The coronavirus pandemic has shut down non-essential businesses everywhere and unfortunately most professional photographers are included. Assignments are on hold or, even worse, permanently cancelled.
Thankfully the federal government has passed the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, legislation designed to provide financial relief to individuals and businesses suffering a sudden loss of income. While the act contains many nuanced benefits worth exploring, there are three key points pros should understand.
Individual Financial Relief
First up is the $1,200 in income tax credits that will be provided as cash to every individual whose 2018 or 2019 federal income tax return shows adjusted gross income of $75,000 or less. No action is required and the IRS will direct deposit funds or mail a check; the process is expected to begin within days.
There are, however, some requirements to qualify. First is the income limit: $75,000 per individual or $150,000 per married couple to receive the full $1,200 per person. Those earning up to $99,000 per individual will receive a payment reduced by $5 per $100 of income above $75,000. (For “head of household” filers the income limit is $112,500 for the full payment up to $136,500 for a reduced payment.)
An additional payment of $500 per child under age 17 will also be provided. An individual earning up to $74,999 with two children would therefore expect to receive $2,200 in total.
Updated information on these 2020 Recovery Rebates is available at irs.gov/coronavirus.
Enhanced Unemployment Insurance
For freelance photographers or those who have been laid off, the CARES Act provides Pandemic Unemployment Assistance—a robust unemployment benefit that is larger, longer lasting and available to more people than ever. Unemployment insurance varies by state, but the federal government has pledged to add $600 per week in benefits, and extend those benefits by 13 weeks. For many states this means a maximum of nearly nine months of unemployment insurance, as well as a weekly payment totaling from $835 to more than $1300.
Most important is the broad reach of these benefits, available for the first time to freelancers, part-timers and those employed in the gig economy. If a self-employed photographer has lost income, unemployment insurance is the first place to start. Career One Stop offers a convenient portal to individual state systems, but be warned that the sudden influx of millions of people is overloading those systems and could delay benefits so it’s best to start the process as soon as possible.
Forgivable Small Business Loans
The Small Business Administration offers many loans designed to help businesses in times of crisis, but the CARES Act provides the opportunity for a loan that can be fully forgiven. It’s called the Paycheck Protection Program, and it’s practically free money for businesses that use the funds to pay employees throughout the coronavirus crisis. This is the ideal solution for a professional photographer who owns a small business and has assistants, studio managers or office workers on the payroll, but it may also be useful for sole proprietors or even individual S corp owners who draw a salary.
The amount of loan forgiveness is based on use of the funds for payroll, mortgage, rent and utilities. Otherwise, the loans come with a 1% interest rate and a two-year term, and the first payment is deferred for six months. Business owners should check with their accountants and bankers to access PPP loans. Learn more at home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses.