COVID-19 Relief Programs
Are you eligible for COVID-19 relief programs? Check out this detailed list of programs to see if you and your business qualify.
This is a diversion from my normal newsletter and is based on the current situation in the world today due to the COVID-19 pandemic. It has come to my attention that many individuals and business owners, including artists, are unaware of the various COVID-19 relief programs available to them today. My goal is to shed some light on these programs in the hope they will guide you through these uncertain times.
The $1.9 trillion relief package signed by President Biden on March 11, 2021, opened up additional opportunities to help those in need. While the Paycheck Protection Program (PPP) has been helpful to literally millions of businesses, some hard-hit industries need additional help, and they are now getting it through the American Rescue Plan.
Please keep in mind this information is changing rapidly and is based on my current understanding of the programs as of March 21, 2021. I will provide updates in RED as additional information becomes available.
Stimulus
The third stimulus bill includes payments of up to $1,400 for qualifying individuals who make $75,000 or less per year. A family of four could get $5,600. Find out the status of your stimulus payments at Get My Payment on the IRS website. Or call (800) 919-9835 for more information.
Unlike the previous two rounds, you will receive stimulus payments for all your dependents, including adult dependents and college students.
Although you may want to file your 2020 return now in order to provide your most recent information to the IRS, including bank account information, you don’t need to do anything to get your stimulus check. The IRS will determine eligibility based on your last tax return, either 2019 or 2020, and will likely send your payment to the bank account where your tax refund was deposited.
EIP Debit Card
An Economic Impact Payment (EIP) card is a prepaid debit card the US Treasury distributes as stimulus payments. The cards are provided to eligible US residents when the government doesn’t have banking information for them. They will arrive in a non-descript envelope so be sure you don’t toss it.
These Visa debit cards can be used to make purchases, get cash from ATMs and transfer funds to your personal bank account without a fee. If you receive one, head to the EIP card website to activate it.
Taxes
IRS Tax Deadline – Time to File Extended to May 17, 2021
The IRS has extended the federal tax-filing deadline for individuals for the 2020 tax year from April 15, 2021 to May 17, 2021. The IRS will be providing formal guidance in the coming weeks.
Business Tax and Estimated Tax Payments
Business and estimated tax payment deadlines were NOT extended and are still due on April 15, 2021.
Montana State Tax Deadline
On March 18, 2021, the State of Montana extended the tax filing date to May 17, 2021.
Unemployment Tax Break
Unemployment Tax Break of $10,200
Your unemployment insurance benefits are considered taxable income. However, as part of the new relief legislation, federal taxes are waived for up to $10,200 for the 2020 tax year, provided you made $150,000 or less. Your state may or may not tax your unemployment benefits. By now you should have received a 1099-G for the tax year 2020 which includes all payments received from regular unemployment, pandemic, and additional benefit funds.
According to an article in Forbes, if you are single with an adjusted gross income (AGI) of $70,000 and you received $15,000 of unemployment benefits during the 2020 tax year, you would enter $15,000 on Line 7 and report negative $10,200 (as -$10,200) on Line 8 of your Schedule 1 of your federal tax return. The IRS will only tax you on $4,800 for the 2020 tax year. See the example below.
Hold Off on Filing Your 2020 Taxes
If you use Turbo Tax or another tax software program, you may want to wait for them to reprogram their software to include the new $10,200 tax relief for unemployment income. This could amount to significant tax savings for you.
According to the Wall Street Journal, the IRS is asking taxpayers who have already filed to NOT resubmit their tax returns because it plans to issue a second refund to them automatically. IRS Commissioner Charles Rettig told lawmakers on a House panel that the organization understands how complicated this tax season already is. “We believe that we will be able to automatically issue refunds associated with this new exemption,” Rettig said.
Unemployment
Unemployment Boost of $300 – Extends to September 6, 2021
As a result of the recently passed relief package, a $300 weekly boost was approved and extends to September 6, 2021. Be sure to apply, re-apply, certify or re-certify in your state.
Mixed Earners Unemployment Compensation (MEUC) – Montana Only – Extends to September 4, 2021
If eligible, an additional $100 could be added to your weekly unemployment insurance benefits for weeks beginning December 27, 2020, through September 4, 2021.
Qualifications to Receive MEUC:
- Must have received at least $5,000 in annual self-employment income in the most recent taxable year prior to their regular unemployment compensation application.
- Be receiving an unemployment benefit other than Pandemic Unemployment Assistance.
- Submit documentation substantiating their self-employment income.
PUA
PUA – Benefits Extended to September 4, 2021
Pandemic Unemployment Assistance (PUA) program offers relief for sole proprietors, gig workers and those not traditionally eligible for aid. This means that self-employed, freelancers and gig workers will continue to be eligible for unemployment through September 4, 2021.
You may qualify for PUA if you are not eligible for regular Unemployment Insurance (UI) and you are unemployed or partially unemployed for a COVID-19 reason permissible under federal law. This includes:
- Business owners.
- Self-employed workers.
- Independent contractors.
- People with a limited work history.
- People who have used all their regular UI benefits as well as any extended benefits.
PEUC
PEUC For Gig Workers – Benefits Extended to September 4, 2021
Pandemic Emergency Unemployment Compensation (PEUC) s a temporary program that provides up to 53 additional weeks of payments to individuals who have exhausted their regular Unemployment Insurance benefits. PEUC was extended to March 14, 2021, and the number of weeks that an individual can claim PEUC benefits has been increased from 13 to 24 weeks.
EIDL Loan
3/24/21 – Update
The SBA is increasing the maximum amount small businesses and non-profit organizations can borrow through its COVID-19 Economic Injury Disaster Loan (EIDL) program. Starting the week of April 6, 2021, the SBA is raising the loan limit from 6-months of economic injury with a maximum loan amount of $150,000 to up to 24-months of economic injury with a maximum loan amount of $500,000.
Businesses that receive a loan subject to the current limits do not need to submit a request for an increase at this time. SBA will reach out directly via email and provide more details about how businesses can request an increase closer to the April 6 implementation date. Any new loan applications and any loans in process when the new loan limits are implemented will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000.
EIDL – Non-Forgivable Loan – Deadline to apply December 31, 2021
This non-forgivable Economic Injury Disaster Loan (EIDL) provides economic relief to small businesses that are experiencing a temporary loss of revenue. Unlike the PPP, EIDL grants and loans are directly administered by the SBA.
Terms for this loan:
- 3.75% for businesses (fixed)
- 30-year maturity
- No pre-payment penalty or fees
- Collateral required for loans over $25,000
Where To Apply – The SBA is currently accepting new COVID-19 EIDL loan applications from all qualified small businesses, including agricultural businesses, and private nonprofit organizations.
EIDL Advance
EIDL – Targeted EIDL Advance $10,000 Forgivable Grant – Deadline to apply December 31, 2021
The EIDL grant provides $10,000, completely free and non-repayable money, to select small businesses. As of this update, the SBA is not yet taking applications for EIDL Targeted Grants, but keep your eyes on their COVID-19 EIDL application page for when it opens. The SBA is reaching out via email to those who qualify, already applied, and did not receive the full $10,000.
Eligibility – You are eligible if your business has 300 or fewer employees, your business is located in federally identified low-income communities, and can demonstrate more than a 30% reduction in revenue.
How to Determine 30% Loss – Take an eight-week period between March 2, 2020 and December 31, 2021 and compare it to a comparable eight-week period in 2019.
Is Your Industry Eligible? Eligibility includes many businesses, agricultural enterprises, religious and government-owned concerns, businesses considered hobbies, businesses that get more than a third of their gross revenue from legal gambling activities, and speculative real estate.
Do You Live in a Low-Income Area – Click here to enter your address in the SBA low-income area mapping tool. Yellow means no, you are not in a low-income area.
EIDL Targeted Supplemental Advance
EIDL Targeted Supplemental Advance – Extra $5,000 Forgivable Grant
The American Resource Rescue Plan became effective on March 11, 2021, and expanded access to and funding for Economic Injury Disaster Loans (EIDLs). It provides for an additional supplemental grant of $5,000 to eligible businesses that have suffered more than 50% economic loss and have under 10 employees. This MAY apply to businesses that are NOT in a low-income community. Look for more information on this in the coming weeks.
First Draw PPP Loan
3-25-21 Update:
By a 92-7 margin, the Senate passed a bill on March 25, 2021, extending the deadline for Paycheck Protection Program (PPP) applications until May 31, 2021. This SBA program was scheduled to expire March 31st, a timeline that could have prevented some 190,000 small businesses who have pending PPP applications from securing a loan.
The PPP Extension Act of 2021 also gives the SBA an additional 30 days beyond May 31 to process those loans. The House-passed measure now goes to President Joe Biden for his signature.
First Draw PPP Loan: Filing Deadline MAY BE Extended to May 31, 2021
The American Rescue Plan expands eligibility for some nonprofits, digital news services, sole proprietors, independent contractors, and self-employed individuals, who are now able to receive more financial support, thanks to a revision of the PPP’s funding formula for these categories of applicants.
Schedule C filers are able to use gross income instead of net profit in calculating the maximum amount they can receive in a PPP loan. The House this week approved the PPP Extension Act of 2021, which would extend the application deadline from March 31, 2021 to May 31, 2021. This legislation currently awaits action in the Senate so stay tuned.
Eligibility for your first PPP loan in 2021:
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 500 employees
- If your business has multiple locations, you have no more than 500 employees per location
Second Draw PPP Loan
Second Draw PPP Loan: Filing Deadline May Be Extended to May 31, 2021
To qualify for your Second Draw PPP Loan, Schedule C filers must show that they received and spent the loan proceeds from their First Draw PPP Loan appropriately, and have filed a Loan Forgiveness Form with the issuing bank. Use Form 3508S only if you received a PPP loan for $150,000 or less. Otherwise, use Form 3805EZ. Forms are available on the SBA website.
Eligibility for your second PPP loan in 2021:
- You have used up your first PPP loan
- Your business was operational before February 15, 2020
- Your business is still open and operational
- You have no more than 300 employees
- If your business has multiple locations, you have no more than 300 employees per location
- You can show a 25% or greater reduction in gross revenue
How PPP Funds Can Be Used
The funds from your PPP loan can be used for the following purposes:
- Payroll—salary, wage, vacation, parental, family, medical, or sick leave, health benefits
- Mortgage interest—as long as the mortgage was signed before February 15, 2020
- Rent—as long as the lease agreement was in effect before February 15, 2020
- Utilities—as long as service began before February 15, 2020
- Operations expenditures—any software, cloud computing, or other human resources and accounting needs
- Property damage costs—any costs from damages due to public disturbances in 2020, not covered by insurance
- Supplier costs—any purchase order or order of goods made prior to receiving a PPP loan essential to operations
- Worker protection expenditures—any personal protection equipment or property improvements to remain COVID compliant from March 1, 2020, onwards
Montana Vaccine
Montana Vaccines – Now Open To All
On March 16, 2021, Montana Governor Greg Gianforte announced that all Montanans aged 16 or older are now eligible to receive the Covid Vaccine, beginning April 1, 2021. The Pfizer and Moderna vaccines are the most available at this time.
To set up an appointment, visit https://dphhs.mt.gov/covid19vaccine
JJ the CPA
I follow JJ the CPA on Youtube. He provides expert advice on the latest news and updates on PPP, EIDL, ETRC, and other tax-related information related to the pandemic.
UPDATES
I will post updates in RED as I become aware of them. If you are aware of any corrections to this information, please let me know so I can keep it updated for everyone.
CONTACT
If you found this information helpful, please share it. Contact me directly at kellyscollectiblesmt@gmail.com
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DISCLAIMER
This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
Resources
You Likely Won’t Need To Amend Your Taxes To Claim Your $10,200 Unemployment Tax Break
Unemployed Workers Likely Won’t Need to Amend Returns for Tax Break
