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What Freelancers Need to Know About the CARES Act and Families First Coronavirus Response Act
By Philip Garrity March 25th, 2020The latest Wall Street estimates sizing up the economic toll of coronavirus are grim: millions of new unemployment claims, record drops in business activity, shrunken global GDP. Freelancers are eyeing the fallout with especially weary eyes.
Freelance contracts are easy targets for budget cuts inside businesses large and small. That makes it hard for freelancers to build a safety net besides a spouse with a full-time job or an emergency fund. Too often, freelancers are left out of the national dialogue around job security and rescue packages.
But thankfully, there’s hope during this crisis. The Families First Coronavirus Response Act and the CARES Act have some important provisions for self-employed people affected by COVID-19, and there’s other aid in the flurry of government attempts to stem the financial pain for Americans.
Here’s what freelancers need to know as infections rise and gigs dry up.
(Note from Ed: We’ll update this post when and if more relief becomes available.)
Families First: Sick and family leave for the self-employed during coronavirus
On March 18, President Trump signed into law the Families First Coronavirus Response Act, which provides credits for the self-employed that can be claimed against your federal income tax bill. If the credit winds up being more than what you owe in taxes, you’ll get a check from the government for the difference.
Sick leave
Those who get sick due to coronavirus and are forced to quarantine or seek diagnosis can claim either their average daily income (annual earnings divided by the 260 working days in a year) multiplied by the number of eligible sick days, or $511 per business day up to 10 days for a maximum of $5,110—whichever is less.
Caring for family
If a member of your family is sick due to coronavirus or your child requires care due to school closures, you can claim up to 67 percent of your average daily earnings, or $200 per day up to 10 days for a maximum of $2,000—whichever is less.
Emergency family leave
The act helps self-employed coronavirus-affected taxpayers for up to 50 days of emergency family leave. You can claim up your average daily income for the length of the emergency period, or $200 per day up to $10,000—whichever is less.
CARES Act: Pandemic unemployment benefits for freelancers
In a sign of how dire the circumstances are, the CARES Act took the bold (and very important, if you ask us) step of extending “pandemic unemployment benefits” to self-employed folks.
The CARES Act grants unemployment benefits to independent contractors and gig workers who lose work due to one or more of the following COVID-19–related reasons:
- the individual has been 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] is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 2107 and meets the requirements of subclause (I)
How much can you get? That varies by state, but is likely to be based on historical earnings plus an extra $600 from the federal government.
These instructions from the U.S. Department of Labor can help you get started.
A delayed tax-filing deadline could spell coronavirus relief for the self-employed
Federal income-tax returns are due on July 15 this year, as opposed to the regular April 15 deadline. No extension request is necessary. This could make a big difference for freelancers who are left with no choice but to dip into money set aside for estimated taxes.
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Photo Credit: sorbetto