Are you a self-employed individual who was affected by COVID-19? If so, you may qualify for sick and family leave credits on your Form 1040.

Recently, the IRS published the new IRS Form 7202 allowing certain self-employed individuals to claim qualified sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA) for Tax Year 2020. On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) extended the FFCRA tax credits for qualified leave taken through March 31, 2021.

Eligible self-employed individuals must have conducted a trade or business that qualifies as self-employment income and be eligible to receive qualified sick or family leave wages under the FFCRA Emergency Paid Sick Leave Act or Emergency Family and Medical Leave Expansion Act as if the taxpayer was an employee. It is important for taxpayers to maintain appropriate documentation establishing their eligibility for the credits.

Eligible self-employed individuals will determine their qualified sick and family leave equivalent tax credits using the new IRS Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. Then those tax credits should be reported on the 2020 Form 1040 for leave taken between Apr. 1, 2020, and Dec. 31, 2020. Leave taken between Jan. 1, 2021, and March 31, 2021, qualified tax credits should be reported on the 2021 Form 1040.

Self-employed individuals who believe they may be eligible should contact their Geffen Mesher Team to verify eligibility and if these credits were claimed for Tax Year 2020. The IRS website provides additional guidance on eligibility requirements and credit calculations.

Our expert team at Geffen Mesher is ready and prepared to help navigate these changes for your business.