Self- Employed Tax Credit (SETC)

Where you unable to work or telework due to:

Quarantine

• Federal, state, or local lock down orders related to COVID-19
• Quarantining or isolation order related to COVID-19

Illness

• Cared for an individual who is subject to a Federal, State, or local quarantine or isolation order related to
  COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• Cared for a child if the child’s school or place of care has been closed, or child care provider is unavailable due
  to COVID-19 precautions; or
• Symptoms of COVID-19 or seeking a medical diagnosis
• Sickness due to vaccination side effects

Vaccination

• A COVID-19 vaccination appointment
• Side effects due to vaccination

Other Similar Condition

Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Childcare

• Caring for your child whose school had closed or gone virtual
• Caring for your child because your childcare provider was unavailable due to COVID-19.

You may be eligible for up to $32,220 in tax credits from 2020 & 2021

While the SETC is not new, countless Americans remain uninformed of its existence, potentially missing their rightful claims. Time is of the essence, with only a limited period left to seize this opportunity.

Research shows over 80% of self-employed individuals don’t know they’re eligible.

The Families First Coronavirus Response Act (FFCRA) came to the rescue for many self-employed taxpayers during the pandemic. The act, signed into law on March 18, 2020, initially provided tax credits to eligible taxpayers who could not work from April through December 31, 2020, due to COVID-19. The credit was extended to March 31, 2021. This carryover period from January through March 31, 2021, allowed eligible taxpayers to claim any unused sick leave or paid leave credits from 2020. The FFCRA laid the ground rules for how the credits worked, who is eligible, and how the credit is calculated.

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act. This extended the tax credits for self-employed workers through September 30, 2021. This means that taxpayers affected April 1 – September 30, 2021, can claim the credits on their 2021 tax return.

Below, we break down the credits available for self-employed taxpayers under FFCRA.

What tax credits are available to self-employed workers affected by COVID-19?

There are two tax credits available to self-employed workers affected by COVID-19: Sick leave and family leave. The sick leave credit applies to qualified individuals who were not able to work for a period of time due to COVID-19 or were caring for someone with COVID-19. You may qualify for the family leave credit if you had to care for another family member due to COVID-19-related circumstances and already maxed out the sick leave days.

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.