In response to the coronavirus pandemic and its devastating impact on the U.S. economy, congressional lawmakers have passed a $2 trillion stimulus bill known as The CARES Act, the largest emergency economic package in US history, which has now been signed into law. The hope is that this will provide some much-needed relief for American workers, businesses, and hospitals and give the economy a jolt during this unprecedented time.
American trade workers are the backbone of this country, including:
- Handymen &
- HVAC technicians
In March, trade workers of all kinds were deemed essential by the White House and the Department of Homeland Security in the “Guidance on the Essential Critical Infrastructure Workforce: Ensuring Community and National Resilience in COVID-19 Response.” It reads:
“Workers who support the supply chain of building materials from production through application/installation, including cabinetry, fixtures, doors, cement, hardware, plumbing, electrical, heating/cooling, refrigeration, appliances, paint/coatings, and employees who provide services that enable repair materials and equipment for essential functions.”
Thank you for putting yourselves at risk to meet the needs of people across America, whether that’s in their homes or in the infrastructure of their communities.
And Although trade workers will always be in demand in the case of emergencies such as a broken pipe flooding a basement and destroying the structure and materials within it, with restaurants and other businesses closing, the commercial calls your business gets are likely almost completely non-existent right now.
Even residential calls are down as more people are hesitant to call people into their homes if it is not absolutely necessary. Not to mention, trade workers who do not want to make it out to the calls they are getting in order to protect themselves or vulnerable individuals in their family. Additionally, there are disruptions in supply chains due to quarantines around the world, causing delays in getting the necessary materials and pushing back projects that actually are active. Help is needed and it is needed now.
The stimulus package itself can be confusing to unpack as it addresses many sectors of the United States workforce. How does the stimulus package affect trade workers specifically? This guide will break down what the stimulus package means for trade workers, from business owners to private contractors to the newly unemployed, and how each group can take advantage of the benefits the package is offering.
SMALL BUSINESS OWNERS
What the stimulus package is offering you:
The coronavirus stimulus package is offering $349 billion in loans to small businesses that have been impacted by the sweeping changes and shutdowns resulting from the coronavirus pandemic. It offers emergency loans to small businesses through community banks and lenders that are guaranteed by the Small Business Administration.
The CARES Act also offers a refundable payroll tax credit to qualifying companies, which covers $5,000 per employee each quarter. The business has to show at least a 50% drop in revenue in the first quarter of 2020 as compared to the same time period in 2019.
What do small businesses need to qualify for a loan?
Here is a list of what your plumbing business must have in order to be eligible for a loan from The CARES Act:
- Businesses with less than 500 employees. In order to qualify as a small business, your company must have less than 500 employees. Self-employed, one-man shops are also eligible for loans.
- Business must be in place as of Feb 15, 2020.
- Keep your workers. Must have paid employee salaries and payroll taxes since the crisis began. This also includes independent contractors.
- If you already laid off workers, then use these funds to rehire them. If you already had to lay off employees, you can still qualify for a small business loan, but you must show that you will use the loan to rehire employees or to cover other expenses such as rent or utilities for the business space.
- If you already had to shut down completely, then use funds to rehire and cover business location costs. If you had to shut the doors of your plumbing business, you could still qualify for a loan as long as you use the money to rehire workers or pay for things related to keeping your business in its place, such as rent or mortgage payments.
What’s this I’m reading about loan forgiveness?
The package offers payroll loan forgiveness to eligible small businesses. This would mean that a company may not need to pay back part or all of its loan, which would be a much-needed break for many struggling plumbing businesses right now.
The portion of the small business loan that would be eligible for forgiveness is only on funds that are used for:
- Paying employees
- Rent or mortgage
The loan forgiveness portion only applies to the above expenses that are made during the eight-week period from when your loan is approved. The amount of forgiveness will depend on how many workers were retained or rehired. Lawmakers want to keep workers connected to their employers and not feeling the stress from the uncertainty of if they will have a job to return to when this is all over. Loans paying salaries over $100,000 or to employees primarily living outside of the U.S. would not be eligible for loan forgiveness.
So, as long as your business maintains the typical size of its workforce, you will likely only be responsible for paying back the interest accrued on this loan.
How do I apply for a loan?
Contact your lender and ask about applying for a small business loan. If they do not offer it or this falls through, then try another lender, bank, or credit union. Many private lenders have already been approved to provide these loans and new regulations are expected to come through that will allow for the majority of FDIC-insured banks to make these loans.
You can also apply for a disaster loan provided by the Small Business Administration, which is separate from this bill. These loans are smaller, with a cap at $2 million. You can apply for these with the Small Business Administration.
How much money can I apply for?
Lenders will assess the amount your small business qualifies for based on payroll expenses between January 1st and February 29th. Loans can be up to 2.5 times the entity’s average monthly payroll costs, with the maximum loan amount set to $10 million. Interest rates for these loans are also capped at 4%. The small businesses borrowing the money are also allowed to defer payments between six months and one year.
The Small Business Administration is expected to release detailed information on application guidelines and criteria sometime soon. For the most up-to-date information, visit the Small Business Administration’s website (SBA.gov).
CONTRACTORS / SELF-EMPLOYED
What the package is offering you:
The relief package allows for the creation of a temporary Pandemic Unemployment Assistance program that will last through December 31st of this year. This program will offer federal aid to workers who are not normally eligible for unemployment benefits, including individuals who are self-employed and contractors.
Also notable in the CARES Act is that people receiving nontaxable income or Social Security benefits will still get checks.
What do contractors have to do to get a check?
Here is what plumbing contractors or self-employed plumbers need to do in order to make sure their check comes in:
- Make sure that you are up to date on your 2018 or 2019 taxes. Monetary distributions are going to come from the IRS and the way the IRS will determine how much money a specific individual will get from this bill is to look at their 2019 tax forms. If you have not filed your 2019 yet, they will look at your 2018 tax forms. So, if you are a plumbing contractor, make sure you are up to date on either your 2019 or 2018 tax forms as soon as possible.If you haven’t done this, there’s no need to hire an accountant or download tax software, just go to the IRS’s free filing page on their website. There is one option for people making over $69,000 per year and another for people making under $69,000 per year. Also, the federal government pushed back Tax Day from April 15, 2020 to July 15, 2020, so you have an extra three months to file your 2019 taxes this year.*On April 10th, the IRS launched a non-filer web tool on their website that allows people who do not usually file a tax return to get their stimulus checks from the government
- Have a Social Security number. To be eligible, you must have a valid Social Security number. Exceptions are made for military members.
- You cannot be claimed as anyone’s dependent. Adults can be claimed as dependents and if this is the case for you, then you are not eligible to receive a check. For example, if you are a student working part-time as a plumber, but your parents still cover half of your expenses, then you are likely still seen as a dependent.
- If you’ve moved since your last tax filing, fill out a change of address form. The paper checks will be sent to the address on your last tax filing (2018 or 2019), so if you have moved to a different address than is noted on this form, then you will need to fill out a change of address form with the IRS.
- Sign up for direct deposit (if you want to). By signing up for direct deposit with the IRS, you can get your money faster than those who will be mailed paper checks, possibly several months earlier. One way to sign up for direct deposit is through your tax forms. On the form, mark direct deposit as your preferred refund method. If you need to change the banking information for the deposit, the IRS has a customer service line you can call to handle that: 800-829-1040.
If you are all set in the above areas, then you do not have to do anything to receive a check.
RECENTLY LAID-OFF WORKERS
What the package is offering you:
In one week, a record 6.6 million people filed for unemployment benefits. If you are unemployed, in addition to your state’s unemployment benefits (which vary by state), you will receive $600 a week for four months. This stimulus bill extends unemployment insurance an additional 13 weeks, so people can maintain coverage for longer.
For the average American, the benefits will cover all of the salary you would be making during this period. They also added $600 on top of everyone’s unemployment benefits, so in some cases people will be making a little more. This benefit includes furloughed, part-time, and self-employed workers. You cannot quit your job in order to receive these unemployment benefits, you only qualify for them if you were laid off.
What do unemployed workers need to do to get a check?
In case you skipped directly to this section, the instructions for what you need to do are the same as contractors noted in the above section, so for more detailed information please read the instructions in the “What do contractors have to do to get a check” section immediately above this one.
Here’s what unemployed plumbers need to do in order to get paid from this stimulus bill:
- File a tax form (or check out the IRS’s new non-filer web tool above). If you filed taxes in 2018 or 2019, then you are good to go. The IRS will make decisions on how much money individuals will receive based directly on those tax returns. If you have not done this, then go to the free filing page on the IRS’s website in the link shared in the above section.
- Must have a Social Security number. Must have a Social Security number.
- Must not be noted as dependent. If you are noted in anyone’s taxes as their dependent, then you are not eligible to receive a check from this bill.
- Make sure your information is up to date. If you moved from the address that is noted on your tax form that IRS officials will be reviewing for this, then you will need to update your information on the change of address form linked above. If you would like direct deposit rather than a mailed check, then also make sure your correct bank information was selected as the refund method in the tax forms they will be working from. If not, call the customer service line listed in the above section.
Put simply, as long as your 2018 or 2019 tax filings have been filed and your information is updated with the IRS, then you do not need to do anything in order to receive a check from this stimulus bill.
HOW MUCH MONEY WILL I GET?
If you make up to $75,000 then you will receive a check for $1,200. If you make between $75,000 and $99,000, your check will decrease down from $1,200 proportionally as your income goes up. The bill has set an income cap at $99,000, so if you make that amount then you will not be receiving a check from this bill.
Below is a chart that shows, if you’re up to date on your taxes and information, how much money you will receive from the IRS based on your income.
The left column shows the amount of money that an individual makes per year (adjusted gross income, as noted on their tax return) and the right column shows the amount of money they will receive as a result.
CHECK AMOUNT FOR INDIVIDUALS:
- Up to $75,000$1,200
- $75,000 – $99,000DECREASES DOWN FROM $1,200 AS INCOME AMOUNT INCREASES
For Married Couples:
For married couples who file jointly, if the household collectively brings in less than $150,000 then both adults will receive $1,200 checks. If the household brings in over $150,000 collectively, then the check amount will begin to decrease from there with a cap at $198,000.
CHECK AMOUNT FOR MARRIED COUPLES:
- Up to $150,000$1,200
- $150,000 – $198,000DECREASES DOWN FROM $1,200 AS INCOME AMOUNT INCREASES
In addition to the above amounts, families will receive $500 per child that is marked as a dependent.
For Head of Household:
If you are a head of household with one child, the income that the check amount starts to decrease at is $112,500 and up until $146,500. A head of household bringing in $146,500 or more will not receive a check.
CHECK AMOUNT FOR HEAD OF HOUSEHOLD:
- Up to $112,500$1,200
- $112,500 – $146,500DECREASES DOWN FROM $1,200 AS INCOME AMOUNT INCREASES
WHEN WILL I GET MY CHECK?
According to the U.S. Secretary of the Treasury Steven Mnuchin, taxpayers will get their checks within three weeks of the CARES Act becoming law, but many are saying that it could take months for the paper checks to arrive. Direct deposit money is supposed to arrive significantly earlier than mailed checks. If the money arrives in your account through direct deposit, you should still receive a written notice in the mail explaining the amount you received within a few weeks.
There will likely be future stimulus bills passed to address areas overlooked in this bill or anything that arises as this crisis continues. For up-to-date information regarding tax relief, the IRS will be posting updates on the coronavirus page on their website.
You can read the government documents below:
CARES Section by Section FINAL – www.basementguides.com/wp-content/CARES-Section-by-Section-FINAL.PDF
Coronavirus Supplemental Appropriations Summary FINAL – www.basementguides.com/wp-content/Coronavirus-Supplemental-Appropriations-Summary_FINAL.pdf
FINAL CARES Act – www.basementguides.com/wp-content/FINAL-FINAL-CARES-ACT.pdf