COMPLETE GUIDE TO THE SELF-EMPLOYED TAX CREDIT (SETC)

The Families First Coronavirus Response Act FFCRA, enacted on March 18th, 2020, offers refundable tax credits for self-employed individuals impacted by COVID-19. This guide explains the eligibility and the calculation of the Self-Employed Tax Credit (SETC), which provides up to $32,220 in refundable credits for 2020 and/or 2021.

Eligibility

To be eligible for this credit, you must be a self-employed individual (e.g., freelancers, gig workers, independent contractors, etc). You must also have filed a Schedule SE (IRS Form 1040) for 2020 and/or 2021 that showed a positive net income. The final eligibility piece is that you were unable to work or telework for some period of time during COVID 19 due to having COVID 19 yourself or caring for someone that was ill.

Calculation

Under the Emergency Paid Sick Leave Act (EPSLA) of the FFCRA, individuals may claim the lesser of $511 per day or 100% of their average daily self-employment income per day. A total of 20 days would be considered. 10 days for the period between 4/1/2020 and 3/31/2021, and 10 days for the period between 4/1/2021 and 9/30/2021.

Limitations

The main limitation for this credit is the eligibility criteria. However, there are a few more that you will want to be aware of. You will not receive the full credit amount if you already received wages from an employer for sick/family leave in 2020 or 2021. Your refund for the SETC will be reduced by those wages that you already received. You also must be a US citizen, permanent resident, or qualifying resident alien.

Application Process

The application process is simple. Create a FREE account with SETC Tax Return and then answer the survey questions to determine eligibility and your estimated credit amount. Once that is complete, documentation will be requested so that the SETC Tax Return can review and determine your final credit amount. An identity verification will be required in the meantime. Once that is complete, determine your funding method and wait for the IRS to issue funds!

Conclusion

The SETC provides significant financial relief for self-employed workers affected by COVID-19. SETC Tax Return and SETC Tax Credit have created one of the most streamlined ways to process this tax credit. Take the pre-qualification survey on the home page to get started today!