Zombies! Well, not yet, but would you really be surprised if they came munching down the street at this point? COVID-19 is playing out like a bad disaster movie, although you have to credit humanity to the extent we’ve seen almost no civil unrest in the form of looting or rioting [knock on wood.].
A good bit of helpful information on how to deal with COVID-19 has been published online in various places, so I thought it might be helpful to provide a summary of what exists as of April 1, 2020. Government agencies will no doubt publish more information in the future, but at least this gives you a start.
CARES Act Stimulus Checks
The CARES Act is the $2.2 trillion federal law enacted in the middle of March to pump money into the economy. It contains a variety of funding efforts, but most people are interested in the stimulus check in the short term.
The IRS has put out a statement on what to expect. The short and sweet of it is check and electronic deposits to your bank account should start around April 21, 2020. You will receive the payment quicker if you have provided the IRS with a bank account number when filing your 2018 or 2019 tax returns. If you didn’t, the IRS will be launching an online page where you can submit bank account information, but I don’t have a domain for you at the moment as the page isn’t up. I suggest checking the IRS home page every few days for news.
How much will you get? The IRS summarizes the situation nicely.
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.
2019 Tax Returns
Personal and federal tax returns are typically due on April 15th. The federal government has extended this period to July 15th. There will be no penalties or interest associated with filing in July.
However, make sure your state has also extended the time to file. Some have not. For example, Idaho only extended specific returns to June 15th, while Mississippi only extended its filing period to May 15th. New Jersey is offering no extension at all – taxes are due April 15th. One would think many of these lagging states will provide additional time, but make sure to keep an eye on the conduct of your local politicians.
Financial Help For Your Business
Start by checking your state and local business resources for assistance. Depending on your location, the options for financial assistance can be very helpful. Here are just a few programs of note that provide cold, hard cash in these interesting times:
- Restaurant Workers’ Community Foundation COVID-19 Relief Fund
- Bartender Emergency Assistance Program
- One Family, Los Angeles
- San Francisco COVID-19 Small Business Resiliency Fund
- Los Angeles City Small Business Emergency Microloan Program
- Freelancers Relief Fund
- One Fair Wage – Emergency Coronavirus Tipped & Service Worker Support Fund
- Napa Valley Emergency Financial Assistance Program
- The Workers Fund
- Apron Inc. Emergency Fund for Restaurant Workers
From a federal perspective, the CARES Act should again be your focus. If you have employees, the “Paycheck Protection Program Loan Guarantee” program should be of great interest. The program is offered through the SBA and has incredible terms. The key aspects:
- Available to businesses with fewer than 500 employees.
- Self-employed are eligible.
- Loans of up to 2.5 times the average monthly payroll costs.
- Interest rate of no more than four percent.
- Loan term is up to 10 years.
- No personal guarantee or collateral required.
- Payments are deferred for up to a year.
- The parts of the loan used on rent, leases, payroll, utilities, and health insurance will be forgiven – you don’t have to pay it back!
The loan process has qualifiers, so make sure to read the fine print. You can find the application form here.
The SBA also offers “Economic Injury Disaster Advance Loans” to small businesses suffering temporary revenue losses. The SBA states:
“In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. This loan advance will not have to be repaid.”
Financial Help for You
The financial help offered by the government to individuals isn’t great. The stimulus check is an excellent start, but how far will $1,200 per adult go? The federal government may well push through a new funding bill to help out households, but color me a bit dubious given the bickering that occurs in our nation’s capital.
One source of private funding is your retirement account – 401k or IRA. You know how they tell you to hold off on ever tapping it until you either retire or face a “rainy day.” Well, COVID-19 counts as a drenching rainstorm! The federal government has acknowledged as much by stating you can now take money out of your retirement account up to $100,000 without paying early withdrawal penalties.
The money you pull out will be counted as income for tax purposes. However, you can avoid the taxes if you pay it back to the retirement account within three years. If you can’t, you can pay the tax associated with the payment out over three years. Not bad, but I fear to think what the tax form is going to look like in 2021.
And then there is unemployment. Most entrepreneurs are not eligible for unemployment compensation, but these are unique times. The definitions associated with unemployment insurance are being expanded to include the self-employed, so make sure to check with your state employment agency. Don’t expect a quick answer, however. These agencies are swamped with claims.
CCPA Enforcement Date
On the legal front, many business owners are casting an eye towards the July 1, 2020 enforcement date for the California Consumer Privacy Act. Several business groups requested the California Attorney General extend the date of first enforcement from July 2020 until January 2, 2021, given the current state of the business world. As is typical, the Attorney General has refused the request. California – the state least friendly to businesses!
The above resources are nowhere near comprehensive, and we’ll likely see more financial assistance coming out as we venture into April 2020. So get off your metaphorical butt, and click on over to your favorite search engine. Start doing searches for “coronavirus financial help” and various other terms to see what you can find in your area. You’ll be surprised, and the financing may help you make it through what many expect to be a rough couple of months. While the health issues associated with the coronavirus are awful, legitimate fear exists as to what will be the state of the economy after such an enforced period of stagnation. Let’s hope we bounce back quickly.
And, finally, on a personal note. Give each other a bit of space. Being couped up with Gandhi for 30 days would likely put me in a murderous rage, so try to keep a bit of perspective on the current situation. Instead of focussing on the annoying habits of family members, focus on the positives and the fact that in 30 days you will each be able to move to a different part of the planet and never speak to each other again!
On a side note, I’ll be starting a roving gang called the Angry Penguins should society go full Mad Max. The first meeting is on April 23, 2020. [Personal note – set up a Facebook group.] No, you don’t need a penguin to join, but a bat with nails and/or toilet paper may get you an officer position.
Hang in there,
Richard Chapo, Esq.