Do you have a self-employed business that you file on Schedule C of your Form 1040? As you are probably aware, self-employed people do not receive special government assistance in times of economic hardship, such as the COVID-19 pandemic. You do not, for example, have access to benefits that employees do, such as unemployment and paid sick leave. This time, however, things are different. You could be qualified for the following seven advantages as a result of the COVID-19 pandemic: PPP funds. Self-employed entrepreneurs without any employees are eligible for forgivable first- and second-draw PPP monies of up to $20,833 per draw, for a total of $41,666.
These funds will be eligible until May 31. If you haven't already done so, apply now. If you have a PPP loan already, you could qualify for a second-draw loan if your income in 2020 decreased by 25% compared to the same quarter in 2019. EIDLs. These non-forgivable 3.75 percent interest loans of up to $500,000 are available to self-employed people. You can get a loan for up to $25,000 with no collateral. Prior EIDL Advances. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, signed into law on December 27, 2020. This repealed the clause that required the SBA to reduce your PPP forgiveness by the amount of your EIDL advance. Now the SBA is to refund your advance if your loan forgiveness has already been reduced by it. New Targeted EIDL Advances. Suppose your company is located in a low-income community and experienced a 30% reduction in sales starting March 2, 2020, and lasting over eight weeks. In that case, you might be eligible for a Targeted EIDL Advance of up to $10,000. Targeted EIDL Advances, unlike EIDLs, do not require repayment. They are tax-free grants from the government. Sick and family leave tax credits. You could be eligible for refundable sick leave and family leave tax credits of up to $15,511 in 2020 and $17,511 in 2021 if you cannot work due to COVID-19 or if a family member needs to be cared for by you. If you're sick, you can get up to $511 a day for ten days. If you need to care for someone, you can get up to $200 a day for 70 days. These credits will be valid until September 30, 2021. ACA premium tax credits. For 2020 and 2021, Congress eliminated the subsidy cliff (400 percent of the federal poverty level). During those years, ACA coverage will not cost more than 8.5% of your household income. If your midlevel silver ACA coverage reaches this limit, you are eligible for premium tax credits. Unemployment for the self-employed. Self-employed people will also be eligible for unemployment insurance. The program for Pandemic Unemployment Assistance has been extended until September 6, 2021. And if you have a low or no salary, you would be eligible for unemployment benefits. Please contact us at 262-358-8297 if you have any questions or need our assistance.
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances. AuthorKeana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients. |