Self-Employment Tax Credit Quick Guide
Overview:
Welcome to our brief guide on the Self-Employment tax credit. This tax credit is crafted for self-employed individuals and business owners who pay self-employment tax on their income. Let's dive into the details.
Eligibility Criteria:
- You took a break in 2020 or 2021 due to COVID-19 or to look after someone with COVID-19.
- You took time off to cater to a child under 18 due to school or daycare closures.
- You reported self-employed income under Schedule C.
Credit Amount & Categories:
1. Sick Leave Credit:
- Maximum days: 10 days for 2020 and 10 days for 2021.
- Credit amount: $511 per day (10 days max each year).
- Maximum annual credit: $5110 per year, totaling $10,220 for both years.
2. Family Leave Credit:
- Maximum days: 50 for 2020 and 60 for 2021.
- Credit amount: $200/day.
- Maximum annual credit: $10,000 for 2020 and $12,000 for 2021 totaling $22,000 for both years.
Total Potential Credit: $32,220
Eligibility for Refund
1. Sole proprietors, LLC operators, business partnership members, and others with Schedule C and Schedule SE income.
2. Joint filers with both spouses eligible must attach separate Form 7202s.
3. S Corp businesses that pay owners as employees are excluded.
Required Documentation:
1. Tax Returns for 2020 & 2021 (partners' returns if in a partnership).
2. If previously employed by a W-2 employer, provide all W-2s with sick and family leave reported.
Eligibility Questions:
1. Were you absent due to COVID-19 in 2020/2021? You can claim up to 10 days of sick leave.
2. Were you unable to work because of a quarantined person or due to school/daycare closures or a child-care provider's unavailability related to COVID-19?
Frequently Asked Questions:
- I've already filed my 2020 & 2021 taxes. What now?
Our CPAs and EAs will file an amendment. Provide copies of your 2019-2021 tax returns and a driver's license.
- What about processing fees?
We charge no upfront fees. We do take a 20% contingency fee from the adjustment. No hidden charges.
- Is there a lot of paperwork?
Minimal. You'll sign an agreement letter from our site. Also, upload your 2020-2021 tax returns and a driver's license copy. We handle the rest to ensure a seamless experience for you.
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