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COVID-19 Provisions Related to Self-Employed Individuals


The recently issued Families First Coronavirus Response Act (Act) provides relief to employees impacted by COVID-19 in the form of paid leave, and to the small and midsize businesses who can claim payroll tax credits in order to recover the cost of this paid leave. The Act also includes protection for Eligible Self-Employed Individuals.

1. Eligible Self-Employed Individuals

An eligible self-employed individual is defined as an individual:

  • Who regularly carries on any trade or business and

  • Who would be entitled to receive the benefits, if the individual were an employee of a traditional employer.

2. Tax Credit for Sick Leave

An eligible self-employed individual can claim a sick leave tax credit if he or she is unable to work due to:

  • Federal, State, or local quarantine or isolation order related to COVID-19

  • Recommendation from health care provider to self-quarantine due to COVID-19 concerns

  • Self-isolations resulting from COVID-19 symptoms

The sick leave tax credit is equal to the lesser of $511 or 100 percent of the an individual’s average daily self-employment income, defined as the net earnings from self-employment divided by 260, multiplied by the number of days that the individual could not perform services in the applicable trade and cannot exceed ten (10) days.

3. Tax Credit for Family Leave

An eligible self-employed individual can claim a family leave tax credit if he or she is unable to work due to taking caring of:

  • An individual who is subject to Federal, State, or local quarantine or isolation order related to COVID-19

  • An individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19

  • A child whose school or place of care has closed, or whose child-care provider is unavailable due to COVID-19

The family leave tax credit is equal to the lesser of $200 or 67 percent of the an individual’s average daily self-employment income, defined as the net earnings from self-employment divided by 260, multiplied by the number of days that the individual could not perform services in the applicable trade and cannot exceed fifty (50) days.

4. How to Claim Tax Credits

The refundable credits are claimed on the eligible self-employed individual Form 1040 tax return for the 2020 tax year. An eligible self-employed individual can also reduce estimated income payments in 2019 by taking into account the credit to which the individual is entitled.

About the Author - Dan Kats, Audit Manager, CLFP, recently joined ECS Financial Services, Inc. Dan has more than 11 years of public accounting experience with commercial, not-for-profit, and governmental entities providing audit and consulting services, such as financial statement audits and financial statement reviews. He has worked with a variety of entities, including equipment leasing and financing services companies, construction and real estate entities, universities, colleges, foundations, not-for-profit organizations, associations, retail, and professional services organizations, state agencies, and municipalities.

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