit as opposed to checks in the mail.
The IRS states that it will make about 60 million payments to Americans through direct deposit in mid-April (likely the week of April 13), but be mindful that these deadlines are optimistic and it is still not clear exactly how the program will be implemented and whether it will be charged against 2021 taxes.
The IRS has direct deposit information for these individuals from their 2018 or 2019 tax returns. This will include SSA beneficiaries who filed federal tax returns that included direct deposit information.
Shortly (hopefully within 10 days) after the first round of payments are made in mid-April, the IRS plans to make a second run of payments. These payments will be made to Social Security beneficiaries who did not file tax returns in 2018 or 2019 and receive their Social Security benefits via direct deposit. (The estimates are that nearly 99% of SS beneficiaries who do not file a return receive their SS benefits through direct deposit.)
If you are unsure of what you may receive, please feel free to reference the Forbes Stimulus Check Calculator.
HUD announced a tailored set of mortgage payment relief options for single family homeowners with FHA-insured mortgages who are experiencing financial hardship as a result of the COVID-19 National Emergency. Also included is an extension period for seniors with Home Equity Conversion Mortgages. More information can be found HERE and HERE.
Social Security Recipients
The U.S. Department of the Treasury and the Internal Revenue Service announced that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts. More information can be found HERE.
Unemployment Insurance Provisions
Increased Unemployment Benefits
For workers eligible to receive unemployment insurance benefits, which typically includes workers who have been furloughed or laid off through no fault of their own, the Act provides a Federal Pandemic Unemployment Compensation boost of up to $600 per week for each recipient. For reference, the current nation-wide average payment is about $385 per week. UI is administered by the states, and the benefits and the implementation will vary greatly from state to state. The $600 boost is in addition the level of benefits under state law and lasts four months from the time of enactment.
The Pandemic Emergency Unemployment Compensation provision of the Act extends UI benefits for 13 weeks beyond what is normally provided, expiring on December 31, 2020. If a recipient’s state does not allow for unemployment benefits to be received in the first week of unemployment, the Act also provides funding to cover the first week, allowing recipients to begin receiving the benefits immediately.
Expanded Eligibility for Those Who Do Not Receive W-2s
The Pandemic Unemployment Assistance provision of the Act makes self-employed workers, independent contractors, and freelancers (generally all those who work on a 1099-basis) eligible to receive unemployment compensation. It also covers workers who do not have a long-enough work history to qualify for state UI benefits, workers who have exhausted their standard state UI benefits, part-time workers, those who had to quit their job because of the virus (including to care for a family member), and those whose employer is forced to close due to the virus. The $600 per week increase mentioned above also applies to this program. The program will last through December 31, 2020.
To be eligible for PUA, an individual must self-certify either that the individual is unemployed, partially unemployed or unavailable to work because of one or more of the following COVID-19 related reasons:
- The individual is diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- A member of the individual’s household has been diagnosed with COVID-19;
- the individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19;
- A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;
- The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
- The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
- The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
- The individual has to quit his or her job as a direct result of COVID-19;
- The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency; or
- The individual meets any additional criteria established by the Secretary for unemployment assistance under this section.
The Secretary of Labor has created additional criteria (reason 11) to clarify that 1099 workers are eligible for PUA if the “COVID-19 public health emergency has severely limited" their ability to "continue performing customary work activities, and has thereby forced [them] to suspend such activities." This additional criteria was created to allow applicants who otherwise cannot self-certify to one of the ten specifically listed COVID-19 reasons, but have nevertheless suffered severe consequences as a result of the COVID-19 epidemic, to be eligible for PUA. There’s some indication that the additional criteria may be limited to those freelance workers whose work activities have been severely limited because they cannot travel as a result of shelter-in-place orders. The Authors Guild and other creator and freelance groups are seeking clarification. Nonetheless, pending further guidance, if you believe that your work has been “severely limited” because of the COVID-19 public health emergency, you may use this criteria for your PUA claim.
Another thing to note about the PUA is that self-employed workers, independent contractors, and others who are "able to telework for pay" or who are receiving paid or sick leave may not be eligible to receive PUA. But if you are caring for children (reason 4) or a sick family member (reason 3), and these additional responsibilities have hampered how much you can work as a writer (such as by limiting the number of assignments you can take on), then you may self-certify that you are not "able to telework for pay." In other words, having the technical capability of performing your work from home does not by itself disqualify you from applying for and receiving PUA. You can claim that you are unable to telework for pay because under one of the eleven reasons.
Keeping documentation about your previous income and wages as a freelancer, independent contractor, or self-employed worker is important and will help you while filing for unemployment. Keep documentation both about how you get your money and how much you have been paid per month in the past (old tax returns and invoices are good examples; see this VOX article for more details).
Funding for Pro-Rated Benefits
The Act also provides funding for a “short-time compensation” (STC) program, allowing individuals to receive a pro-rated unemployment benefit if their hours have been reduced. The program provides 100% federal funding for states that already have an STC program and 50% of the cost for states that choose to begin one. This provision will last through December 31, 2020.
The Secretary of Labor has been given the authority to enter into agreements with the states already administering UI programs to determine the method of funding the program. The Act states that the Secretary has the authority to determine whether to provide funding in advance or through reimbursement. The funding will also cover “any additional administrative expenses incurred by the state by reason of such agreement.”
See the links below for more resources on unemployment benefits.
Applying for Unemployment Insurance Benefits, Including PUA Benefits (click hyperlink and go to appropriate state in dropdown box on the bottom of page)
II. Assistance for Small Businesses, Including Sole Proprietorships (Self-Employed Persons)
Paycheck Protection Program Loans
The Paycheck Protection Program allows small businesses (500 or less employees) and eligible nonprofit organizations, veterans organizations, and tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, to receive low interest loans through the Small Business Administration.
Sole proprietors and independent contractors can use PPP loans to compensate for their lost income from self-employment ( “owner compensation replacement”), and do not need a payroll process in place to be eligible for a PPP loan as self-employed individuals.
The full principal amount of the PPP loans and any accrued interest qualifies for forgiveness as long as at least 75% of the loan is used for payroll expenses (including owner compensation replacement) and the remaining is used for qualified business expenses.
Below is a list of helpful resources related to this program:
- Authors Guild PPP Guide
- A top-line overview of the program
- More information for borrowers
- U.S. Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist
- Borrower application
- Paycheck Protection Program—Interim Final Rule
- SBA Paycheck Protection Program website
- Department of the Treasury CARES Act website
Economic Injury Loans
The CARES Act also makes additional funds available for Economic Injury Disaster Loans (EIDLs) for small businesses and including sole proprietors. Borrowers can use both EIDL and PPP loans as long as the loans are not duplicative and not used for the same purpose. This means that a borrower using an EIDL to cover payroll expenses cannot also get a PPP to cover payroll for the length of the forgiveness period (eight weeks from when the loan is due). The borrower must use the subsequent EIDL or PPP loan for different operating expenses or payroll for a different period.
EIDL Loan Advance: The EIDL program allows approved applicants to receive a $1000 advance per payroll employee, up to $10,000 or ten employees, in addition to an approved loan (Note: these must be W-2 employees; 1099 contractors hired by small businesses or sole proprietors are not considered for purposes of a loan advance). Since the advance is per employee, sole proprietors can get a maximum of $1000. The advance does not need to be repaid and is released upon approval of the loan application.
Links to this program and other helpful resources for small business are below:
- SBA Economic Injury Disaster Loan application
- COVID-19-related tax credits for required paid leave provided by small and midsize businesses
- Treasury and IRS Employee Retention Credit Program
III. General Tax Relief
Summary of Key Individual Tax Provisions
Section 2201. (Individual rebates) (Also see “Direct Individual Payments” above)
All U.S. residents with adjusted gross income up to $75,000 for individuals and $150,000 for joint filers, who are not a dependent of another taxpayer and have a valid Social Security number, are eligible for a $1,200 ($2,400 joint filer) rebate. In addition, they are eligible for an additional $500 per child. Generally, the taxpayer does not need to take any action to receive the rebate. The rebate amount is phased out gradually for single filers with incomes up to $99,000, and for joint filers up to $198,000, with further adjustments for filers with children.
Section 2202. (Penalty-free retirement account withdrawals) (More info HERE)
The 10% penalty for early retirement account distributions is waived for up to $100,000 in withdrawals for coronavirus-related purposes made in 2020. Income attributable to those distributions would be taxed over three years, and the funds may recontributed to a retirement plan within three years without regard to that year’s contributions cap.
Section 2301. (Employee retention tax credit)
A refundable payroll tax credit for 50% of wages is provided to employers whose (1) operations were fully or partially suspended due to a COVID-19-related shut-down order, or (2) quarterly gross receipts declined by more than 50% year-over-year. For employers with over 100 full-time employees, qualified wages are wages paid to employees no longer providing services due to COVID-19-related circumstances. For eligible employers with 100 or fewer FTEs, all employee wages qualify for the credit. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020, through December 31, 2020.
Section 2302. (Payroll tax payment deferral)
There is not a payroll tax holiday. Instead, there is a delay in payment of employer payroll taxes for the period from the date of enactment through the end of the year, without penalty or interest charges. Employers must pay 50% of the deferred amount by December 31, 2021, and the remainder by December 31, 2022.
Sections 2303 and 2304. (Expanded use of net operating losses)
Relief is temporarily granted from the changes made to net operating losses (NOLs) in the 2017 tax act, which had generally eliminated NOL carrybacks and capped NOL carryforwards. The Act provides that a loss from 2018, 2019, or 2020 can be carried back five years. The provision also temporarily removes the taxable income limitation to allow an NOL carryforward to fully offset income. Relief is provided for corporations, pass-throughs, and sole proprietorships.
Section 2305. (Accelerated corporate AMT credits)
The corporate alternative minimum tax (AMT) was repealed as part of the 2017 tax act, but corporate AMT credits were made available as refundable credits over several years, ending in 2021. The Act accelerates the ability of companies to recover those AMT credits.
Section 2306. (Increase in maximum business interest deduction)
The Act temporarily increases the amount of interest expense businesses are allowed to deduct, from 30% of taxable income to 50% (with adjustments) for 2019 and 2020.
Section 2307. (Accelerated write-offs for real property improvements)
The Act allows businesses to write off the cost of certain improvements to real property immediately, rather than over the 39-year tax life of the building. This provision is meant to particularly help the hospitality and retail industries.
Section 2204. ($300 above-the-line charitable deduction)
The 2017 tax act largely wiped out the charitable deduction for the great majority of taxpayers who claim a standard deduction rather than itemize. The provision permits an “above-the-line” deduction (i.e., a deduction for non-itemizers) for cash charitable contributions of up to $300.
Section 2205. (Increase in maximum charitable deduction)
For individuals, the limitation of charitable deductions to 50% of adjusted gross income limitation is suspended for 2020. For corporations, the 10% limitation is increased to 25% of taxable income.