Eligible self-employed individuals will determine their qualified sick and family leave equivalent tax credits with IRS Form 7202, “Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals.”
Taxpayers can claim the credits on their 2020 Form 1040, for leave taken between April 1 and Dec. 31, 2020, and on their 2021 Form 1040 for leave taken between Jan. 1 and March 31, 2021.
The FFCRA, passed last March, allows refundable tax credits to eligible self-employed individuals who, due to COVID-19, can’t work or telework for reasons relating to their own health, or to care for a family member. The credits can offset their federal income tax and are equal to either their qualified sick leave or family leave equivalent amount, depending on circumstances.
Eligible self-employed individuals must conduct a trade or business that qualifies as self-employment income and be eligible to receive qualified sick or family leave wages under the Emergency Paid Sick Leave Act as if the taxpayer was an employee. Taxpayers must maintain appropriate documentation establishing their eligibility.