A new form is available for self-employed individuals to claim sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA). The FFCRA, passed in March 2020, allows eligible self-employed individuals who, due to COVID-19, are unable to work or telework for reasons relating to their own health or to care for a family member to claim refundable tax credits to offset their federal income tax.
Self-employed individuals who are eligible for the credits determine their qualified sick and family leave equivalent tax credits by using a new IRS form, Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The tax credits are equal to either their qualified sick leave or family leave equivalent amount, depending on circumstances.
For leave taken between April 1, 2020, and December 31, 2020, taxpayers can claim the credit on 2020 tax returns (on Form 1040). They can also claim the credit next year when filing their 2021 tax return (Form 1040) for leave taken between January 1, 2021, and March 31, 2021.
Filing Form 7202
Eligible self-employed individuals are those who:
As always, taxpayers must maintain appropriate documentation establishing their eligibility for the credits as an eligible self-employed individual. Please don’t hesitate to call if you need assistance calculating the credit, determining if you are eligible, or have any other tax questions.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.