Self-Employed Reliefs For Coronavirus In The US

1 - Stimulus Checks

The Senate passed the coronavirus stimulus package, the CARES Act, signed into law on March 27. The act will send $1,200 repayments and checks to eligible individuals and $500 for each child under the age of 17.

To be eligible, if you are single your adjusted gross income (line 8b of the 2019 1040 federal tax return) should be $75,000 or less. If you are married filing jointly the threshold is $150,000.

When you look at the thresholds above - you include your self-employed net earnings (income less expenses). So even if your income is above the threshold, once you claim expenses you may fall below.

If your total income (self-employed net earnings plus all other income) exceeds the thresholds above, the repayment will be reduced by $5 for every $100 of income over the threshold.

Treasury Secretary Mnuchin has said that repayments will start to be issued in 3 weeks. If you will receive a paper check, then the time scale may be up to 8 weeks.

This is a one off payment, it's not a monthly recurring payment - but given the current situation, it is likely that the government will announce further reliefs in the coming months.

Even if you owe past taxes, the repayment will still be issued to you.

The stimulus payments are not taxable and they will not be reclaimed if you are over the income threshold in the future.

Further details of the individual and married filing thresholds can be found here.

2 - Income Tax Deferments

The due date for 2019 tax payments has been extended from April 15, 2020 to July 15, 2020.

You can defer up to $1 million of federal income tax (including self-employment tax) by 90 days with no interest and no penalties.

If you believe you will have a refund, it still makes sense to file as soon as possible so you have the funds now.

The deferral is automatic, you do not need to make a claim.

Each state has its own reliefs and you can view the current guidance for each state here.

3 - Filing Deadline

The new deadline for filing federal returns is July 15, 2020

Each state has different views on extensions and you can view the current guidance for each state here.

4 - Unemployment Insurance

Under changes introduced to help with coronavirus, self-employed people are now eligible to claim unemployment benefits.

As part of the coronavirus relief package, an additional $1 billion has been set aside for unemployment benefits.

The CARES Act also provides an additional $600 per week for 4 months.

5 - Small Business Loans

The CARES Act includes $349 million in loan funding from the Small Business Administration (SBA).

• SBA will issue funding as Economic Injury Disaster Loans up to $2 million

• Low interest rates of 3.75%

• Long-term repayment plans of up to 30 years

6 - Student Loans - Pausing and Interest

All federally held student loans will automatically have their interest rates set at 0% for a period of 60 days from March 13, 2020.

In addition, if you make a request, you can suspend all loan repayments for 2 months during the pandemic. There will be no interest or penalties by suspending the loan repayments.

The US Department of Education will continue to review the coronavirus situation to see if the measures need to be extended.

7 - Homeowners

If your mortgage is owned by Fannie Mae or Freddie Mac, you can delay payments for up to 12 months.

Interest will still apply to the balance of the mortgage outstanding, but there will be no late fees or affect on your credit score for delaying the payments.

Foreclosure and other legal proceedings for eviction are suspended - including any foreclosures and legal actions in process.

If your mortgage is held with other providers, you may still be able to defer payments by 3 to 12 months depending on the company.

8 - Renters

If landlords have mortgages with Fannie May or Freddie Mac, they will not be allowed to evict tenants during the crisis, through to the end of July 2020.

Landlords can not charge any fees or penalties for non-payment of rent during the pandemic.

Each state has it's own guidance for renters where the landlord does not have the mortgage with Fanny May or Freddie Mac - further details here.

9 - Household Bills

For internet and phone accounts, AT&T, Comcast, Cox, RCN, Sprint, T-Mobile and Verizon have all agreed they will not cut-off services during the crisis.

For electricity, gas and water - each company has its own policy, but the government has told them they need to work with consumers. For example, in New York, Con Edison has agreed to suspend all shutoffs for electricity and gas.

If you are experiencing financial difficulty, the first step is to contact the company and ask what reliefs they have in place.

SUMMARY

These measures cover the next 3 months and it is likely that further measures will be provided. The IRS has a dedicated page for support for those affected by coronavirus here.