Paycheck Protection Program (PPP) Loan

Taking applications: April 10th, 2020 through June 30th, 2020

This program authorizes up to $349 billion in loans that can be forgiven to self-employed and those who own small businesses. The loan terms will remain the same for everyone who receives one. 

Learn More: Click here 

View application form here : Click here 

COVID-19 Economic Injury Disaster Loan (EIDL) 

Taking applications: Now

The Small Business Association (SBA) is approved to provide up to $10,000 loan advances to small businesses, those who are self-employed, and independent contractors. Funds can be made available within 3 days of someone who has applied and been approved. 

This is to hold over until you are able to get a loan approval from the bank. Once you are approved from a bank loan, you would subtract the amount you received from the SBA. 

For example, if you were approved from the SBA to get $10,000 now, and in 2 months you were approved for a $25,000 loan from your bank, you would really get a $15,000 loan since you already received $10,000 from the SBA. 

More Information and Apply Here: Click here

Self-Employment Tax Deferral:

There is an option to defer what you owe in self-employment tax over 2 years. Here is the schedule you would follow if you chose to take this credit:

-Pay 50% on your 2020 Form 1040 Return (you would file this in 2021)
-Pay 25% no later than December 31st, 2021
-Pay the remaining 25% no later than December 31, 2022. 

If you don't like math, here is an easy example for you. 

Let's say Tom owes $1,200 in 2021 for his 2020 Form 1040. That means he will pay 50% ($600) when he files in 2021, another 25% ($300) by the end of the 2021 year, and the remaining 25% (the last $300) by the end of the 2022 year. 

Self-Employed Sick Leave Credit

The same stipulations and requirements apply with this loan as if you were employed and qualified for sick leave. 

If you are unable to work due to illness or experiencing COVID-19 symptoms, you can receive different amounts depending on the clause that you qualify for. 

The clauses are as follows:

1. You are went under COVID-19 quarantine by the state 
2. You went under COVID-19 quarantine from your employer
3. You are experiencing COVID-19 symptoms and are seeking a medical diagnosis
4. You are caring for an individual who is either under clause 1 or clause 2
5. You are caring for your child who is unable to go to school due to COVID-19 precautions
6. You are experiencing any other similar condition specified by the Department of Health and Human Services in consultation with the Department of the Treasury and the Department of Labor

As someone who is self-employed, the following credits are available to you:

A. If you could not work because of Clause 1, 3, or 3 mentioned above, your refundable tax credit is equal to the days you were not able to work, multiplied by the lesser of either $511 or 100% of your average daily self-employment income for the tax year. 

Example: You experienced symptoms and are therefore under clause 3. You were unable to work for 8 days. Usually, you make $50,000 per year. The first option, $511 multiplied by 8 days is $4,088. On average, you make about $137 a day from the $50,000 a year example. 8 days at that rate equals a total of $1,096. So you would receive the second option because it is the less amount, $1,096. 

B. If you could not work because of Clause 4, 5, or 6, you're refundable tac credit is equal to the number of days you were unable to work, multiplied the lesser of either $200 or 67% of your average daily self-employment income for the tax year. 

Both of this credits tap out at maximum 10 COVID-19 sick days per year.  

Self-Employed Family Leave Credit

If you are unable to work from home due to the need to care for a child at home under the age of 18 because the school has been closed due to COVID-19 reasons and you cannot find another caregiver, you may be qualified for Family Leave. 

Your refundable tax credit is equal to the number of days you were unable to work, multiplied by the lesser of either $200 or 67% percent of your average daily self-employment income for the tax year. 

The maximum amount of family leave days eligible for this credit is 50 for each calendar year.

Important Information About These Credits 

For both the Sick Leave Credit and the Family Leave credit, you will include the credit amount as income and the qualifying expenses as a deduction. 

If you are self-employed but also receive either of these credits from an employer, your amount that you can use toward the self-employed refundable tax credits is reduced. 

Contact us: 
[email protected] | CA (760) 888-6247 | NY (845) 237-4060

Copyright © Gold Standard Tax & Accounting. All Rights Reserved.