{"id":47188,"date":"2021-02-08T04:08:00","date_gmt":"2021-02-08T09:08:00","guid":{"rendered":"https:\/\/thestoryexchange.org\/?p=47188"},"modified":"2021-04-27T09:41:21","modified_gmt":"2021-04-27T13:41:21","slug":"3-covid-19-tax-breaks-financial-relief-for-the-self-employed","status":"publish","type":"post","link":"https:\/\/thestoryexchange.org\/3-covid-19-tax-breaks-financial-relief-for-the-self-employed\/","title":{"rendered":"3 Covid-19 Tax Breaks, Financial Relief for the Self-Employed"},"content":{"rendered":"\n
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Looking for financial assistance for your business? Barbara Weltman can help. (Credit: Engin Akyurt<\/a> from Pixabay<\/a>)<\/figcaption><\/figure>\n\n\n\n

Much of the government relief provided to small businesses was keyed toward their employees. They could qualify for the SBA\u2019s EIDL grant of $1,000 per employee (up to a max of $10,000). They could claim a tax credit for keeping employees on the payroll (\u201cemployee retention credit\u201d). And employees could avail themselves of a number of breaks, including regular and extra unemployment benefits, paid sick leave, and paid family and medical leave (paid via the employers\u2019 employment tax credits).<\/p>\n\n\n\n

But what about self-employed individuals\u2014independent contractors, freelancers, and gig workers\u2014who work alone, without any employees? What breaks do these self-employed individuals qualify for? <\/p>\n\n\n\n

Various relief is available. Here’s a roundup. <\/p>\n\n\n\n

[Related: Coronavirus Crisis Coverage from The Story Exchange<\/a>]<\/em><\/p>\n\n\n\n

1. Financial Assistance<\/h2>\n\n\n\n

Self-employed individuals are eligible to request PPP loans, EIDL loans, and direct payments to \u201cshuttered venue operators,\u201d such as talent agents representing live performers. Because self-employed individuals do not receive salaries, special rules determine their \u201cpayroll costs\u201d for these programs (\u201clost 1099 income\u201d). Essentially, the amount of net earnings from self-employment is capped at $100,000.<\/p>\n\n\n\n

Self-employed individuals can apply for PPP loans, round 2 PPP loans, EIDLs, and direct payments to \u201cshuttered venue operators.\u201d Nav has guidance<\/a> for self-employed individuals on applying for these programs now.<\/p>\n\n\n\n

2. Tax Credits Equivalent to Employer Credits for Paid Sick Leave and Paid Family Leave<\/h2>\n\n\n\n

Small employers were required to provide paid sick leave and paid family leave to employees impacted by COVID-19 (e.g., being ill from it; having to care for a child whose school or daycare center was closed because of the pandemic). Employers paid for these employee benefits through employment tax credits. These credits are extended through March 31, 2021.<\/p>\n\n\n\n

[Related: What Does Furlough Mean?<\/a>]<\/em><\/p>\n\n\n\n

Self-employed individuals impacted by the pandemic like employees<\/a> are eligible for income tax credits equivalent to the employment tax credits of employers. The credit is based on average daily self-employment income from net earnings for the period. For 2020, this can be determined by dividing annual net earnings by 260. You can elect to use your average daily self-employment income from 2019 in figuring your 2020 credit amounts. Their credits can also run through March 31, 2021, which should be factored into estimated taxes for 2021.<\/p>\n\n\n\n

The credit for self-employed individuals is figured on new Form 7202<\/a>. You can find more information in IRS FAQs (#60-#68)<\/a>, including how to figure the credit if a person also received employee benefits through a job and guidance on the documentation establishing eligibility for the credits that must be maintained.<\/p>\n\n\n\n

3. Pandemic Unemployment Assistance (PUA)<\/h2>\n\n\n\n

By definition, self-employed individuals are not employees and do not qualify for unemployment (they aren\u2019t employed so they can become unemployed). However, Congress created some assistance to self-employed individuals who find themselves unable to work because of the pandemic. The federal assistance is administered through state unemployment programs.<\/p>\n\n\n\n