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Understanding the CARES Act: Relief, Resources, Laws, and Loans for Creators

Creators,

You all continually impress and humble us with your ability to adapt, reinvent and keep right on creating works that move, motivate and inspire us all. You are needed now more than ever. And patrons, the response from all of you out there in this time of tremendous uncertainty has been truly inspiring. Patreon will be here for creators and patrons alike as we figure out this new normal together.

We are, however, under no illusion that all creators can replace their lost earnings and opportunities on Patreon alone.

For U.S. based creators who could use a little financial help, you may or may not know about the funds being made available through recent legislation. It includes some amount of relief for individuals, artists, independent contractors, “gig economy” workers and entrepreneurs, as well as small businesses working in the creative economy and offers direct support for both nonprofit cultural organizations and state and local arts and humanities agencies.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748) became law on March 27, 2020. It’s over 800 pages long and we’re going to break it down for you. Let’s dive in:

Checks are coming!

Most people in the U.S. will be getting checks or direct deposits of $1,200. All U.S. resident individuals with adjusted gross income up to $75,000 1 and who are not a dependent of another taxpayer are eligible for the full $1,200 rebate check2. An additional $500 is granted per child. This benefit is available even for those who have no income, as well as those whose income comes entirely from social security or other benefits.

Good news! Filing Delays

All tax filings that were due on April 15, 2020, have been postponed until July 15, 2020. This extension is automatic and there isn’t anything you need to do. For independent contractors or those who are self-employed, this delay would apply to first-quarter estimated tax payments for the 2020 year (in addition to 2019 tax returns).
States are mostly following suit, but you should be sure to confirm if you need to delay filing.

Unemployment Checks

Unemployment checks now include an additional $600 per week for up to four months, and eligibility is expanded from 26 to 39 weeks. Additionally, unemployment benefits can now be claimed by self-employed workers, independent contractors, and those with limited work history. This program is run by your home state, which sometimes has “waiting periods” before you can claim, but the federal government is incentivizing states to waive that period. If you were previously not eligible for unemployment, which is common for artists, arts workers, and various other self-employed folks, this bill may now (finally) allow you to claim. Make sure you check your local state programs and services if your income has been impacted by the virus.

Payroll Taxes

Speaking of self-employment taxes… Self-employed individuals can defer payment of the employer share3 of the social security tax effective for payments due after March 27. If you elect to defer, 50% of the deferred payroll taxes are due on December 31, 2021, and the second half is due on December 31, 2022.

Federal Arts Funding

For creators who rely on federal or local arts grants, $75 million each is being put towards the National Endowment for the Arts and the National Endowment for the Humanities. This funding is primarily intended to quickly award “general operating grants with no match requirements to nonprofit and governmental arts agencies” (40% to go to state arts agencies for regranting locally). Reach out to your state arts agency if you rely on federal or local grants to apply. A further $5 billion is being set aside for Community Development Block Grants. Arts groups should work directly with local HUD offices for grant support relating to community development projects.

Loans

The Small Business Administration’s loan program may now be accessible to you and has an increased cap on loans. They’ve provided an online application process4. Businesses with less than 500 employees have access to small business loans under Section 7(a) of the Small Business Act (SBA) of up to the lesser of $10 million dollars or 2.5 times “average payroll costs”.

”Economic Injury Disaster Loan” grants (under Section 7(b)(2) of the SBA) are also available to individuals operating as a sole proprietor or an independent contractor. An Emergency Grant of up to $10,000 which is made available within 3 days, can be used for a number of listed reasons, including rent. Note that there are details to sort out, but if your business has been around for at least a year prior to this disaster and you are struggling it may be worth investigating.

Creators with retirement accounts

If you need to take money out of your retirement plan ASAP, keep in mind that the 10 percent early withdrawal penalty will be waived on up to $100K of retirement funds withdrawn. Additionally, income attributable to such distributions would be subject to tax over three years, and you may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.

Whew, that was a lot!

To recap the most important piece of information: If the IRS has direct deposit information, you will receive payment directly to your bank account. Otherwise, watch for a check sent to the address found on your 2019 return, or your 2018 return if you haven’t yet filed this year. More information can be found at the IRS website, here: https://www.irs.gov/coronavirus

Be safe, creators. We're in this with you.


Note: While the CARES Act impacts our Creators within the US, governments the world over are reacting in kind.

Australia, for instance, has enacted a number of measures, including JobKeeper payments to businesses, checks to social security, veteran, and other income support recipients, and expanded eligibility to income support payments (and a new Coronavirus supplement).

Similarly, Ireland has introduced a COVID-19 Pandemic Unemployment Payment program available to employees and the self-employed who have lost their job on (or after) March 13 due to the COVID-19 pandemic.


Weston Dombroski is the Public Policy Manager and Michael Mincieli is the Director of Global Tax at Patreon



  1. The IRS is going to look at your 2019 tax return (or 2018 return if you have not filed the 2019 return; see filing delay section below). If you’ve filed neither, the IRS will look for a Form SSA1099, Social Security Benefit Statement, or Form RRB-1099, Social Security Equivalent Benefit Statement. Essentially, the only requirement is that you have a valid social security number.
  2. Direct deposits of $2,400 to married couples with adjusted gross income up to $150,000
  3. The 12.4% tax you are required to pay on net earnings above $400 as a self-employed person actually consists of two parts: a 6.2% ‘employer portion’ and a 6.2% ‘employee portion’. The employer portion is the payment which can be delayed.
  4. Though, get comfortable as the application may take roughly 2 hours and 10 minutes to complete

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