“New IRS form available for self-employed individuals to claim COVID-19 sick and family leave tax credits.” - IRS

Introduction:

The Self-Employed Tax Credit is a financial relief measure introduced by the IRS in response to the COVID-19 pandemic. It is designed to support self-employed individuals who were unable to work or telework due to COVID-19 reasons.

This initiative is part of the Families First Coronavirus Response Act (FFCRA), passed in March 2020, and further extended by subsequent relief packages, including the American Rescue Plan Act of 2021.

Understanding the Self-Employed Tax Credit

Eligible self-employed individuals can claim two types of tax credits under the FFCRA: one for sick leave and another for family leave. These credits are intended to compensate for the income lost during periods when the self-employed could not operate their businesses due to health or family care responsibilities related to COVID-19. The credit amounts are calculated based on the average daily income of the self-employed person, capped at specific limits set by the legislation.

The IRS has made new forms available for self-employed individuals to claim these tax credits, ensuring that those eligible can access the financial support they need during these challenging times. It's important for self-employed individuals to familiarize themselves with the eligibility requirements and the process for claiming these credits to take full advantage of the relief provided.

Maximum Credit:

2020:

• The maximum credit amount for up to two weeks of sick leave taken for the self-employed individual's own care was $5,110.

• The maximum credit amount for up to two weeks of sick leave taken to care for a family member was $2,000.

• The maximum credit amount for up to 10 weeks of family leave was $10,000.

• Eligible Self-Employed individuals can claim up to $15,110 in 2020.

2021:

• The maximum credit amount for up to two weeks of sick leave taken for the self-employed individual's own care was $5,110.

• The maximum credit amount for up to two weeks of sick leave taken to care for a family member was $2,000.

• The maximum credit amount for up to 12 weeks of family leave was $12,000.

• Eligible Self-Employed individuals can claim up to $17,110 in 2021.

FAQ:

1. What qualifies as an "eligible self employed individual" for this credit?

Self Employed individuals are those who engage in a business on their own behalf and meet the definition by the IRS. This could be a business owner, sole proprietor, contractor, gig worker, 1099 worker, and others.

2. Which Self Employed Individuals qualify for this credit?

Self Employed individuals can qualify for this credit if Covid had an impact on their ability to perform their Self Employment. There are also several factors that determine the size of the credit you'll receive.

3. I am Self Employed and was affected by Covid. How much do I get back?

The exact amount depends on a few factors including the type of effects Covid had on your Self Employment, the amount of time you were affected by Covid, and how much you typically earn in Self Employment Income.

4. Do I have to pay this money back?

No, this is a tax refund and is considered compensation from the IRS for Self Employed individuals who couldn't work due to a covid related reason.

5. How will I get the money?

If you are up to date on your taxes you will receive a check or wire transfer from the IRS. If you owe taxes however, then this credit will be a reduction of the outstanding tax liabilities owed to the IRS.

6. Can I claim the Self Employment Sic and Family Leave Credit retroactively?

Yes, we can help you file an amended tax return and necessary forms to claim the Self Employment Sick or Family Leave Credit for 2020 & 2021.

Apply now to earn up to $32,220 from your SETC!

Have any questions? Text us at +1 (786) 321-0939

🌐 Sources

1. irs.gov - New IRS form available for self-employed individuals

2. turbotax.intuit.com - Stimulus 2021: Self-Employed Tax Credits and Social Security

3. taxpayeradvocate.irs.gov - COVID-19 Business Tax Relief

4. irs.gov - Tax Credits for Paid Leave Under the American Rescue

5. erctoday.com - Employee Retention Credit for Self-Employed (A 2022 Guide)

6. taxpayeradvocate.irs.gov - Individual COVID-19 Tax Relief (REDESIGN)

7. thereliefconsultants.com/self-employment