To help keep businesses afloat and workers under the wing of their employers so the economy can quickly restart after the COVID-19 pandemic subsides, the recently enacted CARES Act stimulus package created a $367 billion federally guaranteed loan program administered by the Small Business Administration (SBA).
Known as the Paycheck Protection Program, the forgivable loans are geared toward small businesses that employ 500 or fewer people who pledge not to lay off their workers or reduce their wages. The loans can be used to cover payroll costs among other expenses.
While families who employ someone to work in their home are considered employers and must follow tax, wage, and labor laws, they are not eligible for a loan under the Paycheck Protection Program.
On April 2, 2020, the SBA released its Interim Final Rule (PDF), which provided further guidance on the Paycheck Protection Program and clarified the eligibility question regarding household employers.
The final rule states:
The Administrator, in consultation with the Secretary of the Treasury (the Secretary), determined that household employers are ineligible because they are not businesses. 13 CFR 120.100
13 CFR 120.100 addresses the basic eligibility requirements for all applicants for SBA business loans.
Household employers are eligible for tax credits under the Families First Coronavirus Response Act (FFCRA) if they continue to pay their employees who can’t come to work for certain coronavirus-related reasons.
Nannies and other household employees may be eligible for expanded unemployment benefits if they lost their job due to the health crisis.
To take advantage of the tax credits or unemployment benefits, the family must be paying their employee legally.
GTM can help
If you, as an employer, haven’t been contributing employment taxes including unemployment taxes, your employee may be denied benefits. To get caught up on your employer taxes, give us a call at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert or to get started. We’ll bring you up-to-date on your tax obligations so your employee can be eligible for paid leave and unemployment benefits.
For GTM clients
Remitting your employer taxes is part of your service with GTM Payroll Services. If you have any questions about your employee applying for unemployment benefits or using FFCRA tax credits, contact our client support team at (800) 929-9213. We’ll be happy to assist in any way we can.
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