client acquisition services for the setc

Individuals can still claim their Self-Employed Tax Credit (SETC), worth up to $32,220, under the FFCRA. 

The Families First Coronavirus Response Act (FFCRA) was signed into law on March 18, 2020, in response to the challenges brought forth by the COVID-19 pandemic. The FFCRA introduced relief for self-employed taxpayers who could not work or telework due to COVID-19 between April 1, 2020, and December 31, 2020, in the form of refundable sick leave and family leave tax credits. The FFCRA established the foundation for determining who is eligible and how the tax credits are calculated.

The Consolidated Appropriations Act (CAA) extended the 2020 tax credit period from December 31, 2020, to March 31, 2021. The American Rescue Plan (ARP) Act then introduced the 2021 tax period beginning April 1, 2021, and ending September 30, 2021.

The Self-Employed Tax Credit (SETC) refers to the sick leave and family leave tax credit provisions for self-employed individuals introduced under the FFCRA. The SETC allows qualified self-employed workers to recover up to $32,220 for 2020 and 2021.

Eligible self-employed individuals are generally those who meet the following three criteria:

• You identify as a self-employed individual (e.g., sole proprietors, freelancers, independent contractors, and gig workers). See examples below.
• Accountants and Bookkeepers
• Airbnb Hosts
• Amazon Resellers
• Copywriters
• Construction Workers
• Consultants
• Dentists
• Graphic Designers
• General Practitioners
• Personal Trainers
• Photographers
• Rideshare and Delivery Drivers
• Real Estate Agents
• Social Media Marketers
• Veterinarians
• Website Designers and Developers
• You filed a Schedule SE (IRS Form 1040) for 2020 or 2021, reported a positive net income, and paid self-employment taxes on your earnings.
• You could not work or telework in 2020 or 2021 due to COVID-19.

Tax credits provided under the FFCRA for self-employed individuals are equal to the qualified sick leave and family leave equivalent amounts that eligible employers can claim.

The qualified sick leave equivalent amount applies to self-employed individuals who are unable to work or telework due to:

• being subject to a federal, state, or local quarantine or isolation order due to COVID-19,
• being advised by a healthcare provider to self-quarantine due to COVID-19, or
• experiencing COVID-19-related symptoms and seeking a medical diagnosis.

Under the Emergency Paid Sick Leave Act (EPSLA) provision 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 may be considered: 10 days for the period between April 1, 2020, and March 31, 2021, and 10 days for the period between April 1, 2021, and September 30, 2021.

The qualified family leave equivalent amount applies to self-employed individuals who are unable to work or telework due to:

• caring for an individual who is subject to a quarantine or isolation order related to COVID-19, or
• caring for a child if their school is closed or childcare provider is unavailable due to COVID-19.

Under the expanded Family and Medical Leave Act (FMLA) provision of the FFCRA, individuals may claim the lesser of $200 per day or 67% of their average daily self-employment income per day. A total of 110 days may be considered: 50 days for the period between April 1, 2020, and March 31, 2021, and 60 days for the period between April 1, 2021, and September 30, 2021.

Yes, in addition to the eligibility criteria, there are a few limitations of the SETC to be aware of.

• You will not receive the full SETC amount if you already received wages from an employer for sick or family leave in 2020 or 2021. Your SETC portion will be reduced by the wages you received.
• You will not receive the full SETC amount if you received unemployment benefits in 2020 or 2021. Your SETC calculation must exclude these days.
• You must be a U.S. citizen, permanent resident, or qualifying resident alien.