What Self-Employed Workers Need to Know About the Coronavirus Stimulus Package

All workers receiving unemployment benefits — including the self-employed — are also eligible for the extra $600 weekly payment being offered by the federal government through the end of July. (Even qualifying for $1 of benefits means you will receive the full $600 as long as you remain eligible.)

How long your benefits last also varies by state. Most states offer 26 weeks, but others offer less. Under the second economic relief bill, most traditional workers are generally eligible for an added 13 weeks after their state-level benefit runs out. Self-employed people drawing benefits from the pandemic program may receive up to 39 weeks total, in an effort to mirror what traditional employees receive, according to a senior official at the Labor Department. If a state enters a period of high unemployment, triggering what are known as extended benefits, self-employed people may receive up to seven additional weeks.

Eligible workers may receive retroactive benefits for weeks of employment dating back to Jan. 27. The program runs until Dec. 31 unless it’s extended.

Certain gig workers — Lyft or Uber drivers, for example — should qualify for regular unemployment benefits in some places because of the broad definitions of employment under state laws, according to the National Employment Law Project. But it’s often difficult for these gig workers to claim regular benefits, often taking many months. That could potentially create a bottleneck in the application process, or shut out certain workers altogether. (Remember, to become eligible for pandemic benefits, workers must first be ineligible for regular unemployment.) In states that have passed formal exemptions for drivers or similar workers, however, the pandemic fund is supposed to serve as a backstop.

Undocumented workers will not qualify for unemployment benefits; individuals must be authorized to work to be eligible for the pandemic program, according to the National Employment Law Project.

Taxes

A couple of tax rules have been relaxed, which should help self-employed workers keep more money in their pockets right now.

Most businesses split the cost of payroll taxes — which pay for Social Security and Medicaid — with employees, but self-employed workers who earn more than $400 in net profit annually are generally responsible for the entire amount. These so-called self-employment taxes generally equal about 15 percent of a self-employed person’s income; 12.4 percent of that (applied to the first $137,700 of wages in 2020) pays for Social Security.

Article source: https://www.nytimes.com/article/self-employed-workers-unemployment-coronavirus-stimulus-package.html