Note: This guidance was sent as a client alert on April 27, 2020 and the information is current as of that date.
Economic Impact Payment Update
The IRS has corrected many of the issues related to the economic impact payment portal (https://www.irs.gov/coronavirus/economic-impact-payments) setup for taxpayers to provide updated direct deposit information. Some issues still remain and IRS officials acknowledged they are aware of the remaining issues and are working to fix them. The IRS updates “Get My Payment” data once per day (overnight) so there is no need to check more often. They are adding information to the portal on a regular basis to allow more taxpayers to use it. If you expect to receive a stimulus payment, and have not already, verifying and updating this information is important to ensure prompt receipt of funds.
Economic Impact Payment Implications for Dependents
If someone claimed you as a dependent on their federal tax return you won’t get a stimulus check. If you are aged 17-24, and claimed as a dependent, that person will not receive the dependent payment either. To qualify for the $500 dependent payment, the dependent must be 16-years-old or younger. This applies even if you financially supported the dependent.
Unemployment for Self-Employed and Contract Workers
After waiting for more than six weeks contract and self-employed workers in Illinois are being encouraged to apply for unemployment benefits. Online is still the best way to file according to Governor Pritzker and the IDES. If you’re ruled ineligible because you’re a contract worker, your application will be automatically moved to a new system that will be finished by May 11. Any rejected applications are expected to be automatically transferred and processed when the new system opens.
Other states have already started paying unemployment benefits for contract and self-employed workers, but federal funds for the program won’t be disbursed until May. States that have started paying are covering the costs with additional funds available at the state level. Illinois doesn’t have the cash on hand to fund the program without the federal disbursement, which has caused the delay until mid-May.
Paycheck Protection Program (PPP) Loan Updates
The second round of funding for the PPP loan program begins today. At the end of last week, the Small Business Administration (SBA) released updated guidance on calculating the maximum loan amount by business entity type and qualifications for the loan program.
- Guidance for each entity types was posted by the SBA and is available on our website here: PPP Loan – How to Calculate Loan Amounts. If you have not received your loan proceeds yet, you should review the updated guidance to ensure it is consistent with loan amount that you submitted for approval.
- The SBA strengthened some of the language regarding qualifications for the program.
- When an application was submitted you were required to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
- The SBA has clarified that businesses owned by large businesses with adequate sources of liquidity to support the business’s ongoing operations may not qualify for the program. If this applies to your business, you need to make a determination by May 7th. More details can be found here: Paycheck Protection Program Frequently Asked Questions (See question 31)
- We don’t expect this exception to apply to many of our clients, but the additional guidance has caused some banks to send correspondence regarding the change, so we want to ensure you have the information necessary to respond to any inquiries.
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