To apply for the Self-Employed Taxpayer Sick and Family Leave Credit (SETC), which was part of the Families First Coronavirus Response Act (FFCRA), self-employed individuals need to file the appropriate forms. These forms should be filed for the tax years 2020 or 2021, during which they were affected by COVID-19 and unable to work. Here’s a step-by-step guide on how to apply for and claim your SETC Tax Credit:
1. Verify Eligibility
Before applying, you should make sure you meet the eligibility requirements for the SETC tax credit. You could qualify if, during the eligible time period (April 1, 2020 – September 30, 2021), you:
- Were unable to work due to being sick with COVID-19, or
- Needed to care for a family member who was sick with COVID-19, or
- Needed to care for a child whose school or childcare provider was closed due to COVID-19.
You can claim this credit for up to 10 days of sick leave (for personal illness or quarantine) and up to 50 days of family leave (to care for a child).
2. Form 7202: Claiming the Credit
To claim the SETC, you need to complete Form 7202: Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. This is the form that calculates how much of a credit you can claim based on the time you couldn’t work due to COVID-related reasons.
Steps to Fill Out Form 7202:
- Part I – Sick Leave Credit: This part calculates the credit for days you were unable to work due to illness, quarantine, or COVID-related health issues.
- Part II – Family Leave Credit: This calculates the credit for days you were unable to work because you needed to care for a child due to school closures or childcare provider unavailability because of COVID-19.
You’ll need to:
- Report the number of days you were unable to work.
- Provide your self-employed income (e.g., net earnings from your business).
- Include any days you were eligible for sick or family leave under the FFCRA.
The IRS allows you to claim up to $511 per day for up to 10 days for the sick leave credit. They also allow up to $200 per day for up to 50 days for the family leave credit.
Are you eligible for the SETC tax credit?
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Click Here3. Submit Form 7202 with Your Tax Return
- For 2020 or 2021: After completing Form 7202, you’ll need to attach it to your annual tax return (Form 1040).
- Claiming the Credit: Once you’ve calculated your SETC, the amount will be entered on your Form 1040 and help reduce your tax liability or potentially generate a refund.
4. Deadline for Filing
- For Tax Year 2020: The deadline to file your return (or to file an amended return) for 2020 is generally April 15, 2024.
- For Tax Year 2021: The deadline to file your return (or to file an amended return) for 2021 is April 15, 2024 as well.
If you missed claiming the SETC on your original return, you can amend your tax return by filing Form 1040-X for that year. The deadline to amend your tax returns is generally 3 years from the original filing deadline. You can still file amended returns for 2020 before April 15, 2024. The same can be done for returns from 2021 before April 15, 2025
5. Consult a Tax Professional
While the process for claiming the SETC is relatively straightforward, it can be complicated. Such as needing to amend a return or uncertainty about eligibility or even how to fill out the forms. It’s a good idea to consult a tax recovery professional or CPA to ensure you’re claiming the credit properly and maximizing your refund.
If you were eligible but missed claiming the credit, amend your return before April 15, 2024 for the 2020 tax year and before April 15, 2025 for the 2021 tax year.
You can recover this lost money very easily by working with a tax recovery expert who can get you back every penny you’re owed. To find a qualified expert and help claim your SETC Tax Credit click here
Learn more about the SETC tax credit
- Is the 1099 SETC Tax Credit a Scam?
- What is the 1099 SETC Tax Credit?
- How Much Time is Left in The SETC Tax Credit?
- Do You Qualify for The SETC Tax Credit?
- Why Did My Accountant Not File for The SETC Tax Credit Already?
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