Self-Employed Tax Credit

The Self-Employed Tax Credit (SETC) is a provision under the Families First Coronavirus Response Act (FFCRA) that provides financial relief to self-employed individuals, such as sole proprietors, consultants, freelancers, and gig workers, who are unable to work due to COVID-19.

The credit can get you up to $32,220 in paid leave and is not a loan but a refund of taxes already paid. It’s non-taxable and first-come, first-served from a $50 billion fund approved by the government.

To qualify for the Self-Employed Tax Credit (SETC), you:

1. Are self-employed (sole proprietor, independent contractor, freelancer, gig worker or partnership member).

2. Filed a Schedule SE (Form 1040) for 2020 or 2021 and reported positive net income and paid self-employment taxes.

3. Couldn't work or telework due to COVID-19 related reasons such as having the virus, being under quarantine or caring for someone affected by the pandemic.

4. Claim the credit for eligible periods between April 1, 2020 and September 30, 2021.

If you meet these requirements you may be eligible for a refundable tax credit of up to $64,000 (if filing jointly) by amending your 2021 tax returns by April 15, 2025.

If you have self-employment income and W2 income in 2020 or 2021 you may be eligible for the Self-Employed Tax Credit (SETC). But if you received paid leave benefits from your employer under the Families First Coronavirus Response Act (FFCRA) your SETC will be reduced to avoid double dipping.

If your employee benefits don’t cover all your eligible leave you can still claim additional credits based on your self-employment income.

Good news! The Self-Employed Tax Credit (SETC) is non-taxable income. Unlike the Paycheck Protection Program (PPP) and the Employee Retention Tax Credit (ERTC) which may increase your tax liability, the SETC does not add to your tax burden.

So you can claim the credit without worrying about any additional taxes. It’s a benefit that comes with no tax strings attached.

Filing for the Self-Employed Tax Credit (SETC) does not affect your current tax return. The SETC is claimed by amending your 2020 and/or 2021 tax returns which is a separate and retroactive process handled by our team of accountants.

So the credit is applied to prior years and doesn’t affect your current tax situation.

The amount of your Self-Employed Tax Credit (SETC) depends on:

1. Your net income from your Schedule C or SE as reported on your 2019, 2020 and 2021 tax returns.

2. Number of days you were personally impacted by COVID-19 (sick or in quarantine).

3. Time spent caring for someone impacted by COVID-19: Days spent caring for a minor child due to school closures, remote learning or lack of daycare

All these are considered when calculating your SETC. The average we’re seeing is $9,000. This can vary based on individual circumstances.

To get a free, accurate estimate of your credit, complete our form.

Not at all! Claiming the Self-Employed Tax Credit (SETC) is easy:

1. Fill out our form, select the days you were impacted.

2. Confirm your identity We’ll pull your records directly from the IRS so you don’t have to upload anything.

3. Sign our agreement. We walk you through the whole process.

That’s it! Our team will take care of the rest, so you can focus on what’s important to you and your business.

The deadlines for the Families First Coronavirus Response Act (FFCRA) credits are approaching but you still have time:

1. 2020 Tax Returns: To claim FFCRA credits for 2020 you must file an amended return by April 15, 2024.

2. 2021 Tax Returns: For FFCRA credits related to 2021 the deadline to file an amended return is April 15, 2025.

As a general rule you have 3 years from the original due date of your return or 2 years from the date you paid the tax (whichever is later) to amend your returns and claim or adjust your FFCRA credits. Keep these dates in mind if you need to make changes to your 2020 or 2021 tax returns to maximize your credit.

Yes, if both spouses have self-employed income and meet the eligibility criteria, they can each claim the maximum SETC of $32,220.

But they cannot share COVID related days for caring for children. Each spouse must qualify based on their own self-employed activities and COVID impacted days.

We’d be happy to answer your questions and assist you with the process.

Due to the high demand with the credit deadline approaching on April 15th, the best way to get started is to Contact Us Here.