Self-employed workers looking to claim coronavirus-related tax credits for sick and family leave can now do so on a new IRS form, as long as specific requirements are met.
Form 7202, “Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals,” released February 8 along with instructions, shows self-employed workers how to get the tax relief. The credits are meant to aid workers who can’t work themselves because of COVID-19 or who take time off to care for a family member.
The credits, created in the Families First Coronavirus Response Act (P.L. 116-127), were scheduled to expire at the end of 2020 before Congress passed the Consolidated Appropriations Act, 2021 (P.L. 116-260), which extended the time to claim the credits to March 1, 2021.
The IRS recently updated its FAQs on the credits to reflect changes made under the Consolidated Appropriations Act.
The credits were designed to provide businesses with financial relief to deal with costs associated with the pandemic, but self-employed individuals can also claim them.
An eligible self-employed individual would be someone who carried on a trade or business within the meaning of section 1402, would have been eligible to receive qualified sick leave wages under the Emergency Paid Sick Leave Act if they had been an employee, or would have received qualified family wages under the Emergency Family and Medical Leave Expansion Act.