FAQs: DIRECT PAYMENTS AND OTHER RELIEF
Updated on March 14, 2021
NOTE: On March 11, 2021, President Biden signed a $1.9 trillion stimulus bill into law that will provide, among other things, direct payments of $1,400 to many Americans. More information below.
Several pieces of federal legislation, including the Families First Coronavirus Response Act (FFCRA), the CARES Act, and the Consolidated Appropriations Act (referred to as the CARES Act II), were passed in 2020 to provide paid leave and/or financial relief to small business owners, independent contractors, and other individuals. In March 2021, the American Rescue Plan Act was passed to provide additional stimulus and relief.
TABLE OF CONTENTS
Direct Payments to Taxpayers
So far, there have been three rounds of direct tax rebate payments (also sometimes referred to as Economic Impact Payments) to eligible taxpayers:
Most recently, the American Rescue Plan Act (March 2021) provided direct tax rebate payments of $1,400 per adult and qualifying dependent to taxpayers whose adjusted gross income was $75,000 or less for individuals or double that amount for joint filers. For income levels above those thresholds, the payments will be phased out so that individuals with adjusted gross incomes above $80,000 and joint filers with adjusted gross incomes above $160,000 are not expected to receive any payments. Note that unlike the first two rounds of payments (see below), which restricted payments for dependents to those age 16 or younger, the American Rescue Plan Act expands payments to each dependent claimed on a federal tax return, regardless of age.
The first CARES Act (March 2020) provided 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. For income levels above those thresholds, the payments were phased out. Individual taxpayers with adjusted gross incomes above $99,000 and joint filers with adjusted gross incomes above $198,000 were not expected to receive any payments.
The CARES Act II (December 2020) provided direct tax rebate payments of $600 per adult and qualifying child for households with adjusted gross income of $75,000 or less for individual filers or $150,000 or less for joint filers. For income levels above those thresholds, the payments were phased out: individual taxpayers with adjusted gross incomes above $87,000 and joint filers with adjusted gross incomes above $174,000 were not expected to receive any payments.
When will I receive my direct tax rebate payment?
The IRS has said that some direct tax rebate payments would go out beginning March 14-15, 2021, and they would continue to be rolled out thereafter. The IRS has not yet indicated when all payments under the American Rescue Plan Act will be disbursed. As with the previous two payments, taxpayers can check the status of their disbursements using the IRS’s Get My Payment tool, available here: https://www.irs.gov/coronavirus/get-my-payment.
The IRS has issued all direct tax rebate payments under the first CARES Act and the CARES Act II. If you believe you were eligible for such payments and didn’t receive them or received less than the full amount you were eligible for, you may qualify for the Recovery Rebate Credit and must file a 2020 tax return to claim the credit even if you would otherwise not have to file. More information on the Recovery Rebate Credit can be found here: https://www.irs.gov/newsroom/recovery-rebate-credit.
How will I receive my direct tax rebate payment?
Your funds will either be direct deposited into the bank account provided on your most recent tax return, or if such account information is not available, a check or debit card will be sent to your address from IRS files. If you don’t receive a direct deposit, the IRS suggests you watch your mail for an envelope from the US Treasury. If you receive the debit card, it will have the Visa name on the front of the card and the issuing bank, MetaBank, N.A., on the back of the card. For the first two direct tax rebate payments, the IRS sent a letter (Notices 1444 and 1444-B for the first and second payments, respectively) to the last known address within 15 days after the payment was 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?
No. For the CARES Act, eligibility and amount of payment was calculated by the IRS based on your 2019 tax return (or your 2018 tax return if one for 2019 was not available). Those who received the first payment under the CARES Act did not need to do anything to receive the second payment under the CARES Act II. As noted above, if you believe you were eligible for such payments and didn’t receive them or received less than the full amount you were eligible for, you may qualify for the Recovery Rebate Credit and must file a 2020 tax return to claim the credit even if you would otherwise not have to file.
Similarly, eligibility and amount of payment under the American Rescue Plan Act will be determined based on your 2020 tax return if available; if not, then it will be based on your 2019 tax return.
What if I didn’t file a 2019 or 2020 federal income tax return?
If you didn’t file 2019 or 2020 federal income tax returns because you had no income or your gross income was under the applicable filing requirement threshold, you will still receive the funds you are eligible for under the American Rescue Plan Act – but it will be in the form of a tax credit that you will file for in 2022 as part of your 2021 tax return.
If you didn’t file a 2019 or 2020 federal income tax return because you receive Social Security retirement, disability (SSDI) survivor benefits, or Railroad Retirement and Survivor Benefits, the IRS already has your information and will send you any payments you are eligible for based on the information it has.
The non-filers tool on the IRS’s website closed on November 21, 2020 and is no longer available for non-filers to submit their information in order to receive payment.
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 2019 or 2020 tax returns may not be able to use that tool.
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-payments.
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 or 2021?
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.
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 were able to claim a tax credit for two weeks of sick leave. The tax credit, which has been extended through September 30, 2021, is refundable and creditable against income and self-employment taxes, and will be claimed on the individual’s Form 1040. Note that the American Rescue Plan Act has expanded paid sick and family leave to include leave taken to get a COVID-19 vaccine or to recover from an injury, disability, illness, or condition related to receiving a COVID-19 vaccine. 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 FFCRA provided up to 50 days of paid family leave (again, in the form of tax credits) that could be used for these purposes. The American Rescue Plan Act extended this option through September 30, 2021 and also increased the maximum number of days to 60.
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 DIEC 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 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 our PUA FAQ here 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. Our PUA FAQ has information on how to apply for these UI benefits as well.
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 were required to 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 were eligible to receive tax credits to offset the cost of providing the paid sick or family leave. The FFCRA’s mandatory paid leave requirements expired on December 31, 2020, thus eliminating covered employers’ obligation to provide paid sick and family leave. However, the CARES Act II gave employers the option to provide such paid leave and extended the tax credits to available to employers through March 31, 2021.
The American Rescue Plan has further extended these tax credits through September 30, 2021. 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.
Are there any other tax-related benefits offered to employers during the COVID-19 pandemic?
Yes. Under the first CARES Act, employers had the option to defer the employer’s portion of Social Security taxes on payroll through December 31, 2020. The deferred taxes would then be paid over two years, half by the end of 2021 and the rest by the end of 2022. More information can also be found here: https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020. This deferral option expired at the end of 2020 and is no longer available.
Additionally, during the pandemic, federal legislation has provided for a refundable tax credit against employer payroll taxes for eligible employers that are impacted by COVID-19 but retain their employees. For 2020, the CARES Act provided that in order to qualify for the employee retention credit, (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 corresponding quarter from 2019. The tax credit would be 50% of up to $10,000 in eligible wages per employee. Note that while the CARES Act prohibited borrowers of PPP loans from claiming the employee retention credit, this was subsequently changed to allow PPP borrowers to claim the credit except with respect to wages taken into account in connection with an application for PPP forgiveness. The IRS has issued guidance on how to calculate qualified wages here: https://www.irs.gov/pub/irs-drop/n-21-20.pdf.
The employee retention credit has been extended through 2021. The CARES Act II extended the credit from January 1, 2021 through June 30, 2021 and expanded it in a couple of significant ways, namely: (1) the threshold for gross receipts must be below 80%, instead of 50%, of the corresponding quarter from 2019, and (2) the tax credit was increased to 70% of up to $10,000 in eligible wages per employee per quarter. The American Rescue Plan Act extends the employee retention tax credit from July 1, 2021 through December 31, 2021 with the same gross receipt threshold and tax credit amount as the CARES Act II.