Frequently Asked Questions: These are the

most commonly asked questions regarding the

self-employed tax credit.

What is the Sick and Family Leave Tax Credit?

The Sick and Family Leave Tax Credit, established under the Families First Coronavirus Response Act (FFCRA), serves as a financial assistance program tailored for self-employed individuals and those on 1099 contracts. This initiative allows eligible individuals, including independent contractors and the self-employed, to claim a refundable tax credit against their income tax obligations. Its primary objective is to offer relief to those who find themselves unable to work or telecommute due to circumstances linked to COVID-19.

Key features of this tax credit encompass:

1. Qualified Sick Leave Credit:

- It covers the full extent of qualified sick leave equivalent amounts, with a maximum limit of $511 per day.

- The calculation is based on the lesser of $511 per day or 100% of the individual's average daily self-employment income divided by 260.

- This applies to days when an individual is unable to work due to COVID-19 quarantine or isolation, experiencing symptoms and seeking a diagnosis, or caring for someone under quarantine or exhibiting symptoms.

2. Qualified Family Leave Credit:

- The credit extends to qualified family leave, providing coverage for up to 67% of the average daily self-employment income, with a cap at $200 per day.

- This is applicable for days when an individual cannot work because they need to care for a child whose school or care facility is closed due to COVID-19.

These credits form part of a broader initiative to extend financial support to those affected by the pandemic, recognizing and addressing the specific challenges confronted by self-employed individuals and independent contractors.

I am ready to start my SETC refund, what’s next?

1. Provide Necessary Documents:

- Gather and send us copies of your tax returns for the years 2019, 2020, and 2021.

- Include a copy of your driver's license for identification purposes.

- Also, provide a secondary form of photo identification for enhanced security.

2. Our Role:

- Once we receive these documents, our team will handle the intricacies of amending your tax returns.

- We'll ensure that every step is taken meticulously to maximize your entitlements and submit the amended returns accurately.

3. Ensuring Your Benefits:

- Our goal is to ensure that you receive all the funds you are eligible for, including any missed opportunities in the initially filed returns.

Rest assured, with our expertise, the process will be seamless and thorough, ensuring that your amended returns are handled professionally and efficiently.

What if I have questions before uploading my documents or beginning my SETC file?

We understand that you may want to speak with someone regarding any questions or concerns you may have. We have multiple options available for you convenience.

You can also reach us directly, by email, at

Are there any upfront fees to use SETC Fast?

Absolutely no upfront fees are associated with the use of SETC Fast service. Our commitment is to provide accessible and straightforward services. The fee structure is crafted to apply charges only after we have effectively obtained your Self-Employed Tax Credits. This ensures that you can benefit from our expertise without incurring any initial financial obligations. It's crucial to be aware that in the presence of any outstanding back taxes, a member of our team will contact you to discuss alternative payment options.

How is my refund calculated?

The amount of your tax credit is determined based on a combination of key factors. These include:

1. Net Income: Your net income as reported on Schedule C of your 2019, 2020, and 2021 tax returns is a crucial factor. This provides a baseline for calculating the potential credit.

2. Days Sick or Quarantined: The number of days you were unable to work due to being sick or quarantined as a result of COVID-19 directly impacts the calculation.

3. Caregiving Duration: If you spent time caregiving for a family member affected by COVID-19, the duration of this caregiving is considered in the calculation.

4. School or Daycare Closures: The length of time you needed to care for a minor child because their school or daycare center was closed due to COVID-19 is also factored in.

To get a quick and accurate estimate of your eligibility and potential tax credit amount, we recommend using our online Tax Credit Calculator. This tool is designed to help you easily understand your qualification and the estimated credit you might receive.

If both my spouse and I have self employed income, can we both qualify for the SETC?

Yes, if both the taxpayer and their spouse have self-employed income, they are both eligible to claim the Self-Employment Tax Credit individually. It's crucial to understand, though, that they cannot overlap or share qualifying COVID-related days for which they claim the credit. Each individual's claim must be based on their own specific circumstances and periods of inability to work due to COVID-19.

Can I claim SETC tax credits if I am also a W2 employee?

You may still be eligible to claim SETC tax credits as long as you earned self-employment income in addition to your W2 salary during 2020 and/or 2021. If you are also a W2 employee and your employer filed for FFCRA credits on your behalf, you may have to decrease the credit for the FFCRA wages paid.

If you receive paid leave benefits as an employee, it may affect the amount of tax credit you can claim as a self-employed individual under the SETC. You cannot claim a double benefit for the same period. However, if your situation as an employee doesn't provide full coverage, there might be potential to claim additional credits based on your self-employment income.

Do I qualify for SETC tax credit if I already received Sick & Family Leave credit on either the 2020 or 2021 returns?

You would only be eligible if you did not FULLY UTILIZE the credit(s) on previous return(s). Not fully utilized means you did not list the most beneficial self-employed income by electing the highest self-employed income year (2019 or 2020 for the 2020 amendment, or 2020 or 2021 for the 2021 amendment) or you listed fewer COVID days in any of the three categories for the years 2020 or 2021 than you actually had.

Is the SETC tax credit based on gross self-employed income or net self-employed income?

In order to qualify for the self-employed tax credit, you MUST have a positive NET (after deductions) self-employed income for either 2019, 2020, or 2021 AND qualifying COVID days.

Do I qualify for SETC tax credit if I received unemployment benefits during 2020 and/or 2021?

You can still qualify for the SETC tax credit even if you received unemployment benefits. However, you CANNOT claim the days you received unemployment benefits as days you were not able to work due to COVID-19 related issues.

For the SETC credit, do you require a complete copy of my return to be amended?

Yes, for any return to be amended, we require a COMPLETE copy of the return, including all schedules. A complete copy of the return MUST be submitted with the amended return for the return being amended.

Example: If we are amending 2020 by electing to use the 2019 positive self-employed income, we must have a complete copy of the 2020 return.

How much is the SETC credit?

The SETC Tax credit can be up to $32,220, based on your self-employed net earnings in 2020 and 2021.

To calculate your SETC credit, we use your daily average self-employment income (this is your net earnings for the taxable year divided by 260) and the amount of self-employment work missed due to COVID-19-related issues. This allows the IRS to estimate how much you lost in wages for every day you could not work.

How can I claim the SETC tax credits?

To claim the SETC tax credits, you must determine your eligibility and amend your 2020 and/or 2021 tax returns and their supporting schedules. To amend these returns, it is recommended to use a Certified Public Accountant (CPA) or Tax Attorney to obtain the best results. This can take countless hours and funds. Or let SETC Fast do it for you! Our Tax Attorney team has created the fastest, safest, and most accessible tool for self-employed individuals and sole proprietors to claim the federal SETC tax credits you deserve.

What qualifies as a reason for claiming SETC?

To qualify for SETC tax credits, you must have missed self-employment work due to COVID-related issues. If you were unable to work because of one of the following reasons, you may be eligible:

- A government agency imposed a quarantine or isolation order.

- Your doctor recommended you self-quarantine.

- You were having COVID-19 symptoms while also waiting for an appointment with your doctor.

- You were waiting for COVID-19-related test results.

- You were getting vaccinated against COVID-19.

- You were experiencing side effects from the COVID-19 vaccine.

What dates are eligible for SETC tax credits?

The SETC covers the days you were unable to perform self-employment work from April 1, 2020, to September 30, 2021.

Here is a breakdown of the number of days you could be eligible for:

Childcare-related time off - up to 110 days

- 50 days between April 1, 2020, and March 31, 2021

- 60 days between April 1, 2021, and September 30, 2021

For yourself or loved ones - up to 20 days

- 10 days between April 1, 2020, and March 31, 2021

- 10 days between April 1, 2021, and September 30, 2021

These eligible days include situations where:

- You took care of your children who were affected by school or daycare shutdowns.

- You took care of someone else/family member who had COVID-19 issues.

Why haven't I heard of the SETC tax credits before?

Initially, the SETC focused on employers with W-2 employees. While the CARES Act was passed later that same year with the expansion to provide tax credits to the self-employed, it was not widely publicized. Research shows that over 80% of self-employed individuals are unaware they're entitled to the SETC tax credits.

Are there any deadlines for claiming the SETC tax credits?

Yes, the deadline to amend your 2020 and/or 2021 tax return for claiming or adjusting SETC credits is three years from the original due date of the return or within two years from the date you paid the tax, whichever is later. The deadline for filing for the SETC tax credits for your 2020 tax return is April 15, 2024, and for your 2021 tax return is April 15, 2025, unless you filed an extension, but it is advisable not to push that limit.

What if I already filed my taxes for 2020 & 2021?

Our CPAs and EAs must file an amended tax return for each applicable year. All we require from you is a copy of your 2019, 2020, and 2021 tax returns and a copy of your driver's license, and we'll handle the rest.

Is this similar to the PPP program?

The PPP (Paycheck Protection Program) and SETC (Families First Coronavirus Response Act) are two distinct initiatives responding to the economic impact of the COVID-19 pandemic. PPP assists small businesses by providing loans with the potential for loan forgiveness. SETC is not a loan but a credit on taxes individuals have already paid. While PPP supported businesses, SETC focused on helping individuals.

What documentation do I need to provide?

For the most part, we only require your 2019, 2020, and 2021 tax returns, including your Schedule C and a copy of your driver's license for identification.

Do I have to fill out a ton of paperwork?

Not at all. Our website has an agreement letter that you must read, sign, and date. You will also need to upload a copy of your 2019, 2020, and 2021 tax returns and a copy of your driver's license.

We try to make the process as easy and stress-free as possible. Once we have your tax returns, we'll take over and get everything filed for you.

Is the Self-Employed Tax Credit (SETC) taxable?

No. Unlike the ERTC, it is not taxable!

What is the definition of a dependent?

The IRS defines a dependent as either a qualifying child or relative of the taxpayer. The relative can be your child, stepchild, foster child, sibling, parent, grandparent, grandchild, aunt, uncle, niece, nephew, or certain in-law relationships. A child must have lived with you for over half of the tax year. Temporary absences, such as for education or medical care, are generally counted as periods of living with you. You must have provided more than half of the relative's total support during the tax year. The relative's gross income must be below a certain threshold determined annually by the IRS (subject to change). It's important to note that these are just general guidelines, and there may be additional rules and exceptions. The IRS provides detailed information in publications such as IRS Publication 501.

Do I qualify for SETC tax credit if I already received unemployment benefits?

You can still qualify for the SETC tax credit even if you received unemployment benefits. However, you cannot claim the days you received unemployment benefits as days you were not able to work due to COVID-19 related issues.

Do weekends count as days I can claim?

Yes, if you missed self-employment work that you would have normally worked on a weekend, then you can claim weekends as days missed.

Can I use days I took care of a child other than my own child?

Yes, you may qualify for taking care of a child other than your own under the "Caring for others" section of our portal.

What if my child's school moved to online instruction/classes? Is it considered "closed" for the purpose of the credit?

Yes, if the physical location where your child received instruction or care was closed, the school or place of care is "closed" for purposes of paid sick leave and expanded family and medical leave. This is true even if your child is still expected or required to complete assignments.

Why do I have to have positive net earnings to qualify for SETC income tax credit?

Positive net earnings are a requirement from the IRS to qualify for the SETC income tax credit. Positive net earnings indicate taxable income against which a credit can be applied. We understand the Covid-19 pandemic affected everyone globally. If you did not have positive earnings in 2020 because of Covid-19 restrictions, we may use your 2019 net income.

What is a Form 1040?

IRS Form 1040 is the standard individual income tax form in the United States, used by taxpayers to report their annual income and calculate their tax liability. To file for the SETC tax credits, SETC Fast will amend your previously filed IRS Form 1040.

What is Form 7202?

An IRS Form 7202 is the core document used to claim sick leave and family leave tax credits for self-employed individuals. The 7202 is used to detail self-employed individuals' eligibility and tax credit calculations.

Note: When you use SETC Fast, your IRS Form 7202 is filed on your behalf.

What is a Form 1040X?

IRS Form 1040X is used to amend your previously filed individual tax return. To file for the SETC tax credits, SETC Fast will amend your previously filed IRS Form 1040 by completing Form 1040-X.

What is a Schedule SE Form 1040?

Schedule SE is a tax form self-employed individuals use to calculate the self-employment tax owed. This tax covers Social Security and Medicare taxes for individuals who work for themselves. Although all businesses may qualify for the SETC tax credits, SETC FAST can only process self-employed individuals now. To be eligible for the SETC tax credit, a self-employed individual must have self-employment income listed on line 6 of Schedule SE (2020 and 2021) and line 4 of Schedule SE (2019).

What is a Schedule C?

Schedule C is a tax form used by sole proprietors, single-member LLCs, and other self-employed individuals to report their business income and expenses. The form is filed as part of the individual's income tax return (Form 1040), and it helps calculate the net profit or loss from the business, which is then used to determine the individual's overall taxable income. Net income (line 31) from Schedule C calculates self-employment income on line 2 of Schedule SE (Form 1040).

This may not appear in the application, but it is essential to know that Schedule C feeds into the overall self-employment income calculation on Schedule SE (Form 1040).

What is the Form 1040-X?

An IRS Form 1040-X is an “Amended U.S. Individual Income Tax Return.” Since the FFCRA’s sick leave and family leave tax credits for self-employed individuals now have to be claimed retroactively, claimants must amend their original income tax return(s) to claim the credit(s).

Note: When you use SETC Fast your IRS Form 1040-Xs are filed on your behalf.

What is a Form 8821?

IRS Form 8821 is the Tax Information Authorization form. Taxpayers use this form to authorize the release of their tax information to a third party, such as a tax professional, for a specified period. Once signed, Form 8821 allows SETC Fast to pull your required tax information to accurately calculate your SETC credit and amend the 2020 and/or 2021 tax returns to file for your SETC tax credits. This form does not authorize the designee to represent the taxpayer before the IRS; it only allows SETC Fast to receive and inspect confidential tax information. If representation before the IRS is necessary, a separate form, such as Form 2848 (Power of Attorney and Declaration of Representative), would be required.

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