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 provide up to $32,220 in paid leave and is not a loan but a refund of taxes already paid. It is non-taxable and available on a first-come, first-served basis from a $50 billion fund approved by the government.

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

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

2. Have filed a Schedule SE (Form 1040) for 2020 or 2021, reporting positive net income and paying self-employment taxes.

3. Have been unable to 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 time periods between April 1, 2020, and September 30, 2021

If you meet these criteria, you may be eligible for a refundable tax credit of up to $64,000 by amending your 2020 and 2021 tax returns before April 15, 2024.

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

In cases where your employee benefits do not fully cover your eligible leave, you may still claim additional credits based on your self-employment income.

Great news! The Self-Employed Tax Credit (SETC) is not 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.

This means you can claim the credit without worrying about any additional taxes. It's a financial benefit that comes without any tax-related drawbacks.

Filing for the Self-Employed Tax Credit (SETC) does not impact your 2023 income 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.

This means that the credit is applied to your previous tax years and does not affect your current 2023 tax situation.

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

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

2. The number of days you were personally affected by COVID-19, such as being sick or having to 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 the unavailability of daycare centers

All these factors are taken into account when calculating your SETC. The average we're seeing is $9,000. This amount 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 a simple process:

1. Complete our questionnaire, selecting the days you were affected.

2. Upload your tax returns from 2019 to 2021 and a copy of your driver's license.

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

That's all you need to do! Our team will take care of the rest, ensuring a seamless and hassle-free experience for you. We handle the complexities, so you can focus on what matters most to you and your business.

The deadlines for claiming the Families First Coronavirus Response Act (FFCRA) tax credits are approaching, but you still have time to take action:

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 three years from the original due date of your return or two 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 individually meet the eligibility criteria, they can each claim the maximum SETC of $32,220.

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

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Absolutely! We'd love to answer your questions and assist you.

Schedule a call with one of our SETC experts: Schedule Your Call Here