These are the most common questions we’re getting related to the economy, new legislation, tax changes, and economic stimulus. Do you have a question that’s not answered here? Use the form at the bottom of the page to submit your question.
Q: How much of the PPP and EIDL are forgivable?
The forgivable portion of your PPP loan depends on how you use the funds. The amount that you spend on payroll, rent, utilities, and/or mortgage insurance within the 24 weeks after you receive the loan is forgivable provided you maintain your headcount. If you’ve decreased your headcount, you have the full 24 weeks to bring it back up, and there is some room to decrease headcount and still receive loan forgiveness. If you received your funds prior to June 5, you can also opt for the 8 week time period. See full details here.
The EIDL is not forgivable. However, if you received the $10,000 grant within your first few days of submitting an EIDL application, that amount does not have to be repaid.
Q: If my PPP loan is forgiven, does it count as taxable income?
A: No, your forgiven PPP loan amount will not be taxed. However, any expenses paid with PPP funds cannot be counted as deductible business expenses. This means that you won’t be able to deduct the payroll, mortgage interest, rent, and utility payments that would normally be deductible as business expenses.
Q: I’m a senior citizen who receives income from social security and a pension, and I don’t file a tax return. Do I need to file a tax return in order to be eligible for a stimulus payment?
A: You do not need to file a simple tax return to receive a stimulus payment. Initially the IRS said that seniors would need to do so, but the agency reversed course because that requirement contradicted language in the CARES Act. The treasury will use information from your social security forms in order to calculate your stimulus payment. Further, if you receive your social security benefits via direct deposit, you will receive your stimulus payment that way as well.
Q: I’m applying for a Paycheck Protection Program Loan through the SBA. Do I include 1099 contractors in my payroll calculations?
A: No. The SBA has clarified that because independent contractors have the ability to apply for a PPP Loan on their own, they do not count toward your payroll calculations.
Q: I already filed a PPP application and included my 1099 contractors in my payroll calculations. Should I file a new application showing only my W-2 payroll?
While original SBA rules seemed to indicate that 1099 subcontractors would be included in payroll costs, the actual forgivable amount will exclude amounts paid to 1099 subcontractors. The loan amount itself is based on 2.5 times average payroll for two months. We recommend contacting your bank to make them aware that 1099 payments were included in your application, based on their information request.
Q: My daughter was a student and dependent in 2019, but she’s working and on her own in 2020. Does she qualify for the $1,200? If so, how can she apply?
A: Unfortunately she will not qualify for a check right now since she was claimed as a dependent in 2019. However, when she files her 2020 tax return, she will be able to claim the $1,200 as a tax credit (provided you don’t claim her as a dependent and she falls under the income threshold).
Q: Are hobbyists (e.g. making handmade goods for commissions, pet sitting, etc.) considered independent contractors for the purposes of claiming unemployment benefits?
A: If you run a bona fide for-profit business related to the hobby and file a tax return showing income from pet sitting, commissions, etc., that income would be the basis for your stimulus qualification. However, if your hobby isn’t a bona fide, for-profit business and operates at a loss, we suspect you would fall under hobby loss rules and therefore not qualify.
Q: If an individual (one of the owners of a small business) has a blemished credit history including bankruptcy, will it disqualify that person from receiving an SBA loan under the CARES Act? If so, should we add a minority owner in the business with a better credit record in order to seek assistance under the program?
We haven’t seen any information indicating special assistance for business owners with bad credit. If your credit score disqualifies you from EIDL fast approval, your loan would likely fall under normal SBA guidelines. As far as adding a minority owner, this is an issue to discuss with your trusted strategic advisor.
Q: How can small businesses apply for aid?
- Florida Small Business Emergency Bridge Loan Applications
- U.S. Small Business Administration Loan Information
- Disaster Loan Assistance (federal)
- Florida Disaster Loans
Q: As an employee, what rights do I have related to paid leave?
The U.S. Department of Labor has created a poster explaining paid leave and expanded FMLA rights for employees. Read more.
Q: My 2019 income was over the threshold for receiving a stimulus payment. Because of the virus, I’m expecting to be under it in 2020. Can I receive a check?
A: Not at this time. However, when you file your 2020 tax return, you will be able to claim the stimulus amount as a tax credit (assuming your projected income level is accurate).
Q: I haven’t yet filed my 2019 income tax return. My 2018 income would disqualify me from receiving a stimulus check, but my 2019 income falls under the threshold. Should I file my 2019 return ASAP in order to get a check?
A: We haven’t seen a cutoff date for filing 2019 returns in order to have that income considered for the stimulus. At this time, we are recommending that you do file now, but we can’t guarantee that the IRS will look at your 2019 return in time. Rest assured that if you don’t qualify now but do qualify later, you will make up the difference on your 2020 tax return.
Q: Will a college student who works part time be eligible for the stimulus check?
A: It depends on whether the student’s parents claimed him as a dependent on their 2019 tax return. The payment of $500 per child is only for dependents under the age of 17. Older dependents are not eligible for the stimulus at this time. If the student is not claimed as a dependent, then he would be eligible provided he falls under the income limit.
If the student was claimed as a dependent in 2019, but is not claimed in 2020, he may be eligible for the tax credit once he files his 2020 tax return. Unfortunately he would not receive a check at this time. However, college students may be eligible for relief grants under the CARES Act; these are administered through university financial aid offices. Learn more.
Q: I owe back child support. Will I receive a stimulus check?
A: If your child support obligation has been reported to the treasury, you will not receive a stimulus check. Your stimulus will be credited toward your child support.