The self-employed tax credits provide tax savings for individuals who could not work due to COVID-19. These credits offset any tax liability created from self-employment income in the taxable year.

The SETC is a specialized tax credit designed to support self-employed individuals during the COVID-19 pandemic. It acknowledges the unique challenges faced by those who work for themselves, especially during times of illness, caregiving responsibilities, quarantine, and related circumstances. This credit can be a valuable resource for eligible individuals to help bridge financial gaps caused by unforeseen disruptions.

Whether you’re a self-employed business owner, a 1099 subcontractor, or a family-centric small business, the Self-Employed Tax Credit is a great option to take advantage of if you qualify.

The maximum credit amount is $33,220. Qualified individuals may be able to claim up to $15,110 for the sick and family leave credits for 2020 and $17,110 for 2021.

It’s still worth seeing how much you Qualify for. The IRS guidelines allow you to use the income from the previous year if it is higher than the year you are applying for the credit. For example if you made $40,000 in 2019 and $22,000 in 2020 the guidelines will allow the credit in 2020 to be based off of the 2019 income.

It’s pretty simple. First you have to be a sole proprietor who runs a business that might be just you, can have employees, 1099 subcontractors, and single-member LLCs.

You have filed a 1040 Tax Return for 2020 and / or 2021. You must have filed a “Schedule C” or a Partnership (1065) on your federal tax returns for 2020 and/or 2021.

If you have Net Income on Line 6 of the 1040, Net Income on line 31 of your Schedule C and / or Net Income in box 14A of your K1 then you will likely qualify.

Sub S or True S Corps / C Corps are not eligible for the SETC.

If you have Net Income it will be on Line 6 of the 1040. It is also listed as Net Income on line 31 of your Schedule C and / or Net Income in box 14A of your K1.

If you have filed taxes under a Sub S or True S Corps / C Corps then you are not eligible for the SETC.

Most self-employed people likely qualify for the SETC. There are 3 Factors that determine your credit amount and we can give you an estimate the same day we receive your qualification form:

You MUST have positive Net income on a 1040 tax return for 2019, 2020 or 2021. You can find this information on line 31 of your Schedule C or Line 6 of the 1040 tax return. K1 net income also qualifies. Look at 14A on the K1.

You took time off from your self-employment business because you, your dependent children or someone you were taking care of had to quarantine because of COVID, COVID symptoms, had symptoms after a COVID vaccination and / or also because of daycare or school closures.

The number of days you sacrificed for yourself and / or the care of your dependent children.

The more net income, and days you sacrificed for yourself and any dependent children who you cared for because of the qualifying COVID issues then the higher the potential credit amount.

Yes, there are limits to the sick and family leave credits. You will not receive the full tax credit if you also received any wages from an employer for sick or family leave. The wages received reduces the amount of the credit you are eligible for. This prevents individuals from double dipping from the same benefit. Qualified individuals may be able to claim up to $15,110 for the sick and family leave credits for 2020 and $17,110 for 2021.

Prior to April 2020, the credit for sick and family leave was limited to certain employers. This credit was available to small and mid-sized employers who had fewer than 500 employees. Qualified employers received the credit for providing paid sick and family leave wages to their employees.

The Families First Coronavirus Response Act expanded these credits to include self-employed workers. This includes freelancers, contractors, and gig workers. This legislation allowed qualified self-employed individuals to claim the credit on their 2020 tax return. The American Rescue Plan Act extended the credit and allowed taxpayers to claim it on their 2021 tax return, too.

Qualified employers did receive the credit for providing paid sick and family leave wages to their employees. Here’s an example of how the sick and family leave credits work if that was the case for you:

• Let’s say James is single and has no dependent children.
• James works as an employee at his friend’s retail store.
• He also worked as an IT professional on the side in his own business during 2020.
• James had a net profit of $135,000 from his own business.
• He missed 10 days of working in his friend’s store due to COVID.
• During that time, James received $1,600 in sick wages from his friend’s retail store.
• For 2020 he can only claim up to $3,510 ($5,110 – $1,600) as a sick leave credit on his taxes for his business as an IT professional.

Our team will provide you with the right answers based on your specific circumstances.

This is not a loan but rather a refund from your previously paid taxes. This does not need to be paid back and is not taxable.

Based on 2023 we typically saw the credit issued by the IRS issues 4 – 6 months after the 1040X amended tax return was filed.