Earlier in 2019, I was on the verge of a breakdown… In retrospect, it was a good problem to have. I was fortunate enough to have
While negotiations between political factions have stalled, it does appear that there will be some form of additional economic stimulus package in the coming months. When and how much are the big questions many Americans might be asking as record numbers of individuals continue to file for unemployment, and the economy crawls its way back to pre-pandemic health.
The economic impact of the COVID-19 outbreak has trickled down into the freelance community. These unprecedented circumstances have taken a toll on self-employed writers, developers, fitness instructors, etc. and the pain has been felt by folks who depend on freelance work for both full-time income and side hustles.
Any form of relief will be most welcome by independent contractors who have seen revenue decline in the past six months. Uncertainty around economic recovery persists, but it’s highly unlikely to imagine that an agreement won’t be reached in the near future.
Freelance workers wouldn’t be remiss to ask how another round of stimulus payments might apply to them. So, let’s take a look at the latest developments and how these proposed benefits might provide a boost to the wallets and welfare of the self-employed.
What Is on the Table?
Thus far, here is what’s known and anticipated about the “skinny” coronavirus bill that has been bandied about in August 2020 by Democrats and Republicans:
Extended unemployment benefits. The additional $600 per week for eligible unemployed individuals ended on July 31st. That level of benefit is not expected to continue but the President has proposed a $400 weekly payment, with the Federal government providing 75% of the total, and the states kicking in 25%.
Freelance workers are now eligible to receive unemployment insurance compensation and are encouraged to apply for benefits through their respective state’s unemployment portal. It may require some patience as the individual government entities are trying to handle excess request capacity and modify rules for the newly added class of self-employed individuals.
One-time payments. Depending on income levels from the prior tax year, more than 160 million Americans received up to $1200 in a stimulus check in mid-2020. The Executive Branch looks to be on board with another round of $1200 payments for individuals making less than $99,000 annually and joint filers without children earning less than $198,000.
There’s no need for freelancers to speculate about this payment as the guidelines are fairly straightforward— whether a person is self-employed or works as a W-2 wage-earner for some other business entity. To receive the benefit, self-employed folks won’t need to do anything special. But, if you owed money to the IRS in 2019, you may need to update banking information on this site for a speedy, direct-deposit payment.
Student loan help. Federal student loans have automatically been held in forbearance until September 30th, which means no payments have been required, and interest will not accrue on balances through the prescribed period. Once again, the President supports continued forbearance, and current proposals see these deferrals lasting until the end of 2020, if not longer.
Recent self-employed graduates or those people in the midst of managing student loan payments won’t need to do anything if student loans continue in forbearance. It’s important to note that these modified terms only apply to federal loans, and each borrower should check with private lenders to see if any assistance is available through those entities.
Paid sick time and family leave. One of the advantages of working for someone else is that most companies allot sick days to employees. Also, the Family and Medical Leave Act (FMLA) requires almost all employers to offer employees an unpaid 12-week leave to tend to a sick loved one or the needs of a newborn child. During this period, health insurance benefits must be maintained, and a job must be held open for an affected employee until the 12-week period expires.
Until the Coronavirus Aid, Relief, and Economic Security Act (CARES) was passed in March 2020, freelancers were left to hedge their own bets, foregoing income and relying on savings to pay bills when these events occurred. The CARES Act has accounted for self-employed individuals who face these circumstances. While payments are not made, affected freelancers can take a tax credit in 2020 that helps equate the credit with the relative value of paid sick or leave time.
Health insurance. One of the pricier yet necessary concerns for self-employed individuals is health insurance. If it’s not possible to qualify for a family member’s plan, a freelancer will need to look to the Federal marketplace for individual health plans— or perhaps an association or guild for group plans. In either scenario, there will be a considerable premium expense for independent business consultants or graphic artists who are earning a decent living.
As revenue for these self-employed people either dwindles or disappears, there is a way to retool health insurance plans so that there’s no lapse in coverage. Dependent on their state of residence, those who have realized a severe drop in income can either qualify for Medicaid or look to the Federal healthcare exchange for a heavily subsidized individual medical insurance policy.
If a marketplace plan is already in place, existing policyholders can reconfigure their income in the system, perhaps allowing for a higher subsidy and lower out-of-pocket premium costs.
When Will It Happen?
Despite political headbutting, it looks like a second wave of help is on the horizon. Most freelancers will necessarily be interested in how soon that aid will arrive. Based on when both parties in the legislature reach a consensus, the programs should hopefully reboot sometime in September 2020.
If the bill passes the House of Representatives on September 8th, for example, the law can be approved in the Senate on the following day and then placed on the President’s desk for signature on September 10th. Payments should begin shipping out about two weeks after the bill is signed into law.
Note that there will be a pecking order when it comes to who receives benefits first. Individuals and couples who already have their accurate direct deposit information on file will be first in line. As such, it becomes even more important for eligible freelancers to update their banking information.
Making Sense of It All
In these tumultuous times, it’s difficult enough to find new customers and restore your self-employed revenues to where they were in late 2019 or early 2020. Toss in some sweeping laws and more administrative details to track, and a freelancer’s plate becomes fuller.
You can always bolster your efforts internally by streamlining financial processes, such as invoicing and cash management, while waiting to see how stimulus developments unfold. For those purposes, you can come to a place that helps self-employed individuals operate more efficiently so they can concentrate on finding new customers and generating more revenue. AND.CO offers freelancers a consolidated resource to push through the pandemic— and simultaneously make their business processes stronger from the inside out.