Self-Employed
Tax Credit (SETC)
Do You Qualify?
IRS Filing Deadline is
APRIL 15, 2025!
The Self-Employed Tax Credit (SETC) for COVID-19 Tax Relief and IRS Form 7202
The SETC is for freelancers, business owners and sole proprietors who changed their working environment in 2020 or 2021 due to COVID-19. This is a Federal (IRS) tax incentive that's designed to help those who were impacted by COVID-19 illness, quarantine and/or child care changes in 2020 and 2021. If this sounds like you, you may be eligible to claim the Self-Employment Tax Credits (SETC) tax credits by filing IRS Form 7202.
What is IRS Form 7202?
IRS Form 7202 allows self-employed individuals to claim tax credits for sick and family leave provided under the Families First Coronavirus Response Act (FFCRA) for tax years 2020 and 2021. This IRS form allows eligible individuals to recover a portion of the wages lost while unable to work due to COVID-19-related reasons.
What You Need to Know About IRS Form 7202
Eligibility Criteria: IRS Form 7202 is for self-employed individuals and gig workers such as contractors and delivery drivers. It allows you to claim sick and family leave tax credits under the FFCRA.
Documentation: You must demonstrate why you were unable to work, even remotely, for up to two weeks during the specified period from April 2020 to March 2021 due to COVID-19-related reasons. Acceptable reasons include illness, quarantine or caring for a sick family member or child due to pandemic-related school or daycare closures.
Exclusions: Individuals cannot claim the tax credit if they were receiving compensation from another employer during the period of incapacity.
Compliance: Individuals must ensure compliance with IRS guidelines when claiming tax credits. Attempting to exploit loopholes or make inaccurate claims can increase your risk of audit and lead to fines or legal repercussions.
Filing Period: If you had sick and family leave during the eligible period but did not take advantage of this tax credit, you can file an amended return within three years after filing the original return. Such amended returns must be received by the IRS by Tuesday April 15, 2025.
How the SETC Can Benefit You
The SETC is designed to provide financial relief to self-employed individuals who faced challenges due to government mandates, personal illness, and care giving responsibilities during the pandemic. This credit can help offset your lost income and provide a much-needed financial cushion. The credit is calculated based on your net self-employment earnings, which can significantly reduce your overall tax burden.
Get Help from Our Knowledgeable Team
Navigating the complexities of tax credits can be challenging, especially when dealing with the additional stress of self-employment. We are here to help. Our experienced team specializes in assisting self-employed individuals to claim the tax credits they deserve, including the SETC. We can guide you through the application process, helping you get the financial relief you're entitled to.
To find out if you qualify or for professional assistance filing the required documentation, click HERE.