What to Do If You Lost Work Due to the Pandemic
Nearly 3.3 million Americans filed unemployment claims during the third week of March, and this number likely underrepresents those whose work has been impacted by the spread of COVID-19. Gig workers, freelancers and part-time employees may now qualify for unemployment through the stimulus plan—officially the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In addition to an expanded unemployment program, the CARES Act provides several other measures of relief. Keep reading for suggestions on ways to alleviate the impact of lost income.
Receive Relief Payments
Every individual taxpayer who has an adjusted gross income of less than $75,000 and who is not claimed as a dependent on a tax return can expect to receive $1,200 from the U.S. Treasury. For reference, this amount represents slightly more than the median weekly earnings of $936 for a full-time time wage or salary worker. And if you claim qualifying dependents under the age of 16, you will receive $500 for each. Reduced relief checks will go to individuals earning between $75,000 and $99,000 per year. Taxpayers who file jointly or as head of household are also eligible for relief up to certain income cutoffs.
No application is necessary to receive this payment. If the IRS has your bank account information from a recent tax return, they will automatically send a direct deposit. Otherwise, a check will be mailed. The relief calculation will be based on your 2019 or 2018 tax returns, so file taxes immediately (at least for 2018) to ensure receipt of a check.
Although Treasury Secretary Steven Mnuchin aims to send the first batch of payments the week of April 6, this timetable may not hold. In 2008, it took about eight weeks for people in the final batch to receive their relief payments.
Apply for Unemployment Benefits
While workers who have been laid off or furloughed as a result of the novel coronavirus outbreak may know they qualify for unemployment, the stimulus package will extend benefits to more workers than ever before, as long as their loss in income is derived from the pandemic. These individuals include:
- Gig workers, freelancers, independent contractors
- Part-time workers
- Service industry employees whose tips have decreased due to shelter-in-place
- Workers who had but could not start a new job due to outbreak
- Workers whose employers shut down
- Workers who must remain home to care for dependents due to school and daycare shutdowns
- Those who cannot work because they are symptomatic or received a diagnosis
The amount and length of your unemployment benefits will depend on your state. Self-employed and gig economy workers do not typically receive unemployment benefits, but states now have the ability to provide Pandemic Unemployment Assistance, an amount calculated based on recent wage information.
The stimulus package will also provide an additional $600 per week to anyone eligible for a state unemployment payout. This supplementary payment can be received through July 31. Under CARES, unemployment benefits may also be extended for up to 13 months.
Follow the instructions on your state government’s website to submit your application as soon as possible, bearing in mind that many people are reporting extended wait times and site crashes due to high traffic. Some states are enacting systems to mitigate the effects of this unprecedented volume; Illinois, for example, is assigning filing days according to the first letter of applicant surnames.
Reduce Monthly Expenses
As you await federal relief, take advantage of other stimulus provisions and financial planning to lower the following expenses:
The CARES Act has automatically suspended payments for any federal student loan through September 30. Interest should not accrue on your loan during this time. If you expect to encounter extended financial hardship, be aware that you may qualify for a lower monthly payment by establishing an income-driven repayment plan. Contact your student loan servicer to discuss your options.
Mortgage or Rent
If you are a homeowner who will have trouble paying a mortgage, reach out to your mortgage holder, bank, or credit union to learn about payment delay and loan options. If you are a renter who knows timely payments will be challenging, contact your landlord to work out a payment plan. For both homeowners and renters, fast action is the best course—don’t wait until payment is due. The stimulus brings some added security as well: There is a 120-day nationwide eviction moratorium for renters whose landlords have mortgages backed by certain federal bodies. Fees or penalties for nonpayment are illegal during this time.
U.S. News reports that several major lenders have announced programs to assist borrowers. For instance, Ford, Nissan, GM and Toyota offer first payment deferrals to those who purchase new vehicles. If you think you’re going to miss a payment, talk to your lender as soon as possible about options during the national crisis. You’ll have more leverage if your car is worth more than you owe.
If you owe taxes, the Treasury Department has moved the tax filing deadline from April 15 to July 15. Use the three extra months to assess financial fallout and make a plan. Of course, if the government owes you a refund, file as soon as you can.
Access Community Resources
Job security in the restaurant and hospitality industry has eroded as people buy more groceries and refrain from travel. If you are a service industry worker who requires immediate financial assistance, reach out to nonprofit organizations like the Restaurant Workers’ Community Foundation to learn about their fundraising efforts.
Gig workers lack a financial safety net and employment protections in the best of times. In addition to the federal unemployment relief you may qualify for, here’s a robust list of national and local resources compiled by the Gig Workers Collective.
Above all, engage your local community. Reach out to your network using familiar forms of social media to form new client relationships. Some types of freelance and contract work are unaffected or even in higher demand at this time. If you are a Tutor or could transition to teaching a skill online, for instance, this moment could be opportune for business. What does your community need that you can offer?
Additional Information and Aid
An excellent Q&A-style article about the stimulus package is updated with new information regularly at the NY Times. In addition, the Department of Labor provides other federal aid possibilities for employees affected by COVID-19, including paid leave entitlements under the Families First Coronavirus Response Act and the role of the Workers’ Compensation Program for employees exposed to the virus on the job.