Being self-employed can reap flexibility, but it can also have its drawbacks, like not having built-in sick days or short-term disability. Legislators were able to gain approval on offering sick leave credit for self-employed individuals who had to take time-off related to the pandemic. Under the Families First Coronavirus Response Act, up to 60 days can be claimed, along with up to $10,000 on your tax return.
To qualify for this tax credit, you must be under self-employed status by the IRS and, in relation to COVID-19, were unable to work due to you or someone you care for being sick, quarantined, or under a self-isolation order. To be considered self-employed, you must make an income from a trade or business, and income taxes are not withheld by an employer. Maybe this means you have a side-hustle doing Doordash, or you own your business full-time and work for yourself. If you are considered self-employed and did not receive compensation from an employer for the time off, then you may be eligible. Make sure you have proof of self-employment income and keep your records in case an audit should occur.
How to claim
If you qualify for the tax credit, you can claim it for 2020 on Form 1040 if time off was taken between April 1, 2020, and December 31, 2020. Make sure you also fill out the new Form 7202 to determine if you qualify for the sick leave credit. You can claim up to $200 per day. If both you and your spouse are self-employed, you can each claim up to $200 per day. It’s important to note that most people won’t qualify for the full amount unless their case was severe because you would have to have taken the full allotted amount of leave which is ten days for individuals and up to 50 days for family care.
If you’re looking for calculations on how much exactly you will be eligible for, you can check out calculators from the IRS for the qualified sick leave equivalent amount and qualified family leave equivalent amount. If you have additional questions or if you’re ready to file your 2020 taxes, take a look at the IOOGO Tax DIY and IOOGO Tax Pro options to see which one best suits your needs. Submit your paperwork in under 15 minutes and have a fully-completed return in 24 hours or less.