BiggerPockets Money Bonus Episode: CARES Act: Everything You NEED to Know About the Coronavirus Stimulus Package

Mindy:
Welcome to the BiggerPockets Money Podcast Cares Act bonus episode. I chatted with Natalie Kolodij recently about yes, the checks, but also some other provisions in the code that you will want to know about and may not be getting the same attention that those checks are getting right now. And since we’re all isolating in place, her bulldog, Mini Moo, chimes in from time to time in the background. The BiggerPockets Money Podcast is here to make financial independence less scary, less just for somebody else, and show you that by following the proven path, you can put yourself on the road to early financial freedom and get money out of the way so you can lead your best life. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or start your own business, we’ll help you build a position capable of launching yourself towards your dreams.

Mindy:
Hello, hello, hello, and welcome to the BiggerPockets Money Podcast. Scott is not joining me today. I’m flying solo with Natalie. And as you may have heard, Congress just passed a $2.2 trillion bill to provide relief for Americans in the face of the coronavirus. While the bill does provide for monetary help, there’s a lot of other benefits that may not be getting the same press. Natalie Kolodij is here with me to explain some of those other benefits and ways you can take advantage of some of these programs.

Mindy:
Just a quick note, Natalie is joining us today to talk about these provisions, and yes, she is a tax expert, but please check in with your tax professional before implementing any of the ideas suggested in this episode. And also please note that this was recorded on Saturday, March 28th, and additional guidance will almost certainly be forthcoming. Stay tuned and we will keep you up to date as events warrant. Natalie, welcome to the show. Thanks for joining me today on this lovely Saturday afternoon.

Natalie:
Thank you for having me. I’m glad we could get this going somewhere.

Mindy:
I’m glad we could finally get this going too. Okay. So, Natalie, lawmakers are saying that this won’t even be the last bill on this subject, but they wanted to get started with something. So, we will continue to keep you updated as events warrant, however, we can speak to several of these key points, especially as they pertain to BiggerPockets Money listeners. Of course, the first question on everybody’s mind is how much money am I going to get? When do I get it? Is it taxed, do I have to pay it back? So let’s talk about those.

Natalie:
Yeah, perfect. So, before I dive into that, guys, just keep in mind, talk to your tax pro about any of these things. While I am a tax professional, I’m not your tax professional, so your circumstances could be different. So, yeah, the big ticket item that people were kind of waiting for and worried about was the stimulus checks. There were several different versions of it, different amounts, so there’s a bunch of wrong information going around, and I just wanted to make sure everyone got the correct information. Right now, what we have is they are sending out a stimulus check. The question of when, we have no idea. It’s kind of a fun moving target. They’ve said April 10th online, or on stream… what are those called? Teleconferences. They have said three weeks from now. That’s about how long it took when we had a similar program back in 2008. So, we have no idea exactly when they’re going to send out checks or no idea when they’re going to look at your information to see who qualifies, so we’re kind of dealing with a moving target.

Natalie:
With the checks, the key points of them is that you have to have a Social Security number to qualify. They are going to be $1,200 if you’re single, or $2,400 if you’re married, and then there’s an income limit. This is why I wanted to get this information out quickly, because this is something where you may qualify or you may not, and we can potentially change that. The income limits are $75,000 for an adjusted gross income if you’re single, or double that 150,000 for an adjusted gross income if you’re married. So, here’s where it gets tricky. We’re in the middle of tax season, right? So some of you guys have filed your 2019 tax return, some people haven’t. So, the order in which they’re going to look at information to see who gets this check is going to be first 2019. So, if you submitted and filed your 2019 tax return, they’re going to go off of your adjusted gross income amount from that return.

Natalie:
If you haven’t filed ’19 yet, they’re going to look at your numbers from your 2018 tax return for your adjusted gross income. What this means is that if you know you made more money in ’19, or if the opposite is true, say in ’18 you made a lot of money and in ’19 you made much less, you’ll want to get ’19 filed as quick as possible because that could qualify you when 2018 wouldn’t let you qualify. So, if your ’19 isn’t filed yet, take a quick moment to look at how it compares to ’18 and see if one of these years does or doesn’t allow you to qualify for this stimulus check, because that’s going to determine if you want to file ’19 as quickly as possible or hold off on filing it and let them look at your 2018. That’s kind of the starting point.

Natalie:
There is an additional $500 credit per dependent child under 17. What that means is step one is you have to qualify. Pretty much if you tap out, if you made too much money for your stimulus check, your 1,200 or $2,400 based on your income, then you can’t qualify for just having a kid. For example, if you’re single and you make under $75,000, so say you’re single and your adjusted gross income is $60,000 and you have two children, you’ll receive a $1,200 check just based on your income, and then another $1,000, which is 500 per child. If you have not filed ’19 and have not filed ’18, this is something a lot of people asked about, “What if I’m behind? I haven’t filed the last couple years taxes.” If you haven’t filed either, they’re first going to look for Social Security reporting. There’s a lot of people who don’t file a tax return because their income’s not high enough, they’re on Social Security. If the IRS, if they see that you don’t have ’18 or ’19 filed, they’ll look and see if you had Social Security income reported to you, and if so, you’ll qualify.

Natalie:
If you have none of those things, you’ve just been, I don’t know, you have been avoiding your taxes for some reason, so you haven’t filed ’18, you haven’t filed ’19, you’re wondering if you get this check. The answer is no, not right now. A key thing to keep in mind with this check is that it’s actually a credit against 2020, so that has confused a lot of people too. There’s been a lot of kind of incorrect information where people have said, “Oh, you pay this back later. It’s going to hurt you next year.” That’s not the case. All they’re doing is basically this would’ve been a credit on your 2020 taxes, and they’re letting you get it early if they think you’ll qualify. So, if right now, you don’t qualify because you didn’t file your returns, when you file your 2020 taxes, if you do qualify, you’ll get it as a credit on your taxes instead of as a check today.

Natalie:
The same is true if you don’t qualify today. This is what a lot of people are going to see, right? Where 2019 they made their regular amount of income and they make too much to qualify. But it’s right now in 2020, where people are being hurt financially and having that economic hardship. So, if in 2019 like right this second you’re single and you make $200,000, you won’t get a check. You made way too much money based on last year. But then when you go to file your 2020 taxes, you only made $60,000, you’ll get it as a credit on your taxes instead. So, basically, if you don’t qualify today for whatever reason, but you do qualify when you file next year’s taxes for 2020, you’ll get that money as a credit on your tax return.

Natalie:
The opposite won’t hurt you though. This is what people were worried about and people were really worried that they were going to have to pay back this credit. There is no payback mechanism. There was, in earlier drafts of this bill, which is why it was really important to not share all this information until we have the final version. But if you qualify this year because your income is low enough that you get the check this year, and then when you file 2020 you still reconcile. They still see if you would’ve gotten it based on 2020. However, if in 2020 you made too much money, they’re not going to make you pay it back. So, it can only help you. This was kind of the key information to get out early, so take a look at your taxes before you file them, if you haven’t filed ’19 yet, and see if one year will let you get this credit immediately as a check and the other one won’t.

Natalie:
It’s just something to kind of talk to your tax professional about right now. And unfortunately, we don’t have a deadline, right? I can’t tell you if 2019 will help you, you have to file it by next Wednesday or two weeks. We have no idea when they’re going to pull that information, so it’s just kind of a Hail Mary move, try to file it as quick as you can and hopefully it gets through in time.

Mindy:
What about if I don’t want it or I want to refuse it? Can I refuse this check? Or can I contact them and say, “No, I don’t want it.”

Natalie:
Nope. It’s just something they’re going through and doing as quickly as they can and getting it out to everyone who qualifies as quickly as they can. There’s going to be a lot of weird hiccups with it. So, if you don’t want it, but you qualify, they’re sending it to you, do something good with it, pay it forward. I don’t know what to tell you. But you’re getting it, congratulations.

Mindy:
Okay. Another question that we had was eligibility. So, you said that all tax filers from ’18 and ’19 and their dependents under 17, we’ve got a couple of questions.

Natalie:
Okay.

Mindy:
One was, “My daughter is 19, still a dependent, but filed taxes last year. Will she get a check?”

Natalie:
Nope. We’ve got this really unfortunate bubble of college age students where their parents still claim them on their taxes, but it only applies to dependents under 17. So, she’s not claiming herself, so she doesn’t get the 1,200, and you can’t claim her, well, for this credit, so you don’t get anything extra either. So it’s just kind of lost, lost in the middle.

Mindy:
Okay. So now that same daughter, if she had not filed 2019 tax returns, she could change her taxes to claim herself as a dependent in order to get the 1,200?

Natalie:
Yep. You’d want to look at if it’s going to come out ahead or behind. A lot of the time, basically, the parent claiming them provides a better tax benefit overall.

Mindy:
Okay.

Natalie:
So. Their tax benefit might be more than the $1,200 check, so compare it. See before you submit, either look at it both ways and see what the outcome will be.

Mindy:
Okay. And are green card holders and H1B visa holders who work and pay taxes eligible for these benefits?

Natalie:
Anyone with a social, it’s like the earned income credit. So, anyone who doesn’t have a valid social can’t receive the credit. There’s been some kind of questions from tax professionals where they’ve said, “What if one spouse has it, the other doesn’t?” kind of thing. And the fact of the matter is we don’t know for sure. Right? This hasn’t happened yet. The thought at this point is that if one person does have a valid social they will still be entitled to their $1,200 credit. They just won’t get it for husband and wife for both spouses.

Mindy:
Okay. And what if I filed 2018, I have not filed 2019 yet, but I had a baby since then?

Natalie:
If you had your baby in 2019, file 2019 ASAP because they’re going to just go based on what’s on that return. So basically if you don’t have ’19 filed, you won’t get that $500 child credit because they didn’t know you didn’t have a child in 2018. If you did in ’19 and you file your taxes to show that and they receive it in time, you will get it. If you file it and they don’t get it in time, then when you file your 2020, that extra $500 you were entitled to you’ll get as a credit on your 2020 taxes. So it’s going to true up where any additional credit you’re entitled to, you’ll get worst case is as a tax credit on 2020. We’re just trying to make sure people who need the money and need the check today can get it if they qualify.

Mindy:
Okay. Is there anything I haven’t asked about the checks? I think you kind of covered it all.

Natalie:
Another quick weird thing that I will mention is they’re going to direct deposit the checks. This is a whole situation in and of itself because if you haven’t received a refund the past couple of years, your tax returns won’t list direct deposit information. So, if that’s the case, they’re going to send you a paper check which will take longer. If your address with the IRS is not updated, send in… oh, I forget the form number off hand, but I put it in the show notes. I’ll post it in the group after this. But there’s a form you can send to the IRS to try to update your address. It can only be mailed, so I don’t know if they’ll get it in time, but it’s worth trying, because if your addresses and current and they send it to the old address, it’s just going to be a loop around. So, that’s what’s happening, and unfortunately there isn’t, “Oh this is important.” There isn’t.

Natalie:
The IRS isn’t contacting people for updated information. There’s not any website to collect that information. Tax preparers have already heard about and we’ve had reported to us scam websites where people are trying to gather direct deposit and bank information from people to receive the stimulus check. That’s not a thing. There is no way to submit your information for this. If anyone requests it from you, it is a scam, and do not give them your information.

Mindy:
Oh, yeah. Just a note. The IRS doesn’t make phone calls. They send letters through the United States Postal Service, and that’s the only way they contact you.

Natalie:
Yeah. They’re also not working right now. Another heads up, they’re just closed.

Mindy:
Of course.

Natalie:
So, I’m sorry if your tax professional isn’t getting back to you on something, we can’t talk to them. They’re closed. They’re home. They’re quarantined.

Mindy:
Yes. I should apologize for laughing. I’m not laughing at this situation. It’s just kind of absurd.

Natalie:
Yeah, yeah.

Mindy:
Okay. So, let’s talk about some of the things that aren’t the stimulus check things but are still really cool to talk about, 401K distributions. And while we’re talking about 401K distributions, let’s talk about IRAs too. Are the rules the same for both types of retirement funds? And are we talking just traditional pretext funds, or are we considering Roth funds as well?

Natalie:
Yeah, so they did a couple things. With 401Ks, the only thing they changed was you could always borrow money against your 401K. They just doubled the amount. So now you can borrow $100,000 from your 401K. That was kind of the cut and dry change there. The bigger change relates to IRAs, and at this point, like I said, it’s kind of a little convoluted the way they phrased it, but the kind of consensus at this point is that it’s only traditional IRAs. So, what they did with IRAs is normally you can’t borrow money from an IRA. Normally you can’t do a loan the same way you can with a 401K. What they did with IRAs is that they said, “You can withdraw $100,000. You can withdraw up to a $100,000 from your IRA without a 10% early withdrawal penalty if you qualify as having a coronavirus related hardship.”

Natalie:
I’ll read some wording on that in a second. But so you can take out $100,000 from your IRA and then you have up to three years to pay it back into a qualified account. So, what that means is that it doesn’t specifically have to go back to that same IRA, but you have to pay it back into another traditional IRA within three years. As long as it is back in within three years, there shouldn’t be any taxable event, there shouldn’t be any negative impacts. You just get to hold onto that money for three years. The other option is you can take out that $100,000 and you can still not have your 10% early withdrawal penalty, and then you can keep it forever. So, at some point it will be taxable, right? If you don’t pay it back in the three years, you recognize it at some point, but they’re giving you two different options.

Natalie:
Either in that fourth year you can recognize $100,000 distribution all in that one year, like if you know you’re having a really low year for income, a really low tax bracket year, that might be better. The other option is they’re also allowing you to spread the recognition across three years. So, instead of claiming the whole 100,000 in one year, you can split it across three so that it’s less taxable income per year. With the IRAs, there’s been kind of a lot of question on what you can do with the funds. Do you have to use them for related medical expenses or what? There’s no specific on what has to be purchased with it. There’s just qualifiers for who can make this distribution. So the way it’s worded, there’s obviously anyone who is diagnosed with the virus seeking medical from the virus, like personally impacted, physically, medically related to this, you qualify.

Natalie:
But the second qualification is very vague, and it’s literally phrased as anyone who experiences an adverse financial consequence as a result of being quarantined, furloughed, laid off, having your hours reduced, being unable to work due to childcare, or having to reduce hours in your own business due to the impact of this. So, if you have any kind of negative impact financially, if your sales have slowed, if you couldn’t open your doors, if you have any kind of impact like that, you qualify to take this money out. So, for most people, they’ll qualify, so you could potentially use it for investing. I heard someone say you couldn’t buy houses with it, but if you’re a full-time investor and you have had houses sitting on the market due to not being able to sell right now and you have that hardship, you can qualify for withdrawing this money and maybe the solution for it is kind of converting them into a buy and hold or doing something else. So, there’s no specific stipulations on how to spend it. Just the qualifiers are you had to have been negatively impacted, having a financial hardship as a result of the overall situation.

Mindy:
Okay. Somebody sent a note to my husband, and he said, “I read the recap of the Corona bill and the part about the $100,000 IRA withdrawal. It stated that you could pull up to 100,000 out tax free, penalty free, as long as you put it back into an IRA within three years. It said that you do not have to return it to the original account, just an IRA. So, if I pull out 100,000 from a traditional IRA tax free and return it to a Roth IRA, I have just made a tax-free Roth conversion. What are your thoughts?” I’m thinking that that would be really, really awesome but also not allowed.

Natalie:
Yeah. At this point, and there could be, someone could find some weird wiggle, but at this point I would say no, that they will… because the way it’s worded, the sections of a qualified retirement plan, a Roth IRA is a different subsection than what they reference in the code. So, I don’t think it’s going to fall under just being an IRA. I think they would have specifically noted the subsection of the internal revenue code that differentiates them. It’s one of those sounds too good to be true things. So, I also don’t think that they would let you just do a tax free rollover that way.

Mindy:
Yeah, I really wish that they would, but that I don’t think is going to be the case.

Natalie:
Yep. I agree.

Mindy:
Okay. On episode 118, which airs on Monday, Scott and I interview Kyle Mast, who has a number of innovative suggestions for taking advantage of this down-market, including possibly converting funds from a traditional plan to a Roth for maximum tax free growth opportunities. So, what he’s saying is, “Hey, the market is already down. If you’re having lower taxable income today or during this whole year, can you take some of those funds, pay the taxes on them, you’re not going to pay a penalty because of this. Pay the taxes, convert them to a Roth IRA, and now you’re going to receive…” I mean, not receive, this isn’t a guarantee, but we all believe that the market is going to go back up. So now you’re going to realize the same amount of growth in your traditional versus your Roth. But since it’s now been converted to a Roth, it will grow tax free. So, is there anything to consider about that?

Natalie:
I can’t guarantee that it won’t have a 10% penalty for all early withdrawal. I don’t know that this provision is going to override, like I said, being an Roth. But like with any low-income years, that’s the time you will want to convert over, because when you switch from traditional or full funds out of a traditional into a Roth, you’re taxed on them at that point. That’s how a Roth works. You pay the tax on the front end, assuming you will make more money down the road, so you just want to get the tax out of the way. So, you’re taxed at that conversion point. If 2020 is going to be really low income year for you, if you’re impacted negatively, it would be a good point to recognize that taxes, because you’ll presumably be in lower bracket, and then potentially we could have more relief from this bill. It’s just not clear yet. They could release further guidance.

Mindy:
Okay. And are there any provisions for already retired people?

Natalie:
Yeah. One of the great things they did was normally when you’re above 70, or they just raised it up to 72, you have to take RMD, which is a required minimum distribution from your retirement account, and so they have put that on hold for 2020. If you already made it, we can’t pull it back, unfortunately, but if you haven’t taken out your required distribution for the year, you can choose not to. And this is only for 2020, but right now our accounts are all down from the stock market. If you want to leave it and let it be for another year, you can do that. You can skip pulling that money out right now.

Mindy:
Okay. I want to move on to small business owners, but before we do that, Dan just asked, “Would I be able to take up to 100,000 for my self directed Roth IRA and then pay back to my Roth 401K?”

Natalie:
I don’t think so. I think it’s going to be an apples and oranges. I think 401Ks, any variety are going to be kind of their own classification for this.

Mindy:
Okay. Let’s talk about employer benefits to employees. Right now there’s a lot of companies that are closed, small businesses that have no income. Specifically, let’s talk about IRC section 139 disaster relief payments. How can an employer use this effectively?

Natalie:
Yeah, so this is kind of a weird one, and it’s unfortunately when we have the least guidance on. This is when people keep crumbling coming up with really creative tax planning purposes around right now. We don’t know for sure. We’re kind of based on, “Well, this doesn’t say we can’t do this.” But what this code says is it’s a disaster relief payment. So, essentially, the president announced that we were in a state where we’re allowed to use this code provision, and what it lets you do is normally you can’t give any kind of money to employees without it being taxable. You can’t even call it a gift. Like it is taxable if you are paying employees for any reason, it becomes taxable. So, this code says we get to over at that.

Natalie:
So, basically what this says is you can provide payment to your employees at this point under this 139, this code 139, for necessary expenses, so for their living expenses, medical, any of these expenses they are incurring right now, you can provide them with funds to cover that and it is deductible to you as an employer and it is not taxable income to them as an employee. So, keep this in mind. It could just be a good base, but there could be some strategy here. You have people who were reduced hours or things like that, it might be a better option to adjust the structuring and pretty much provide them some income under this code where they’re not getting taxed on it and you still get to deduct it. So, talk with your tax professional and your payroll person to see if this makes a little more sense.

Natalie:
We are not clear yet on if it can or can’t be used related to an S Corp shareholder. What that means is if you own an S Corp, you are technically your own employee. So, there are some provisions in place with certain benefits where you can’t just pay yourself, pretty much, and get these benefits and say, “Oh, I was helping an employee.” But this isn’t technically a fringe benefit, so at this point, it seems like this would be utilizable. So, if you have an S Corp, you do flipping or you do something else, and you’re at a point where you have taken yourself off payroll right now, they’re just strapped for cash, your businesses isn’t flourishing but you need some money just to survive, you can transfer yourself money under this code section and potentially not have it be taxable to you.

Natalie:
So, again, talk with your tax professional, look at your specific circumstance. But that’s what this code was enacted to do was basically let you provide relief to your employees where it’s not taxable income to them, but your business still gets to deduct it. So, it’s kind of the best fumble sides.

Mindy:
Is there any guidance for how much relief you can provide your employees?

Natalie:
There’s not a cap, it’s just that it’s supposed to be for necessary personal family living or fundamental expenses. So it’s again kind of vague, but I think it’s intent just sort of find go based on the purpose of it. You know? You’re just trying to help them get by. You’re trying to help them pay those necessary expenses.

Mindy:
Okay. And can you explain the change in how net operating losses are being accounted for and can this apply to losses from depreciation like passive investors?

Natalie:
Yeah. net operating losses are business losses. The only thing that changed here was they basically took the code and brought it back to what it was before the tax cuts and jobs act. Net operating losses say you had so much of a business loss that you couldn’t deduct at all and you used to be able to carry it backwards for several years. So, you could, if you had owed money in previous years, you could carry it backwards and offset it, and then anything left, then you carried forward. Then tax cuts and jobs act changed it so you could only go forward. So, all this is doing is changing it back. What this means is this is if you have net operating losses, and they have to specifically be NOLs, not passive activity losses. So, if you’re a landlord, if you own passive real estate and you have losses every year due to depreciation and you can’t utilize them because your income is too high, this doesn’t impact you.

Natalie:
There was an article that’s been being shared around where they kind of made it sounds like it did. They referenced real estate developers and their great losses from depreciation, which doesn’t make any sense because real estate developers can’t depreciate houses they’re selling as inventory, but they made it sound like every landlord was going to get this huge wind fall and get to use all those losses. That’s unfortunately not the case. It’s just these excess business losses. So, if you do have those, you normally don’t see these until you’re at a pretty high income level, because you can use a significant portion of them year to year. But if your tax professional tells you you have them and you paid any money over the last five years, you can go backwards now and amend those tax returns and bring these losses backwards and get a refund. So, this is something that’s very case by case, but check your return if you have something listed for net operating losses. Talk to your tax professional about going back five years and amending.

Mindy:
Okay. And let’s talk about student loans now. Student loans are either on hold or interest has been frozen until September 30th, federally backed student loans, I should say. How does provision work and are there any special things you would need to do to take advantage of this one?

Natalie:
Yeah, so the 0% interest is just happening. They have just turned off interest in their system. That means right now if you make a payment on your student loans, it goes all to principal, and that’s great, right? That’s a huge advantage. The flip side to this is they have deferred student loan payments until September 30th, but to receive that benefit, you have to call and contact them. So, reach out to your loan providers. Say you want that deferral, it shouldn’t hurt you at all. There shouldn’t be any negative impact. It just means you have several months here where you don’t have to make a payment. Ways to utilize this are kind of best habits help you. It depends on your goal or your circumstance, right? If currently paying down student loans is really important to you and you have the funds right now, you weren’t hit negatively, you’re still working, great. Take advantage of it when you can apply it all to principal.

Natalie:
The flip side is if you are trying to cut back expenses right now, maybe your hours were cut back at work, you can choose to not make your student loan payments for a few months. The third option is even if you can make those payments, could you use that money for something better over the next few months? So, if you wait until September to not have to make a payment, if you have that extra $400 a month for the next several months, could you put it in something to get money back into a high yield account or something? So, you’ve got kind of a few choices to think about. But just keep that in mind that they’ve added some relief there related to your student loans.

Mindy:
Okay. And I know you are not a payroll person, but let’s talk a little bit about the family first Coronavirus Response Act.

Natalie:
Yeah. This was kind of a weird one. They combined… like this came out at the same time, sort of, and it just got a lot less attention. So, this is what’s allowing basically paid sick leave and paid family leave for employees. So, any business with less than 50 people doesn’t have to do this, so most small businesses are not required to. But businesses that are larger are basically required to do two weeks of paid sick leave or two weeks of sick leave at two thirds your normal pay. It depends on why you qualify. This is why I was saying I’ll kind of touch on it, but I don’t do payroll so this isn’t my jam.

Natalie:
But basically what it’s saying is there’s six reasons you can qualify for this, and three are based on actually being sick, having the virus, something like that. Three are based on not being able to work due to quarantine or a stay at home order or something like that. If you can’t work due to actually being sick, they can give you that full pay. If you can’t work due to quarantine it’s that two thirds pay, and then the employer is actually going to get this back as a credit on their 2020 taxes. So hopefully some employers take advantage of this and really kind of help their employees out at this point.

Mindy:
Okay. What about the employee retention credits?

Natalie:
Yeah. This is what I just wanted to touch on too. It is a credit of 50% of qualifying wages up to $10,000 per quarter per employee. Same thing. Small employers are not required to do this. Bigger ones are. But this is important because to qualify for this retention credit, basically you still have to be operating, just not at full capacity. So, if your business is still going, but you have to work remotely or you can only work certain things, then this is the credit you qualify for. This was important to get out right now, and I wanted to mention it, because if you use this credit or rather if you use one of the SBA loans that are available right now to help with business relief, you can’t also get this credit. So, taking the SBA, what are they calling it? A small business interruption loan, if you utilize that loan to help your business right now, you don’t qualify for this payroll credit. Another thing to just make sure you talk through with your tax person before you go forward on either, because there’s interference.

Mindy:
Okay. And the last thing I want to talk about is the payroll tax payment deferral.

Natalie:
Oh, yep. Yep. Basically what this is letting you do is defer some of your payroll taxes for three years. So, what this means is any that you incur before 2021, you have to pay the rest by the end of the year or pay 50% by the end of the year, and then the other 50% you get to spread over two years. The same thing applies on self employment taxes. This is big for people too and to consider this. So, if on your 2020 tax return, if you’re self employed and you have self employment tax and you can choose to only pay half of that amount due with your 2020 taxes and then pay the other 50% recognize it over the next two years. So, it’s not a forgiveness, it’s just kind of pushing the tax off to a later date. But if you need the money for your company right now, or if there’s something better you could use the funds for to help your business get back on its feet, it just gives you another option.

Mindy:
Okay. We didn’t discuss this beforehand, but do we want to talk about unemployment and the extra benefits that are getting there that people can qualify for during this?

Natalie:
Yeah. What they did basically was extended it, so you can get an extra $600 right now if you qualify for unemployment. And I don’t know the details on this part yet, but I know they also added some relief if you’re self employed, but pretty much only if you work in kind of a gig economy. This was part of Uber’s, they’re rallying for this part of it. Anyone who kind of works these unique jobs like that where they will also potentially qualify for unemployment where they wouldn’t, so the thing to be mindful of is if you get that additional money, unemployment income is taxable to you on your next return. So, keep in mind that if you don’t have… many states let you have withholding just like from your paycheck done from your unemployment and you might want to look at that so you don’t end up owing extra tax on your next year’s tax return. So I’d say that’s kind of the biggest thing to be aware of right now.

Mindy:
Okay, great. I think this covers all the things that we had wanted to discuss. Again, this is a fluid conversation right now. We don’t have a lot of guidance from the government because they did this kind of… I don’t want to say they threw it together because it’s 880 pages long, but they did kind of throw it whether, and I think afterwards you know clever people like the guy who had sent the note to my husband, “Oh, can I just put it back into my Roth?” And they’re like, “Oh, we didn’t think about that.”

Mindy:
So, I think that there are going to be some amendments and additions to this or changes in the next bill that they come out. I believe Nancy Pelosi has said this isn’t going to be our final bill. We’re going to have more. We’re working on them right now. We’ve already started working on the next one. So, stay tuned to BiggerPockets and BiggerPockets Money, and we will bring updates as many as we can. Oh, Dan has one more question. If you’re self employed, LLC [inaudible 00:35:55] partnership, can we qualify for the federal unemployment of 600 per week, and do we apply through our state for the fed? I know you applied through your state.

Natalie:
Yeah. I think, it’s my understanding at least, like I said, guys, this bill came out yesterday. I have been studying nonstop. It’s 880 pages. I spent three hours in a course yesterday. I wanted to give you as much correct information as possible, so I couldn’t learn all of it. But my understanding is that it’s not all self employed people who can qualify, unfortunately, that they’ve kind of narrowed it down to this weird gig economy is what they’re calling it. So, Uber drivers or people who do… well, I guess that’s the only one I can think of right now because that’s the example they kept using. But I guess what it comes down to is this is something that I can follow up on. So, I will go ahead and look into it a little further and I’ll put a post in the Money group and let you know if they’ve expanded the self-employment relief or if we have kind of more detailed guidelines.

Mindy:
Okay. Natalie, what is your favorite joke to tell at parties?

Natalie:
Oh, gosh. I don’t go to parties, you guys. I read tax bills that are 880 pages. I’ve been quarantined since January pretty much. I’ve been at my desk for months now. I have no jokes for you. I’m sorry. This is the joke. The joke is it took this long to do the Facebook live. Thank you guys for sticking with us.

Mindy:
Okay, I’m going to look up a bad joke. I should’ve done that beforehand because that was actually a very good question, Steve. How do you make Holy water? You boil the hell out of it. Okay. I want to thank everybody who was so patient for me fumbling through my Facebook live, world’s worst. Now I’ve got two world’s worst Facebook lives, or three because we started again, so thank you very much. I am going to talk to the people at BiggerPockets to get this released again in its entirety. I know some people joined in a little bit late because, you know what? You can blame me. I will take the blame for that, because technology is not my friend. But thank you so much for sticking around and I really appreciate all of you and your listening and being part of our Facebook group, so thank you very much, and thank you Natalie. I really, really appreciate you, and everybody have a great day.

Natalie:
Bye, guys.

Mindy:
We’ll talk to you again soon. Okay, huge thanks to Natalie for taking time out of her, well, frankly, not so busy day since we’re all isolating in place, to share her thoughts about some of the lesser publicized provisions of the Cares Act. We will be keeping you up to date on the podcast as well as on our blog, which can be found at biggerpockets.com/blog. Thank you for listening and I hope you’re keeping safe. This is Mindy Jensen, over and out.