Passed under the Families First Coronavirus Response Act (FFCRA), eligible self-employed individuals may claim a tax credit for sick or family leave taken between April 1, 2020 and March 31, 2021 or if taken between April 1, 2021 through September 30, 2021.

Form 7202 calculates a refundable credit for sick leave and family leave for certain self-employed individuals. If filing a joint return, both spouses may qualify and must each complete a separate Form 7202.

Eligible self-employed individuals must 1) regularly carry on a trade or business and 2) have been eligible to receive qualified sick leave wages under the Emergency Paid Sick Leave Act and/or qualified family leave wages under the Emergency Family and Medical Leave Expansion Act.

 

Qualified Leave Wages for self-employed individuals who cannot work or telework, include any of the following reasons:

Qualified Sick Leave (January 1, 2021 – March 31, 2021) 

The individual was:

  1. Subject to federal, state, or local quarantine or isolation orders related to COVID-19.
  2. Advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
  3. Was experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  4. Was caring for another individual who was subject to quarantine based on federal, state or local rules or advised by a health care provider to self quarantine due to COVID-19.

Part II Qualified Family Leave (January 1, 2021 – March 31, 2021) 

The individual was:

  1. Caring for their child(ren), because the school or childcare provider was closed or unavailable due to COVID-19.

Part III Qualified Sick Leave/Part IV Qualified Family Leave (April 1, 2021 – September 30, 2021) 

The individual:

  1. Was subject to federal, state, or local quarantine or isolation orders related to COVID-19.
  2. Was advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
  3. Was experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  4. Was seeking or awaiting results of a test or medical diagnosis of COVID-19.
  5. Was exposed or unable to work while waiting for test or diagnosis results related to COVID-19.
  6. Was obtaining or recovering from COVID-19 immunization.
  7. Was recovering from COVID-19.
  8. Was caring for another individual who was subject to quarantine based on federal, state or local rules or advised by a health care provider to self quarantine due to COVID-19.
  9. Was caring for their child, because the school or childcare provider was closed or unavailable due to COVID-19.
  10. Was accompanying another individual to obtain COVID-19 immunization.
  11. Was caring for another individual who was recovering from COVID-19 immunization.

 

How much credit may be claimed?

Qualified Sick Leave:

The qualified sick leave amount is equal to the number of days during the taxable year the individual cannot perform services due to one of the above reasons, multiplied by the lesser of $511 or 100 percent of the “average daily self-employment income” of the individual for the taxable year, or the prior taxable year.  You may take a credit up to a maximum of 10 days in the first benefit period and 10 days in the second benefit period.

Qualified Family Leave:

The qualified family leave amount is equal to the number of days during the taxable year the individual cannot perform services due to one of the above reasons, multiplied by the lesser $200 or 67% of the average daily self -employment income of the current or prior year. You may take a credit up to a maximum of 50 days in the first benefit period and 60 days in the second benefit period.

Contact a member of our team today to learn more about maximizing this credit opportunity.

 

 

Aura Advisors is a boutique tax consulting and compliance firm working with start-ups, emerging growth companies, and affluent individuals. Making it safer for good people and good companies to continue to do good things.