FAQs for Families & Small Businesses During the Coronavirus Outbreak
Table of Contents:
If you are looking for public health information about COVID-19, click here or visit coronavirus.gov, idph.iowa.gov, or call 2-1-1.
If you have been laid off and need to file for unemployment benefits, click here.
If you are a small business owner looking to apply for an SBA Economic Injury Disaster Loan Program, click here.
In response to the coronavirus crisis, the IRS has announced changes to the 2020 tax season. The deadline for filing your taxes and payment any liabilities is now July 15, 2020. Taxpayers are still encouraged to file early in order to get refunds in a timely manner. The State of Iowa has also extended filing and payment deadlines for income, franchise, and moneys and credits taxes with a due date on or after March 19, 2020, and before July 31, 2020, to a new deadline of July 31, 2020.
Why is Congress proposing to pay rebates to individuals?
The public health and economic consequences of COVID-19 are significant. These rebates help Americans afford what they need during this public health crisis, as many are experiencing a significant cash crunch.
When will the rebates be distributed?
The Internal Revenue Service (IRS) is delivering rebates in the form of advance payments. For people who filed a federal income tax return in 2018 or 2019, payment processing will be based on payment or address information already on file with the IRS. Electronic distributions will be automatic to an account the payee authorized January 1, 2018 or later, and have begun reaching payees accounts. If you want to check the status of your payment, visit the IRS portal for direct payments: https://www.irs.gov/coronavirus/economic-impact-payments
How large are the rebates?
The amount of the rebate depends on family size. The payment is $1,200 for each adult individual ($2,400 for joint filers), and $500 per qualifying child under age 17. The advance payment of rebates is reduced by $5 for every $100 of income to the extent a taxpayer’s income exceeds $150,000 for a joint filer, $112,500 for a head of household filer, and $75,000 for anyone else (including single filers).
Do rebates need to be repaid?
No, rebates do not need to be repaid. If an individual experienced an income loss in 2020 or if they have an increase in family size, they may be able to claim an additional credit of the difference when the individual files their 2020 tax federal income tax return in 2021.
How will rebates be delivered?
It depends. Rebates will be delivered automatically—by the IRS—to most Americans who file individual federal income tax returns. When available, electronic direct deposit will be used in place of mailing a physical check.
Many individuals don't need to file a tax return. Are non-filers eligible for rebates?
Yes. There is no earned income requirement to be eligible for a rebate, but non-filers may need to take additional steps to receive their rebates. The Social Security Administration will share information for Social Security (Old-Age, Survivors, and Disability Insurance) beneficiaries with IRS to help ensure these beneficiaries receive a payment.
If I'm a college student, am I eligible for a rebate?
If you are still claimed as a dependent on the tax return of your parent, guardian, or another provider, you are not eligible for a rebate. If you file your own taxes and you are not claimed as a dependent, you will be eligible under the regular criteria.
How will a person who has recently moved access rebates?
The IRS will determine payment delivery systems for everyone entitled to rebates. More information will be posted here.
Will the rebates affect my eligibility for federal income-targeted programs?
No, the rebate is considered a tax refund and is not counted towards eligibility for federal programs.
What identification requirements apply to receive rebates?
Taxpayers must have Social Security Numbers for themselves and their qualifying children in order to receive rebates.
What if I lost the debit card that had my rebate on it?
If you have misplaced your Economic Impact Payment Card, you can lock it by logging in online at EIPCard.com to prevent unauthorized transactions or ATM withdrawals while you look for it.
If your Card is permanently lost, it is important that you call Customer Service at 800-240-8100 to report your lost or stolen Card immediately.
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just passed by Congress are intended to assist business owners with whatever needs they have right now.
Information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA, is available here.
Struggling to get started? The following questions might help point you in the right direction. Do you need:
- Capital to cover the cost of retaining employees? Then the Paycheck Protection Program might be right for you.
- A quick infusion of a smaller amount of cash to cover you right now? You might want to look into an Emergency Economic Injury Grant.
- To ease your fears about keeping up with payments on your current or potential SBA loan? The Small Business Debt Relief Program could help.
- Just some quality, free counseling to help you navigate this uncertain economic time? The resource partners might be your best bet.
Payment Protection Program (PPP) Loans
The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy to snap-back quicker after the crisis. PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Small Business Debt Relief Program
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Counseling & Training
If you, like many small business owners, need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19. There will soon be a joint platform that consolidates information and resources related to COVID-19 in order to provide consistent, timely information to small businesses.
To find a local resource partner, visit https://www.sba.gov/local-assistance/find/.
H.R. 6201, FAMILIES FIRST CORONAVIRUS RESPONSE ACT Emergency Paid Sick Leave
On Wednesday, March 18th, President Trump signed bipartisan legislation to bolster the federal government’s response to the coronavirus (COVID-19) and address the outbreak’s impact on Iowa families’ health and financial stability. Among its many provisions, the bill expands emergency paid sick leave for millions of Americans.
The Families First Coronavirus Response Act expands access to emergency paid sick leave to as many as 87 million U.S. workers. Many of these workers currently have no paid leave and are being forced to choose between their paycheck, their health, and the health of the people around them. This is a critical step toward protecting families’ financial security and mitigating the spread of the coronavirus.
Who Is Eligible?
- Employees at companies with fewer than 500 employees
- Local, state, and federal government employees
- Employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan.
What Are They Eligible For?
- Eligible full-time employees are entitled to two weeks (80 hours) of fully paid time off (up to $511 per day) to self-quarantine, seek a diagnosis or preventive care, or receive treatment for COVID-19.
- Eligible part-time employees are entitled to fully paid time off (up to $511 per day) for the typical number of hours that they work in a typical two-week period to self-quarantine to seek a diagnosis or preventive care, or receive treatment for COVID-19.
- Eligible full-time employees are entitled to two weeks (80 hours) paid time off at two-thirds of their regular pay (up to $200 per day) to care for a family member or to care for a child whose school has closed, or if their child care provider is unavailable due to COVID-19.
- Eligible part-time employees are also entitled to the typical number of hours that they workin a typical two-week period at two-thirds of their typical pay (up to $200 per day) to care for a child whose school has closed, or if their child care provider is unavailable, due to COVID- 19.
Who Pays for the Emergency Paid Sick Leave?
- Employers initially front the cost of emergency paid sick leave but will be fully reimbursed by the federal government within three months.
- The reimbursement will cover both the wages paid and the employer’s contribution to employee health insurance premiums during the period of leave.
- Employers will be reimbursed through a refundable tax credit that counts against employers’ payroll tax, which all employers pay regardless of non-profit/for-profit status.
- Employers will submit emergency paid sick leave expenses as part of their estimated quarterly tax payments. If employer’s costs more than offset their tax liability, they will get a refund from the IRS.
Why are employees at companies with more than 500 employees exempt from emergency paid sick leave?
The White House and Congressional Republicans were unified against any bill that included universal paid sick leave. Workers and families across the country do not have time for a stalemate. House Democrats made a difficult decision to provide emergency paid sick leave to tens of millions of U.S. workers rather than to no one at all.
Currently, 89 percent of employees at companies with more than 500 workers have access to paid sick leave. The Families First Coronavirus Response Act provides emergency paid sick leave to the workers who are least likely to have it.
Will the bill hurt small- and medium-sized businesses?
No. This bill will benefit small- and medium-sized businesses by helping them keep their workers healthy without taking on any additional costs. Every employer that provides paid leave under this bill will be fully reimbursed for the cost of both wages and health insurance premiums in no more than three months.
Does the bill exempt small businesses with fewer than 50 employees?
No. The bill does not exempt small businesses with fewer than 50 employees. Employees at these companies are eligible for emergency paid sick leave under this bill. Businesses with fewer than 50 employees can only qualify for a narrow exemption if the Department of Labor determines that providing these benefits would jeopardize the viability of the business.
Are health care workers and emergency responders exempt from the bill?
No. Health care workers and emergency responders are eligible for paid sick leave and paid family leave under this bill. Given the capacity challenges facing the health care system, employers have the discretion to exempt health care workers and emergency responders from the paid sick and paid family leave provisions. The Department of Labor also has the authority issue regulations exempting health care workers and emergency responders from the paid sick and paid family leave provisions.
The Families First Coronavirus Response Act creates emergency paid sick leave, as well as paid family leave in the case of school closures, for working families impacted by COVID-19. It does so by requiring employers with up to 500 employees to provide paid sick leave and paid family leave, while providing a refundable payroll tax credit to employers to cover 100 percent of the cost of wages. There is also a refundable income tax credit for self-employed individuals.
Employers must offer two weeks (10 days) of paid sick leave for COVID-19-related reasons (existing leave offered can count towards the 10 days). If the sick leave is for an employee who is themselves sick or seeking a diagnosis, the benefit must replace all of the employee’s wages up to a maximum benefit of $511 per day. If an employee is caring for another individual who is sick, the benefit must replace at least two-thirds of the employee’s wages up to a maximum benefit of $200 per day. Our paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
Employers must offer 12 weeks of paid family leave for an employee with a minor child in the event of the closure of the child’s school or place of care. The first 10 days are unpaid, but the employee can overlap this with the 10 days of paid sick leave. This benefit must replace at least two-thirds of the employee’s wages up to a maximum of $200 per day. Our paid family leave credit offsets 100% of employer costs for providing mandated paid family leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
Both credits get money out the door quickly. This credit is against payroll tax and is refundable, so employers receive funds as they make deposits. Employers do not pay the employer side of payroll taxes on the mandated leave. The Social Security OASDI trust funds and the Railroad Retirement Account are held harmless by transferring funds from the General Fund.
Self-employed individuals are provided similar credits as refundable income tax credits. If territorial governments provide corresponding credits, Treasury shall make payments to territorial governments to cover their estimated costs.
How does the refundable payroll tax work?/ Is this a payroll tax cut?
This is not a payroll tax cut. Payroll tax cuts or holidays typically lower (or eliminate) the payroll taxes that all employers must pay. In our legislation, payroll taxes are simply the mechanism we use to reimburse employers as quickly as possible.
The refundable payroll tax credit works like this: employers that are subject to the mandates pay their employees according to the mandates’ requirements. They are allowed a 100% credit against any wages they pay pursuant to the mandates. That credit is used to offset any payroll tax liability an employer has in a calendar quarter. If there is still credit leftover after the credit has been applied to the employer’s payroll tax liability, the employer will receive a refund in the amount of that excess.
When do employers or self-employed workers see this money?
The exact timing of receipt depends on the particular employer, but we have drafted this legislation so that employers get the benefit of any credit as soon as possible. In the case of employers who receive payroll tax credits, they will have lower payroll tax liability or receive a refund for every calendar quarter in which they pay wages pursuant to the mandates. Because employers will not have to put aside money to make payroll tax deposits, their cash flow outlook should improve even sooner than their first filing date.
Self-employed individuals who receive a credit may use that credit against estimated income tax payments. Estimated tax payments are due throughout the year. Self-employed individuals can also receive a refund after the end of their tax year.
Are the Social Security Trust Funds and Railroad Retirement Account held harmless?
Yes. Funds are transferred from the General Fund to ensure no impact on the OASDI trust funds and RRA.
Are Social Security benefits modified by the payroll tax credits?
No. The credit is only on the employer side of the Social Security OASDI tax, not the employee side.
Types of Employees
Are hourly workers covered?
Yes, they are covered to the extent that their employer is mandated to provide leave. For paid sick leave, full-time employees are entitled to 80 hours (or 10 days) and part-time employees are entitled to the typical number of hours that they work in a typical two-week period. For paid family leave, all employees that have been employed at least 30 days may benefit.
Do gig economy and other self-employed workers receive the credit?
Yes. The legislation ensures that self-employed and gig economy workers receive the credit, even though they do not technically receive leave benefits under the paid sick and family leave mandates. It provides a refundable income tax credit in an amount of what self-employed workers would have received if they had been an employee receiving paid leave benefits pursuant to the mandates. For a given day that a self-employed worker could not work, they can claim a “rough justice” tax credit in the amount of their average daily self-employment income for the year. Individuals can reduce their estimated quarterly tax payments in anticipation of this credit.
Types of Employers
What does the small business size limitation apply to?
Both the paid sick leave and the paid family leave mandates apply to employers with fewer than 500 employees. Therefore, the credit is only available to employers with fewer than 500 employees.
Do nonprofit employers benefit from the credit even though they are tax-exempt?
Yes, nonprofit employers will still benefit from the credit because it is a credit against payroll taxes, which both nonprofit and for-profit employers pay.
Do governmental employers benefit from the credit?
No, governmental employers are ineligible for the credit. They are still subject to the employer mandate.