Here’s a summary gathered from various national news publications, as well as IRS and NYS Labor guidance documents issued since the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was approved on March 27. Advisory documents are being issued and updated daily by the IRS and U.S. Department of Labor.
Individuals
Anyone who filed a 2019 or 2018 tax return and has a social security number is eligible for an “economic impact payment” check from the federal government for up to $1,200 per adult plus $500 per child under the age of 16. Individuals who earned between $75,000 and $99,000 in adjusted gross income (or $150,00 to $198,000 for a couple that filed a joint return) would receive a benefit; above $98,000 per person, there is no benefit. These payments will not be subject to income tax.
Payments will be made automatically by the IRS based on income tax information from 2019 or 2018. Recipients can expect a notice in the mail that the payment has been made. Those who did not file a tax return file a simple return for 2019 to be eligible for the $1,200 benefit. Senior citizens, Social Security recipients and railroad retirees who are not required to file a tax return need do nothing – the IRS has other information it will use for them.
Those eligible could receive a check as early as April 17, according to Treasury Secretary Steven Mnuchin. Here is a calculator developed by the Washington Post to help you determine how much you are eligible for. Checks can be deposited directly into individuals’ bank accounts or can be mailed to the address on their tax returns. Further information can be found on the IRS COVID website.
Unemployment Insurance
Unemployment typically covers people who have lost their job through no fault of their own and pays an average benefit of 30-40% of the weekly wage for up to 26 weeks. Anyone on unemployment or who recently exhausted their unemployment benefits is eligible for an additional 13 weeks of unemployment payments plus a weekly payment of $600 until July 31, 2020. The additional $600 will not be counted towards someone’s income eligibility for Medicaid or CHIP, the Children’s Health Insurance Program.
For the first time, self-employed and “gig” workers will be eligible to file for something called Pandemic Unemployment Assistance if they meet a range of COVID-related criteria, with benefits roughly half of the average weekly unemployment benefit of NYS. These PUA benefits can extend for 39 weeks and can be retroactive to January. Eligible self-employed workers will also receive the $600 weekly benefit. Most part-time workers be eligible for partial unemployment benefits in NYS if they work less than four days a week and receive less than $540 in compensation. For every day or part of a day worked, the benefit would drop by one-quarter.
Those unable to work because their employer shut down, they became ill, or had to take care of an ill family member, or a child who could not attend school, are also eligible for benefits plus the $600 extra – unless they are receiving paid sick or family leave from their employer. Employees able to work from home are not covered, nor are new entrants to the workforce who are unable to find a job because of the pandemic. Further information can be found here.
Help for Small Businesses
Small businesses with fewer than 500 employees may apply for zero interest loans that, effectively, convert to grants if a business can show the money was used to cover employee salaries, mortgages, rent or utilities, and worker protection programs such as paid leave for employees and health insurance premiums. Nonprofits are also eligible to apply for these funds. Businesses with tipped employees, such as bars or restaurants, can have their loans forgiven if the funds are used to provide additional wages for employees. Some loans may have to be paid back. Eligible employers may borrow up to 2.5 times their monthly payroll, or $10 million, whichever is lower.
The Families First Coronavirus Response Act approved a week before the stimulus package gives businesses with fewer than 500 employees tax credits to provide employees with paid sick and family leave for COVID-19 related reasons. Workers who are sick or need to care for family members may receive up to 80 hours of paid sick leave, and up to ten more weeks of paid family leave for a child whose school has been closed or whose caretaker is not available because of COVID-19. Some self-employed individuals are eligible for similar credits under the same circumstances. This will make funds quickly available to small employers because, in anticipation of claiming the credits, eligible employers can access federal employment taxes they otherwise would have had to deposit. Those include federal income taxes withheld from employees, employees’ share of social security and Medicare taxes, and the employer’s share of those taxes. For further information from the IRS, click here.
Business owners or non-profit organizations impacted by COVID-19 also are eligible to apply for a Small Business Administration Economic Injury Disaster Loan of up to $2 million. Those who apply are eligible for an immediate cash advance of $10,000. The advance is available even if the loan application is denied, and does not have to be repaid if it is spent on “maintaining payroll and other operating expenses.” The application is available here. The SBA has said funds would be available within three days of applying for the loan. The advance request is located at the bottom of the loan application.
Other tax changes for small businesses
Businesses and tax-exempt organizations that either suspend operation because of governmental orders limiting commerce, travel or group meetings, or who experience a significant decline in gross receipts during a calendar quarter in 2020, are eligible for an employee retention credit. The credit equals 50% of wages and health plan expenses they pay in a quarter. The maximum credit allowed is $5,000 per employee. A significant decline is defined as when gross receipts for a quarter in 2020 are less than 50% of gross receipts in the same quarter in 2019. In anticipation of receiving the credits, eligible employers can access quarterly taxes they normally would pay to the IRS. If credits exceed the amount of taxes owed, the employer can file a “refund” request with the IRS.
Employers may also opt to spread out over the next two years the 6.2 percent payroll taxes due for their employees annually, with the first payment due in December 2021.
This story was updated on Apr. 4.
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