In March 2020, the Families First Coronavirus Response Act (SETC) was signed into law to help companies offer paid sick leave and unemployment benefits caused by COVID-19. Initially, the SETC focused on employers with W-2 employees to help them weather the economic impact caused by the pandemic.

In December 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which expanded the SETC to cover employers and the self-employed. Thanks to the SETC expansion, self-employed individuals, freelancers, independent contractors, and gig workers are now eligible for tax credits that pay you back for the time you would’ve typically spent earning money that was lost because of COVID.

The SETC is federal legislation passed in response to the COVID-19 pandemic. It provides paid sick leave, free COVID-19 testing, food assistance, and unemployment benefits and stipulates employer-provided health insurance protection. For self-employed individuals, it offers equivalent coverage via tax credits that can be claimed on your income tax return, effectively reimbursing you for periods of sick leave due to COVID-19.

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) to obtain the best results.

This can take countless hours and funds. Or let ERCxpress do it for you! Our 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.

To qualify for the SETC, you must meet the following criteria:

1. Identify as a Self-employed individual. A few examples, but not limited to, include sole proprietors, independent business owners, 1099 contractors, freelancers, gig workers, and single-member LLC, taxed as a Sole-proprietorship.
2. Have filed a Schedule SE of IRS Tax Form 1040 in 2020 and/or 2021 with positive net income and paid self-employment tax on your earnings for the years 2019 and/or 2020 and or 2021.
3. Have missed work due to COVID-19-related issues.

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

The SETC covers the days you were unable to perform self-employment work from April 1, 2020 – September 30, 2021.
Here is a breakdown of the number of days you could be eligible 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
  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

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.

The amount you receive depends on your average daily self-employment income and the days you missed self-employed work due to COVID-related issues, including government quarantine orders, self-quarantine, COVID-19 symptoms, and seeking medical diagnosis.
The credit for the childcare portion is calculated by multiplying the number of days on leave and taking whichever amount is smaller:
• Your average daily self-employment income per year or:
• $511.
The credit for missing self-employment work due to a personal COVID-related issue or due to taking care of another person is calculated by multiplying the number of days on leave and taking whichever amount is smaller:
• 2/3 of your average daily self-employment income or:
• $200.

It can take up to three weeks for the IRS to acknowledge the acceptance of your SETC credit application and up to 20 weeks from that acceptance to receive your refund via check or direct deposit.

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 your 2021 tax return is April 15, 2025, unless you filed an extension but would not suggest pushing that limit.

Our CPAs and EAs must file an amended tax return for each year applicable. 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.

The Sick and Family Leave Tax Credit for self-employed and 1099 workers is for eligible self-employed individuals or independent contractors.

Under the FFCRA, eligible self-employed individuals or independent contractors could claim a refundable tax credit against their income tax liability for up to 100% of the qualified sick and family leave equivalent amounts, subject to certain limitations if they were unable to work or telework due to COVID-19-related reasons.

The qualified sick leave equivalent amount was the lesser of either $511 per day or 100% of the average daily self-employment income/260 for each day an individual was unable to work or telework because they were subject to a quarantine or isolation order, had COVID-19 symptoms and were seeking a medical diagnosis, or were caring for someone who was subject to a quarantine or isolation order or who had COVID-19 symptoms.

The qualified family leave equivalent amount was the lesser of either $200 per day or 67% of the average daily self-employment income for each day an individual was unable to work or telework because they needed to care for a child whose school or place of care was closed due to COVID-19.

Filing for the SETC tax credit will not impact filing your 2023 income taxes. To receive SETC tax credits, our team of CPAs will amend the taxes you already filed for 2020 and/or 2021.

Yes. This tax credit is only for self-employed individuals, small business owners, freelancers, and 1099 contractors.

Yes! For 2020, you can elect to use either the 2019 or 2020 self-employed income to qualify. For 2021, you can elect to use either the 2020 or 2021 self-employed income to qualify.

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 over 80% of self-employed individuals are unaware they’re entitled to the SETC tax credits.