New for 2020: Self-Employed Sick & Family Leave
The IRS has a new form for 2020 that benefits those with self-employment income. Form 7202 is part of the Families First Coronavirus Response Act (FFCRA) which was enacted on March 18, 2020. It allows self-employed individuals the ability to claim credits equivalent to qualified sick and family leave. To be eligible a person must have been unable to work or telework or had to care for family members for reasons related to coronavirus. The form is broken down into two sections:
Part 1 - Credit for Sick Leave for Certain Self-Employed Individuals:
Allows you to claim sick leave for “days you were unable to perform services as a self-employed individual” due to COVID-9 related health reasons. These include federal/state/local quarantine orders, advised to self-quarantine by a health care provider, or were experiencing symptoms and seeking medical diagnosis. You may also claim up to 10 days if you were caring for someone (for same reasons) or were caring for a son or daughter because school or place of care was closed due to COVID-19. The dates allowed for this are between April 1, 2020 and December 31, 2020, but in the end you can only use 10 days total (between care for yourself and care of others). Note that sick days for you are worth more than days of care for others. How much each day is worth depends on your net earnings from self-employment and if you also have an employer who paid you sick leave, as shown on your W2, that amount will be subtracted from your credit.
Part 2 – Credit for Family Leave for Certain Self-Employed Individuals
this is a good one for those who have children and are self-employed. You may claim up to 50 days family leave if you were “unable to perform services as a self-employed individual” due to coronavirus-related care to a son or daughter whose school or place of care was closed. So if school and/or daycare was closed and you have to care for your children then you can get up to 50 days of credit. Again, the credit per day is calculated based on your net earnings from self-employment and if you also have an employer who paid you family leave, as shown on your W2, that amount will be subtracted from your credit. This credit can pay you up to $200 per day (If you income was around 80,000 for 2020), which for 50 days equals a maximum of $10,000.
Important to note that this credit is refundable! As far as I am able to currently figure out you are able to use both parts of this credit and add them together on your Schedule 3 line 12b. It also looks like you can do a Form 7202 for each person with self-employment income, so spouses with two self-employment incomes can each use the form for the refundable credit.
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