FAQs: DIRECT PAYMENTS AND OTHER RELIEF
Updated on May 26, 2020
Two pieces of federal legislation, the Families First Coronavirus Response Act (FFCRA) and the CARES Act, were passed in March to provide paid leave and/or financial relief to small business owners, independent contractors and other individuals. The legislation was unprecedented in size and was passed quickly through Congress to speed relief to those harmed by the COVID-19 crisis. There are many ambiguous provisions in the laws that will be clarified by rule-making at the federal and state agencies. We will update this FAQ quickly after any rules or other guidance are provided and will highlight and track all updates.
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Direct Payments to Taxpayers
Among other things, the CARES Act provides direct tax rebate payments of $1,200 per adult and $500 per child to taxpayers whose adjusted gross income was $75,000 or less for individuals or double that amount for joint return filers. These are also called economic impact payments. For income levels above those thresholds, the payments would be phased out. Individual taxpayers with adjusted gross incomes above $99,000 and joint filers with adjusted gross incomes above $198,000 are not expected to receive any payments.
When will I receive my direct tax rebate payment?
The IRS began distributing the payments on April 11 and will continue making direct deposit payments to approximately 60 million Americans for whom the IRS has account information. According to Congress, the IRS will begin issuing checks in May to individuals for whom they don’t have bank account information. The IRS will send out millions of checks each week, but it will take approximately 20 weeks (until sometime in September, most likely) to be issued to all those who are due the payment.
How will I receive my direct tax rebate payment?
Your funds will either be direct deposited into your account or a check will be sent to your address from IRS files. For security reasons, the IRS will send a letter to the last known address within 15 days after the payment is made, providing information on how the payment was made.
Do I need to file a request or form to get my direct tax rebate payment?
For those who filed a tax return for 2019 or 2018, no additional action is required. If you’ve already filed your tax returns for 2019, the IRS will use the information in there to calculate your payment amount. If you haven’t filed yet for 2019 but filed a 2018 federal tax return, the IRS will use your information from 2018 tax filings to calculate your payment. You can use the “Filers: Get My Payment” application (located at https://www.irs.gov/coronavirus/economic-impact-payments) to check the status of your payment.
What if I didn’t file a 2018 or 2019 federal income tax return?
For those who didn’t file a 2018 or 2019 federal income tax return because they had no income or their gross income was under $12,200 ($24,400 for married couples), you can use the "Non-Filers: Enter Payment Info Here" application (located at https://www.irs.gov/coronavirus/economic-impact-payments) to provide information so you can get your payment.
For those who didn’t file a 2018 or 2019 federal income tax return because they receive Social Security retirement, disability (SSDI) survivor benefits, or Railroad Retirement and Survivor Benefits, the IRS already has your information, so don’t use the "Non-Filers: Enter Payment Info Here" application, unless you’re using it to claim the $500 per child payment for your qualifying children under age 17.
Where can I check the status of my payment?
Most REALTORS® can check the status of their direct tax rebate payment by visiting this website: https://www.irs.gov/coronavirus/get-my-payment. You will need to enter your social security number, date of birth, street address, and ZIP code.
However, some individuals who were not required to file a 2019 tax return may not be able to use that tool, and should use the Non-Filers: Enter Payment Info Here tool found through this IRS website: https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here.
Is there an IRS website to get more information about the direct tax rebate payments?
More information from the IRS about direct tax rebate payments can be found here: https://www.irs.gov/coronavirus/economic-impact-payment-information-center.
How do I avoid scams related to direct tax rebate payments?
Keep in mind that the IRS will not call you, text you, email you or contact you on social media asking for personal or bank account information – even related to the direct tax rebate payments. Also, watch out for emails with attachments or links claiming to have special information about direct tax rebate payments. These are likely to be scams, and you should be careful before clicking such links or opening attachments.
Are direct tax rebate payments taxable? Will the payment affect my income, tax owed or refund amount for calendar year 2020?
No. The IRS has stated that the payments are not included in taxable income, nor will it either increase the amount of tax owed or reduce any refund you are due.
Will a direct tax rebate payment increase my tax for calendar year 2020 or decrease the amount of my refund?
Other Relief for REALTORS®
If I get sick with COVID-19, is paid sick leave available to me?
Yes, in the form of tax credits. Under the FFCRA, independent contractors and self-employed individuals who must self-isolate or are diagnosed with COVID-19 are now able to claim a tax credit for two weeks of sick leave. The tax credit is refundable and creditable against income and self-employment taxes, and will be claimed on the individual’s Form 1040 for the 2020 tax year. More information about these tax credits can be found here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-special-issues-for-employees-and-additional-questions-faqs#specific.
What if I need to care for an ill family member or a child whose school or daycare has closed?
The two weeks of tax-creditable sick leave provided under the FFCRA, discussed above, can be used for these purposes.
Are disability benefits available to me if I get sick or need to care for a sick family member?
It depends. If you have enrolled in California’s optional Disability Insurance Elective Coverage (DIEC) program for self-employed individuals and independent contractors, you may be eligible to receive disability or paid family leave benefits if you are unable to work due to being sick or if you are caring for a sick family member. More information about the DEIC program can be found here: https://www.edd.ca.gov/disability/Self-Employed.htm. If you have not enrolled in the DIEC, however, as an independent contractor you are not eligible for disability benefits.
Are unemployment benefits available to me if I get sick and am unable to work?
Yes. The new Pandemic Unemployment Assistance program (PUA) expands unemployment benefits to workers, including independent contractors and self-employed individuals, who are unemployed or partially unemployed as a result of the coronavirus pandemic. See here [internal link] for details. Additionally, if you were previously an employee instead of an independent contractor, or have a side job where you are an employee, you may be eligible for unemployment benefits from the State of California if your employer paid taxes for such benefits. You should file an unemployment claim with the California EDD here, and they will determine your eligibility.
Relief for Brokers as Employers
C.A.R has provided detailed Guidance for Employers on brokers’ responsibilities to their administrative employees and independent contractor agents. The information below focuses on the financial assistance available to brokers and other employers as they bear the cost of those responsibilities, as well as try to maintain their brokerages’ financial stability.
Are there resources available to help me offset the cost of providing my employees with paid sick leave and paid family leave?
Yes. Under the FFCRA, employers with less than 500 employees must provide (1) two weeks of paid sick leave to eligible employees who are impacted by COVID-19, and (2) 10 weeks of paid family leave to employees who are unable to work because they need to care for a child whose school or place of care has closed due to COVID-19. Employers subject to these provisions of the FFCRA will receive tax credits to offset the cost of providing the paid sick or family leave. According to the IRS, such employers should report their total qualified leave wages and related credits for each quarter on their federal employment tax returns, usually on Form 941, Employer’s Quarterly Federal Tax Return. More information about employer tax credits for providing COVID-19-related paid leave can be found here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.
What are my options if I cannot afford to provide paid leave to my employees?
Small businesses with less than 50 employees may qualify for an exemption from the FFCRA’s requirements to provide paid leave due to school closures or unavailable childcare if compliance with the requirement would jeopardize the viability of the business is an ongoing concern. Small businesses wishing to apply for this exemption will need to do so with the U.S. Department of Labor, and will need to show that: (1) providing such paid leave would cause the business’s expenses and financial obligations to exceed available business revenue and cause the business to cease operating at a minimal capacity; (2) the absence of the employee(s) requesting such leave would pose a substantial risk to the financial health or operational capacity of the business because of their specialized skills, knowledge of the business, or responsibilities; or (3) the business cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the service that is provided by the employee(s) requesting leave, and these services are needed for the business to operate at a minimal capacity. Note that this is not a blanket exemption covering all employees – the employer may deny paid leave only to those otherwise eligible employees whose absence would cause one or more of the foregoing three conditions.
Are there any other tax-related benefits offered to employers during the COVID-19 pandemic?
Yes. Under the CARES Act, the employer’s portion of Social Security taxes on payroll, will be deferred through the end of 2020. However, this deferral is not available to any employer that receives loan forgiveness with respect to a PPP loan. The deferred taxes would then be paid over two years, half by the end of 2021 and the rest by the end of 2022. Please note that employers must still deposit all amounts withheld from employee pay on the employer’s regular deposit schedule.
Additionally, the CARES Act provides for a refundable tax credit against employer payroll taxes for eligible employers that are impacted by COVID-19 but retain their employees. To qualify, (1) an employer’s business must be fully or partially suspended to due to a governmental order relating to COVID-19, or (2) the employer’s gross receipts for a calendar quarter must be below 50% of the comparable quarter from 2019. The tax credit would be 50% of eligible employee wages, though the amount of wages that are considered for the tax credit will not exceed $10,000 per employee. Note that employers who receive a PPP loan are not eligible for this employee retention credit.