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Sick & Family Leave Tax Credits for Self-Employed Individuals

 

The Families First Coronavirus Response Act provided new sick and family leave-related tax credits for taxpayers forced to take time off due to COVID-19.  The majority of the text in these laws apply to certain businesses with employees.  However, these key provisions are also available to eligible self-employed individuals in offsetting a portion of their self-employment tax due.

 

The first tax credit for paid sick leave applies to eligible self-employed taxpayers, who are unable to work due to the one of the following circumstances:

 

  • Being subject to a federal, state, or local quarantine or isolation order
  • Being advised by a health care provider to self-quarantine
  • Experiencing COVID-19 related symptoms and seeking a medical diagnosis

 

When considering if a taxpayer is unable to work for one of the above circumstances, it is also important to note that this does not just include in-person work, but remote work as well.  You would be eligible for qualified sick leave for each day you were unable to work, up to a maximum of ten days.  The credit is worth the lesser of $511 per day, or 100% of the average daily self-employment income for the year per day.

 

The second available credit applies to qualified family leave.  The self-employed taxpayer is eligible for a credit for each day they are unable to work due to caring for 1) someone else impacted by COVID-19 for up to ten days, or 2) if a child’s school or child care provider was closed or unavailable due to COVID-19 for up to fifty days.  The credit is the lesser of $200 per day, or 67% of the average daily self-employment income for the year per day. 

 

For your 2020 individual income tax returns, it will be very important to notify your tax preparer if you or your family were impacted in any of the above-mentioned ways.  If you have any questions regarding your eligibility for these credits, please do not hesitate to contact your C&J engagement team.

 

 

 
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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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