COVID-19 Sick and Family Leave Tax Credits for Self-employed Individuals

On February 8, 2021, the IRS announced that certain 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 are eligible for sick and family leave tax credits under the Families first Coronavirus Response Act (FFCRA).

Certain self-employed individuals can claim refundable sick and family leave tax credits to offset their federal income tax using the new IRS Form 7202. To be eligible for the Form 7202, self-employed individuals must meet following requirements:

  • Individuals must regularly carry on any trade or business that are qualified as self-employment income.
  • Individuals must 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 for the credits.

Eligible self-employed individuals will claim the tax credits on their 2020 Form 1040 for leave taken between April 1, 2020, and December 31, 2020, and on their 2021 Form 1040 for leave taken between January 1, 2021, and March 31, 2021. Maximum amount of credit an eligible self-employed individual can take is limited to $5,110 per year.

Written by Sean Jeong
Edited by Kevin Jang