Understanding How the CARES Act Affects Writers
By: Shaunta Grimes
Tags: Money, Life, Remote Working, Work, Covid 19

(Hey, guys. My dad wrote this for you. I hope it helps. I know for sure it helped me. — Shaunta)

The SBA has clarified the rules regarding the small business loans. You can read about that update here.

By Keith Grimes

My name is Keith Grimes. I am 72 years old. I own my own business consulting firm, and have since 1991. I am a freelance writer and have been for more than 30 years.

Most of my writing consists of the preparation of financial documents for small businesses, such as loan applications, business plans, securities prospectuses, and the like. I have even more experience writing legal documents for lawyers, including legal memoranda, motions, oppositions, appellate briefs, and related documents.

I estimate that for the past 30 years writing has consumed 80% of my working time.

In all of those years, I have never lacked for work. Consequently, I have not had the need or opportunity to apply for unemployment insurance, SBA guaranteed small business loans, or any other assistance. I never lend the IRS money, so I never get a refund check from the IRS.

As a result, the IRS has no banking information and won’t be able to deposit a check into my account.

Reading and writing is important to nearly every vocation and occupation.

That explains why writers nearly always have a job. It is one of the most recession proof jobs available. Writers can work from anywhere where a computer can be plugged in, and Internet service is available.

That means everywhere from one’s own bedroom, to every county, province, and country in the world. Just before the CoronaVirus pandemic began, Shaunta, other family members, and I traveled to Mexico, and then to Costa Rica, mostly for vacation. The writing never stopped.

Unfortunately for me, as a result of the CoronaVirus pandemic, my legal writing assignments have nearly disappeared.

If you’re reading this and you’re an American writer, help may be available from the US government. I live in Nevada, so my experience will necessarily be Nevada-specific, but the basic rules remain the same no matter where in the USA you might live.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act.

This Act affects individuals and businesses in several profound ways. But, the primary purpose of the Act is single-minded — pump as much money into the economy as possible in an effort to stave off the collapse of the US economy.

Subsequently, the Act aims to prevent the collapse of the country itself. Never in history has the USA been so unprepared for crises, and never in history has the USA been forced to take as drastic and sudden measures as are being taken now.

I have been able to identify three programs authorized by the Act that might benefit free lance writers, as well as any gig worker, independent contractor, or freelance worker.

Please be reminded that as of this writing, none of these programs have resulted in any payments to any gig worker, independent contractor, or freelance worker. Therefore, the mechanics for administering these various programs can, and probably will, change prior to payments actually beginning.

Nevertheless, it pays to be prepared. I’ll address each specific program in turn.

Direct payments to individuals in the form of tax rebate checks.

This program will be administered by the Internal Revenue Service. Unfortunately, the IRS has been starved of money over the past couple of decades, and is woefully unprepared to take on such a gargantuan program.

Therefore, this program will take time to implement. A lot of time.

Here is how it will work: Single adults with social security numbers and an adjusted gross income of $75,000 or less will receive a $1200 rebate. Married couples with no children earning less than $150,000 or less will receive $2400. Taxpayers filing as head of household earning $112,500 or less will receive $2400. Every qualifying child, age 16 or under, will receive $500.

Payments will decrease until they disappear for single people earning $99,000 or married people who have no children and earn $198,000. A family with two children will not be eligible for payments if the family income is more than $218,000.

There are numerous exceptions.

People who are claimed as dependents receive no payments. This includes adults and students.

Although the bill temporarily suspends efforts to garnish tax refunds to repay the IRS, if you owe money to the IRS you may not receive payments. It may be a good idea for people owing money to the IRS to either request a payment plan from the IRS, or consult with a tax pro to set up a plan. This will almost certainly result in the receipt of the payment. There is one caveat: accepting a payment plan will almost certainly result in an extension of the statute of limitations for collecting taxes due. If there is any question, consult an advisor.

If you owe child support payments, your payment will likely go to your children.

If you are working in the USA, and you are not authorized to do so, you will probably not receive payments, even if you have been paying income taxes for years.

Here’s how to receive your money:

If you pay taxes, and received a refund by direct deposit in 2018 or 2019, you get paid first. The payments will be automatically deposited to your account by the IRS. Approximately 60,000,000 people will receive their money this way. Such payments should begin the week of April 13, 2020.

If the IRS does not have your direct deposit information, but you filed a return, you will receive a paper check. About 100,000,000 people will receive their money by check. The IRS will mail approximately 5,000,000 paper checks per week, starting with people with the lowest incomes.

All together it will take approximately 20 weeks to get all of the checks printed and mailed.

If you did not file a tax return in 2018 or 2019, you will be required to file a “simple tax return” in order to receive your rebate money. Or, if you did file a 2018 or 2019 tax return but want to receive your money by direct deposit, you will also have to file a “simple tax return.”

The IRS is expected to implement this system in late April or early May.

There is an exception for people receiving social security benefits who do not file returns. These people will not be required to file a “simple tax return.” Social security recipients will receive their rebate checks the same way they currently receive their social security benefits, either by check or direct deposit as the case may be.

In addition to those mentioned above, the following people will receive the rebate: unemployed people, veterans, and individuals living abroad who have social security numbers.

While there may be a temporary suspension on efforts to garnish tax refunds to repay debts, including to the IRS, this waiver is not likely to apply to people who are behind on child support payments.

Your rebate check will be paid if your income tax refunds are being garnished because of a student loan default.

Be patient. If you are eligible, you should receive your rebate by September, 2020.

Unemployment benefits.

So far, nearly 10,000,000 workers have applied for unemployment benefits. That’s is a lot of people. This number dwarfs any previous two week period in American history — by a lot.

Since unemployment programs are operated by the states, workers in the various states will have differing experiences. But, since unemployment has been so low for the past ten years or so, most state unemployment offices have no where near the capacity they will need to meet this unprecedented demand.

Ordinarily, gig workers, independent contractors, and freelance workers are not eligible for unemployment insurance. This is a price we pay for our independence. But, the CARES Act, provides for these workers. A worker does not need to have paid into the system to qualify.

Recipients of unemployment payments under the CARES Act will recieve an additional $600 per week on top of regular unemployment insurance payments. This benefit will be paid for four months.

Each state will implement the program differently. More liberal states will be more liberal, and more conservative states more conservative. For instance, Alabama’s maximum weekly payment is $275, California’s is $450, New York’s is $504, and New Jersey’s is $713.

The average worker in the USA earns about $1,000 per week. Add the additional $600 per week available under the ACT, and it becomes apparent that the additional payments are meant to bring the total payments up to an amount sufficient to cover most worker’s needs.

For gig workers, independent contractors, and freelance workers, the total weekly payment will be limited to $600, which amount shall be paid by the federal government through the various state unemployment office.

Unlike the tax rebate checks, applying for this benefit takes some work. In most states (my own state of Nevada included), applications can be filed online. You can also apply by phone, but this effort is not likely to be successful.

I applied for unemployment payments in Nevada last week. In my case, I applied right away, and got denied (under the old rules) right away. I was advised by my Congressman (Steven Horsford, D. Nev.) to appeal immediately, and to apply again once the Nevada Unemployment Division has a chance to upgrade their computer program to accommodate the CARES Act.

I suspect that I will ultimately qualify, but will not be surprised if I do not.

Individuals who are likely to qualify for this benefit are people who must self-quarantine, people who just started a new job and have not worked long enough to qualify for unemployment, people who worked for a business that closed, individuals relying upon a person who died from the coronavirus, people who are already receiving unemployment benefits, and people who have exhausted their benefits.

Individuals who might not qualify are people who can work from home, those receiving sick leave or paid family leave, and new entrants to the workforce who cannot find jobs.

Every gig worker, independent contractor, and freelance worker who is out of work, should apply for this benefit.

Small Business Administration loans.

The Small Business Administration (SBA) has numerous programs designed to help owners of small businesses, including writing businesses. The one I want to concentrate on here is called the Economic Injury Disaster Loan Emergency Advance.

Small business owners in all fifty states, the District of Columbia and all US territories are eligible for this program. It benefits all small businesses with fewer than 500 employees, including sole proprietors, independent contractors, self-employed persons, private non-profit organizations, and certain veterans organizations.

There are some business in certain industries that may have more than 500 employees.

When you apply, you are applying for an SBA loan. If a loan is offered there is no requirement that the loan offer be accepted. An advance will be paid against any loan you might be offered. The amount of the advance is up to $10,000. Payment of that advance should be made within days of application. This loan advance will not have to be repaid.

Receipt of the SBA advance will not affect the receipt of your tax rebate. I am not clear as to whether or not receipt of the advance will affect your ability to receive $600 per week under the federal unemployment program. My advice would be to apply for both as quickly as possible.

Every writer should apply for this Economic Injury Disaster Loan Emergency Advance. Learn more at SBA.gov.