“The difference between death and taxes is death doesn't get worse every time Congress meets.” - Will Rogers

Understanding the FFCRA Tax Credit for Self-Employed Individuals

By Jonathan Welle | The Better Choice Lenders

If you had to take time off work due to COVID-19-related issues, there's a chance to get compensated—even if you're self-employed. The Internal Revenue Service (IRS) offers a tax credit under the Family First Coronavirus Response Act (FFCRA), which is available retroactively for 2020 and 2021.

Signed into law in March 2020, the FFCRA addressed various aspects of the pandemic, including paid sick leave and unemployment benefits. Among its provisions, the FFCRA provides tax credits to eligible self-employed individuals, including 1099 and gig workers, for sick days and family leave related to COVID-19.

This tax credit directly reduces your total tax owed to the IRS, unlike a deductible. You can apply for this credit retroactively, potentially receiving a refund check if you haven't already claimed it.

What is the FFCRA Tax Credit for Self-Employed Individuals?

The FFCRA is well-known among employers with W-2 employees who can provide paid time off or sick leave based on specific circumstances. However, many self-employed individuals, such as 1099 contractors or consultants, may not realize they are also eligible for this tax credit, which can be applied retroactively.

How Does the FFCRA Work?

The FFCRA allows employers to get reimbursed for time you couldn’t work due to COVID-19-related issues. You may qualify if you missed work because you were:

- Following a federal, state, or local quarantine or isolation order

- Advised by a healthcare provider to self-quarantine

- Experiencing coronavirus symptoms and were seeking a medical diagnosis

- Caring for a child or other individual subject to a quarantine order

- Caring for a child whose school or daycare was closed

- Obtaining a COVID-19 vaccination or recovering from vaccine-related illness

- Waiting for COVID-19 test results (applies from April 1, 2021, through September 30, 2021)

How Much Money Can You Get?

As a self-employed individual or 1099 contractor, you can receive up to $32,220 in tax credits, which includes:

- Emergency paid sick/family/medical leave for specific periods with varying daily claim amounts

- Additional paid sick and family leave from April 1, 2021, through September 30, 2021

Am I Eligible?

You may qualify if you were self-employed anytime between March 2020 and September 2021 and took unpaid sick leave to care for yourself or a family member or had to provide childcare due to quarantine restrictions.

How Will You Receive the Credit?

For 2021 tax returns, most applicants can opt for direct deposit via ACH. For 2020 returns, the credit amount will be sent as a check by mail from the IRS.

Remember, this information is for educational purposes and not legal, tax, or accounting advice. Consult with a professional for specific guidance.