Introduction

The Self-Employed Tax Credit (SETC) is a significant financial relief program introduced under the Families First
Coronavirus Response Act (FFCRA) to support self-employed people impacted by the COVID-19 pandemic. The SETC
provides refundable tax credits of up to $32,220 for eligible self-employed workers who were unable to work due to
COVID-related circumstances in 2020 and 2021.

SETC Tax Credit Eligibility Requirements

To qualify for the SETC tax credit, you must:

Be self-employed (sole proprietorship, independent worker, gig worker, or partnership member) Have filed a
Schedule SE (Form 1040) for 2020 or 2021, reporting positive net income and paying self-employment taxes Have
been unable to work or telework due to COVID-19 related reasons, such as having the virus, being under
quarantine, or caring for someone affected by the pandemic Claim the credit for eligible time periods between
April 1, 2020, and September 30, 2021

If you government employment incentive have both self-employment income and W-2 earnings, you may still be
eligible, but your SETC will setc tax credit be adjusted to prevent double-dipping if you received paid leave benefits
through your employer under the FFCRA.

SETC Tax Credit Benefits

The SETC tax credit can provide substantial financial relief to self-employed workers:

Up to $32,220 in refundable tax credits for 2020 and 2021 combined Credits are based on your average daily self-
employment income and the number of days you were unable to work due to COVID-19 The average credit
amount is around $9,000, but can vary based on individual circumstances SETC is not taxable income and does
not add to your tax burden

How to Claim the SETC Tax Credit

Claiming the SETC tax credit entails amending your 2020 and/or 2021 tax returns:

Gather required documents, like 2019-2021 tax returns, Schedule SE, and records of COVID-impacted days
Complete IRS Form 7202 for the applicable tax years to calculate your credit amount Amend your tax returns
(Form 1040-X) to claim the credits Submit amended returns and wait for the IRS to process your refund (can take
up to 20 weeks)

Many self-employed workers opt to work with a tax professional to ensure accuracy and maximize their credit. Services
typically charge a processing fee plus a percentage of the credit received.

SETC Tax Credit Deadlines

The deadlines for claiming the SETC tax credit are:

For 2020 taxes: April 15, 2024 For 2021 taxes: April 15, 2025

It is important to file amended returns claiming the SETC before these deadlines to receive your credits.

Conclusion
The Self-Employed Tax Credit provides much-needed financial support to self-employed workers whose livelihoods
were disrupted by the COVID-19 pandemic. If you qualify based on the eligibility criteria, amending your 2020 and
2021 tax returns to claim the SETC can offer substantial tax relief of up to $32,220. With the April 15, 2024 deadline
approaching for 2020 credits, now is the time for self-employed workers to explore this valuable opportunity.