As a freelance musician, you are an independent contractor, filing taxes using 1099 forms. So how do you apply for the Paycheck Protection Program (PPP)? It’s been an option since Friday, April 10th, but the Treasury Department didn’t provide instructions on how until the following Tuesday.
What is the PPP legislation?
It defines that the maximum payroll amount for any one individual is maxed at $100,000 net profit annually. That means that if you made $105,000 last year, you would calculate it based off of $100,000. Using that number, the max loan amount for a 1099 worker is $20,833.33 (you take the net profit amount from Schedule C, line 31 on your 2019 1040 tax form, calculate 2.5 months’ worth of pay, divide that number by 12, then multiply by 2.5).
The majority of the loan is forgivable. Here’s the big part because you don’t want debt to hang over you: The Treasury will forgive eight weeks’ worth of 2019 net profit.
Like all things related to taxes, it still feels confusing, doesn’t it? But make sure you take the time to figure it out and submit your application! Don’t pass up on the money when this pandemic has turned the music world upside down.
Here’s where you can get started and read more information from the SBA: PPP Loans for 1099 Independent Contractors.