The coronavirus pandemic is making it difficult for rideshare drivers and gig economy workers to earn a living, but help is available. This article provides a step-by-step guide to help gig workers apply for a number of benefits.
1. Families First Coronavirus Response Act (FFCRA)
What is the Families First Coronavirus Response Act?
This program provides refundable tax credits to self-employed people who lose income while caring for a sick family member.
Qualifying events for FFCRA
An eligible self-employed individual is defined as an individual who regularly carries on any trade or business, and would be entitled to receive qualified sick leave wages or qualified family leave wages under the FFCRA if the individual were an employee.
These situations can qualify for the tax credit:
- A person is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
- Is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
According to the Department of Labor regulations: “A quarantine or isolation order includes quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any federal, state, or local government authority.”
The amount of the tax credit depends on your self-employment income.
Amount of the tax credit
Eligible self-employed individuals are allowed an income tax credit to offset their federal self-employment tax for any taxable year equal to their “qualified sick leave equivalent amount” or “qualified family leave equivalent amount.”
Qualified sick leave equivalent amount
The amount is equal to the number of days during the taxable year that the individual cannot perform services in the applicable trade or business for one of the three above reasons, multiplied by the lesser of $511 or 100 percent of the “average daily self-employment income” of the individual for the taxable year.
What if you care for others?
If an eligible self-employed individual must care for other people, the tax credit also applies. These situations qualify for the tax credit:
- You are caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or required by a health care provider to self-quarantine due to concerns related to COVID-19;
- You are caring for a child if the child’s school or place of care has been closed, or child care provider is unavailable due to COVID-19 precautions; or
- You are experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor,
The qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in the applicable trade or business for one of the three above reasons, multiplied by the lesser of $200 or 67 percent of the “average daily self-employment income” of the individual for the taxable year.
In either case, the maximum number of days a self-employed individual may take into account in determining the qualified sick leave equivalent amount is ten.
How to apply for FFCRA
The tax credit will reduce your 2020 tax bill dollar-for-dollar. If you have a $3,000 tax liability and a $400 credit, your tax liability after the credit is $2,600. You will claim this when filing your tax return for 2020 in early 2021.
2. Pandemic Unemployment Assistance (PUA)
What is Pandemic Unemployment Assistance?
PUA provides assistance for those not typically eligible for unemployment insurance, such as gig workers.
Pandemic Unemployment Aassistance provides benefits for eligible individuals who are self-employed, seeking part-time employment, or who otherwise would not qualify for unemployment benefits under state or federal law.
To be eligible, among other requirements, individuals must demonstrate that they are otherwise able to work and available for work within the meaning of applicable state law, except that they are unemployed, partially unemployed, or unable or unavailable to work because of COVID-19 related reasons.
Qualifying for PUA
Here are the situations in which and individual would qualify for PUA:
- He or she is diagnosed with COVID-19
- He or she has symptoms of COVID-19 and is in the process of seeking a medical diagnosis
- A household member has been diagnosed with COVID-19
- He or she is providing care to a household member with COVID-19
- A child or other person in the household for which the individual is the primary caregiver is unable to attend school or daycare due to COVID-19
- The individual is unable to reach work due to a quarantine
- The individual is unable to attend work because a healthcare professional advised him or her to self-quarantine
- The individual is scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of COVID-19
- The individual is the sole wage earner in his or her household due to death of the head of household as a direct result of COVID-19
- The individual was required to quit his or her job as a direct result of COVID-19
- The individual’s place of employment closed as a direct result of COVID-19
- The individual is self-employed, is seeking part-time employment, and does not have sufficient work history or otherwise would not qualify for unemployment benefits under another state unemployment program
QuickBooks explains that: “Unemployed workers can receive $600 from the federal government for every week they do not make an income, up to four months. That’s in addition to state unemployment benefits.”
State unemployment benefits often expire after 26 weeks. The CARES Act extends this benefit period by 50 percent, permitting unemployed workers to collect benefits for up to 39 weeks. However, the $600 additional weekly benefit is currently only available to workers unemployed during the eighteen-week period spanning March 30, 2020, to July 31, 2020.
States are also implementing new programs to expand state unemployment benefits to contractors.
How to apply for PUA
3. Rideshare Worker Programs
There are a number of nonprofit and corporate entities that are providing help to gig workers during the pandemic.
- Gig Workers Collective: This site has created a list of national resources to help workers. The website also lists food, rent, utility, and medical assistance resources listed by state.
- Lyft COVID-19 Fund: Lyft will provide funds to qualifying drivers who are diagnosed with COVID-19 or put under individual quarantine by a public health agency — an amount determined by the driver’s previous activity on the Lyft platform. Check Lyft’s website for details on how to apply.
- Uber: This blog post explains how Uber is helping drivers. They launched a new Work Hub in the driver app to help drivers find more work opportunities at Uber Eats or other companies. They are also developing resources to make it easier for drivers to apply for state and federal financial assistance.
How to apply for Rideshare Worker Programs
To apply for benefits, check with each of the websites above.
4. Stimulus payments
Forbes pointed out that: “Virtually all tax-filing American adults earning up to $99,000 annually will be eligible for some form of direct assistance from the government. Married couples and joint filers who earn up to $198,000 are also eligible, as are heads of household who earn up to $136,500.”
Who is eligible for the Economic Impact Payment?
U.S. citizens or resident aliens who:
- Have a valid Social Security number,
- Could not be claimed as a dependent of another taxpayer, and
- Had adjusted gross income under certain limits.
How much will you get?
- $1,200 payment: Single taxpayers earning up to $75,000 a year, and heads of household earning up to $112,500.
- $2,400 payment: Couples earning up to $115,000 a year.
If your income exceeds the levels listed above, the check you received is reduced at a rate of $5 for every $100 of additional income. If the annual income is above these levels, the taxpayer does not receive a stimulus check:
- $99,000 single taxpayer
- $136,500 head of household
- $198,000 couples
How to apply for Stimulus Payments
If you filed a 2019 tax return, you will receive payment with the same payment method on file for the previous year. If you received a direct deposit refund, or linked your bank account to make a payment, your stimulus payment will be deposited into that account. If you paid, or were paid by check, you will receive a check in the mail.
Most eligible U.S. taxpayers will automatically receive their Economic Impact Payments including:
- Individuals who filed a federal income tax for 2018 or 2019
- Individuals who receive Social Security retirement, disability (SSDI), or survivor benefits
- Individuals who receive Railroad Retirement benefits
If you are an eligible U.S. citizens or permanent resident who:
- Had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019
- Were not otherwise required to file a federal income tax return for 2019, and didn’t plan to
You can provide the necessary information to the IRS directly here.
When will stimulus payments will be sent?
CNN explains that the IRS started sending checks the week of April 13th. If you filed a federal tax return in 2018 or 2019, and supplied a bank account for tax refunds, you should receive payment by direct deposit in mid-April.
If you didn’t provide a bank account to the IRS, you can enter that information using this IRS website. You can also check the status of your payment using the link. Taxpayers who do not supply a bank account may have to wait for weeks to receive a check.
5. Paycheck Protection Program (PPP)
The CARES Act includes the Paycheck Protection Program (PPP). This program offers $349 billion in Small Business Administration (SBA) loans for businesses with 500 or fewer employees.
Sole proprietors and independent contractors meet the SBA definition of a small business. These professionals can apply for loans, using bank statements and 1099 information to prove income received from clients.
Use all of these available tools to obtain the cash you need to pay your bills during the COVID-19 pandemic.
How to apply for PPP
We’ve posted an article with details on how a small business can apply for a loan under the PPP. Keep in mind that, although the terms are quite favorable for a loan under the PPP, it is still a loan that must be paid back under most circumstances and loan forgiveness requires specific circumstances. The funds of the loan must be used for business purposes.
This article is for informational purposes only and ‘The Rideshare Guru’ does not make any guarantees to its accuracy as each individual’s situation is unique. We recommend that you hire a tax professional or an attorney, or contact your state’s unemployment office for guidance related to the various situations discussed in this article. We may get a referral fee to services or products linked to from this site.
Ken Boyd spent over 15 years working as a Certified Public Accountant (CPA) and has authored several books on accounting, including ‘Cost Accounting For Dummies’. He blogs and provides video content at AccountingAccidentally.com