COVID-19: Q&A for Self-Employed Business Owners

Tax Shareholder John Warren recently held a Q&A panel to help real estate agents about the CARES Act and EIDL loans available to offset hardships caused by the COVID-19 pandemic. This information is also applicable to other self-employed business owners as well.

Unemployment:

I’m a licensed real estate agent in multiple states – how do I determine where I apply for unemployment?

You should apply in the state where you are based.  In the application, you will be asked what additional states you are working in to verify that you are not receiving double the assistance for the same pay.

If I have upcoming closings that will pay me and are still scheduled to proceed, but will be being paid less than normal for this time of year – can I apply for unemployment?

We believe yes.  On the application, they will ask if you are working at a reduced level.  You should answer that your business was affected by COVID-19

Economic Impact Payments ($1200 / $2400 personal checks for those that qualify):

Do I have to have filed taxes for 2018 in 2019 to qualify for the CARES Act?

In order to get your $1200 Economic Impact Payment, you need to have filed in 2018 or 2019.  See the above link for more information.

CARES Act & PPP  (Payroll Protection Program):

 Do I have to have filed my 2019 taxes in 2020 to qualify for the CARES Act?

It will be easier if you have filed because your Schedule C net income will go on the application.  If you haven’t filed for 2019 tax return, you may need to show your profit and loss for 2019 to your bank.

Are there family income limits on being able to apply?

Family income does not relate to PPP program, this will be purely based on your schedule C net earnings up to $100,000.  If you are talking about the personal $1,200 checks, then yes, family income levels do come into play.  This phases out at about $100,000 for single and $200,000 per family.

If I apply, will that income be taxed?

This is a loan, and perhaps a forgivable loan, so it won’t be taxed.  We don’t know the forgivable provision for self-employed yet. For businesses with payroll, we know that you must spend 75% on payroll and 25% on other qualifying expenses for the loan to be forgiven.  We do not know how forgiveness applies to the self-employed yet. The repayment structure for the loan is:  6-month deferral, followed by two year repayment at a 1% interest rate.

 Who do I turn my application into?

Loan applications are submitted to your banker.

Who do I put as my employer on the application?

Put the business that sends you a 1099.

What if I have more than one job?   I have a regular paying hourly/salaried position elsewhere and then do real estate too?  

You can still apply for the PPP based on your net self-employment earnings.

What if I own more than one business?

You can have multiple businesses with multiple EINs that are eligible for PPP assistance.  You will need to list all businesses that control more than 50% of so they can verify that you are under 500 employees.

Are property owners who receive income from their rental business as self-employed individuals eligible to apply?

Rental entities can apply for the EIDL program to assist with instances where you are receiving no rent or reduced payments from tenants.  You will need to show profit and losses that are Jan 1 – March 31, 2019 and Jan 1 – March 31, 2020.  You can apply and get up to $10k in a grant.

 Can I qualify for unemployment and the PPP loan forgiveness?

The PPP loan forgiveness is meant to pay for wages during an 8-week period for business affected by COVID 19.  If you are on unemployment, you must stop unemployment for the 8 weeks.

EIDL (Economic Injury Disaster Loans) Small Business Loans:

The CARES Act expands access to Economic Injury Disaster Loans under Section 7(b) to include sole proprietors. Under this program, the government will pay the principal and interest for 6 months for which payments are due.

A new Emergency Grant would be created to allow a business that has applied for a disaster loan to get an immediate advance of $10,000.  This advance can be used to maintain payroll and is not required to be repaid even if the request for the 7(b) loan is denied.

Can I apply for both the EIDL loan and the PPP?

It is our recommendation that if you apply for the PPP loan, you hold off on applying for EIDL.   If you apply for EIDL first, your loan could be held up.

Our teams at BerganKDV are rallying together and working around the clock to ensure we’re up and running so you can be up and running. Whatever situation you’re faced with, at any time – you can call our task force and we’ll get you the answers, the listening ear and/or the quick support you need: 888-356-2295 or info@bergankdv.com.

CATEGORIES: COVID-19 | Tax, Audit & Accounting
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Brian
Brian
5 months ago

Hello, My business is fairly new. Just over 2 years. I have no employees, just 5-6 independent contractors I regularly use. My 2019 taxes show an operating loss since I carried over the expenses from the previous year when I opened. I have been doing great for the last 9 months up until I was forced to shut down due to covid-19 mandates. So now I am trying to apply for a PPP loan, however it seems I cannot since my 2019 taxes show a loss. This is extremely frustrating since the income for 2020 is completely different then the… Read more »

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