Specific information on how this applies to sports officials may be found on National Association of Sports Officials post “Sports Officials and the Coronavirus Bill.”
Limited information is currently available (4/120) about the specific requirements and procedures that will be put in place for independent contractor/gig workers through the recently passed CARES legislation. Here is what we know right now:
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- The Federal Government is still sorting out the guidance it will supply the states.
- Each state will handle the implementation of the legislation on their own, each state will have the freedom to determine exactly how, and whom will receive benefits.
- If it does get to the point where you are going to file please remember that you are an independent contractor and MUST file that way. DO NOT list any entity that you work games for as your employer, that will cause significant issues with your application.
In addition to this, the GLOA Board Member wanted to pass along some important information regarding the two stimulus and relief bills recently passed into law: “Families First Coronavirus Response Act” and “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” We will continue to update this post.
Sick and Family Leave Tax Credits for the Self-Employed
You can qualify for the sick leave credit if you have to self-isolate, are experiencing symptoms and need to obtain a diagnosis, or comply with a self-isolation recommendation for coronavirus. You qualify for the family leave credit if you have to care for a son or daughter under 18 years of age whose school or place of care has been closed due to coronavirus.
The sick leave credit is equal to 100% of the average net self-employment income you earn per day for a maximum of 10 days. The credit is capped at $510 per day.
The family leave credit is equal to 67% of the average self-employment income you earn per day for a maximum of 50 days. But the credit is capped at $200 per day. Thus, the maximum credit is $10,000.
To calculate the credit, you must determine your average daily net self-employment income. To do so, divide your total 2020 net self-employment income by 260. For example, if your 2020 net self-employment income is $70,000, your daily self-employment income is $269. Your sick pay credit is a maximum of 10 days x $269 = $2,690. Your family leave credit is $200 per day for up to a maximum of 50 days.
These credits are refundable, meaning you get the full amount even if you end up with a negative tax liability. For example, if you owe $1,000 in total taxes and qualify for a $2,500 credit, you won’t have to pay any taxes and the IRS will send you a check for $1,500. The credits apply to both income and self-employment taxes (Social Security and Medicare tax).
You won’t actually collect these credits until you file your 2020 taxes in 2021. But, if you qualify for either or both credits, you should reduce (or eliminate) your estimated tax payments to the IRS during 2020 to take the amount of your credit into account.
These highly innovative tax credits are a temporary measure that are only available for 2020.
Pandemic Unemployment Compensation (PUC)
The CARES Act creates three new UI programs: Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, and Pandemic Unemployment Assistance. All three programs are fully federally funded. This fact sheet will discuss all three, as well as “short-time compensation,” laying out what benefits are available to workers who find themselves without any or enough employment or work in these difficult times.
The CARES Act temporarily supplements UI benefit amounts and extends the duration of those benefits.From the date the bill is signed through July 31, 2020, all regular UI and Pandemic Unemployment Assistance claimants will receive their usual calculated benefit plus an additional $600 per week in compensation.
PUC is a flat amount to those on UI, including those who are receiving a partial unemployment benefit check. PUC also goes to those receiving the new Pandemic Unemployment Assistance program described below.
PUC may be paid either with the regular UI payment or at a separate time, but it must be paid on a weekly basis.
PUC is not income for purposes of eligibility for either Medicaid or CHIP.
Pandemic Emergency Unemployment Compensation (PEUC)
The CARES Act also provides an additional 13 weeks of state UI benefits, which will become available after someone exhausts all their regular state UI benefits. All but eight states offer 26 weeks of UI benefits.[1]
To receive PEUC, workers must be actively engaged in searching for work. The bill explicitly provides, however, that “a State shall provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”
PUC, PEUC, and Pandemic Unemployment Assistance (discussed below) are fully federally funded. States will also receive additional administrative funds to operate these programs.
Non-Reduction Rule. There is a “non-reduction rule” in the Act, which means that as long as the states are participating in these programs, they may not do anything to decrease the maximum number of weeks of UI or the weekly benefits available under state law as of January 1, 2020.
Waiting Week. In addition, most states have a statutory one-week “waiting period” for people to receive UI benefits. But under the CARES Act, states that waive the one-week waiting period will be fully reimbursed by the federal government for that week of benefits paid out to workers plus the administrative expenses necessary for processing those payments.
Pandemic Unemployment Assistance (PUA)
Pandemic Unemployment Assistance (PUA) provides emergency unemployment assistance to workers who are left out of regular state UI or who have exhausted their state UI benefits (including any Extended Benefits that might become available in the future). Up to 39 weeks of PUA are available to workers who are immediately eligible to receive PUA. The program will expire on December 31, 2020, unless otherwise extended.
Importantly, this program will provide income support to many workers who are shut out of the state UI systems in this country. In fact, workers who are eligible for state UI are not eligible for the PUA program.
Those eligible for PUA include self-employed workers, including independent contractors, freelancers, workers seeking part-time work, and workers who do not have a long-enough work history to qualify for state UI benefits.
(Note that in most states, however, “gig” workers should qualify for regular UI because of the broad definitions of employment in so many state UI laws and should be encouraged and supported in applying for regular UI. States should be encouraged to streamline their applications and to request pay data in bulk from major companies. In states that have passed formal exemptions from UI for transportation network company drivers or app-based workers, PUA will provide crucial benefits.)
Applicants will need to provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:
They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
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- A member of their household has been diagnosed with COVID-19
- They are providing care for someone diagnosed with COVID-19
- They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19
- They are quarantined or have been advised by a health care provider to self-quarantine
- They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak
- They have become the breadwinner for a household because the head of household has died as a direct result of COVID-19
- They had to quit their job as a direct result of COVID-19
- Their place of employment is closed as a direct result of COVID-19
- They meet other criteria established by the Secretary of Labor
Workers are not eligible for PUA if they can either telework with pay or are receiving paid sick days or paid leave. Unfortunately, workers must be authorized to work to be eligible for PUA, meaning that undocumented workers will not qualify.
The PUA program will run from January 27, 2020 through December 31, 2020. Workers will be eligible for retroactive benefits and can access benefits for a maximum of 39 weeks, including any weeks for which the person received regular UI. But eligibility will sunset on December 31, 2020 absent any extensions.
PUA benefits are calculated the same way as they are for the federal Disaster Unemployment Assistance program under the Stafford Act, which is the model for the PUA program. PUA will have a minimum benefit that is equal to one-half the state’s average weekly UI benefit (about $190 per week).
Short-Time Compensation (Work-Sharing)
Short-time compensation (STC), also known as work-sharing, programs help employers avoid layoffs by putting workers on part-time schedules with partial unemployment benefits to help make up for some of the lost income. Under the CARES Act, the federal government will fully reimburse states for all STC programs already in place that conform with the requirements of Section 3306(v) of the Internal Revenue Code. The Act also provides $100 million in grants to states to implement, improve, and promote STC programs. More information on STC programs can be found here.
The following states provide less than 26 weeks of regular UI benefits: Arkansas, Alabama, Florida, Idaho, Kansas, Missouri, North Carolina, and South Carolina. Source: “Policy Basics: How Many Weeks of Unemployment Compensation Are Available?” Center on Budget and Policy Priorities, 23 March 2020. Available at https://www.cbpp.org/research/
Georgia’s Department of Labor expanded UI benefit duration to 26 weeks on March 26, 2020, https://www.wtoc.com/2020/03/2
You Can Deduct Your Business Losses Against Other Income
If your business loses money this year, you can get a tax deduction. However, as the tax law currently stands, this deduction is limited. Due to the enactment of the Tax Cuts and Jobs Act (TCJA) in 2018, you may deduct your net operating loss (NOL) only against up to 80% of your 2020 taxable income. This may include, for example, your spouse’s income or investment income. Unused NOL amounts may be carried forward and deducted in any number of future years.
The TCJA also limits deductions of “excess business losses” by individual business owners. Married taxpayers filing jointly may deduct no more than $500,000 per year in total business losses. Individual taxpayers may deduct no more than $250,000.
Before 2018, if a business had an NOL, it could be carried back two years, resulting in a refund of all or part of the taxes paid in those years. The TCJA eliminated carry backs of NOLs—that is, they may only be deducted in current and future years.
It’s highly likely that Congress will amend the tax law again to provide a more generous deduction for NOLs, including permitting them to be carried back to past years so you can obtain a refund on past taxes. The details are still being worked out.
For more on deducting NOLs, see Nolo’s article “How to Deduct Business Losses and Net Operating Losses.”