If you're self employed, a 1099 contractor, a freelancer, or a small business owner and file a 1040 tax return with attached schedule C and your business was affected by the COVID-19 pandemic in 2020 and/or 2021, use this survey to calculate how much refund you could expect to receive from the IRS.

The Program Ends April 15th 2025 (or when the money dries up)

Self Employed individuals are those who engage in a business on their own behalf and meet the definition by the IRS. This could be a business owner, sole proprietor, gig worker, 1099 worker, and others.​

You identify as a self-employed individual (e.g., sole proprietors, freelancers, independent contractors, and gig workers). See examples below.​

• General Practitioners
• Personal Trainers
• Photographers
• Court Reporters
• Physical Therapist / Massage 
• Ride share and Delivery Drivers
• Real Estate Agents
• Social Media Marketers
• Veterinarians
• Website Designers and Developers
• Accountants and Bookkeepers
• Air-b-nb Hosts
• Amazon Resellers
• Copywriters
• Construction Workers
• Consultants
• Dentists
• Graphic Designers

Worth amending for: Credits for sick and family leave

Did you or your corporation claim the 2021 sick and family leave credits?

If not, you can do it now with an amended return(s).

Also, if you didn’t claim the 2021 credits, it’s likely you did not claim the 2020 credits. If that’s the case, it’s possible that you could claim all 2020 and 2021 available credits of up to $32,220 on your 2021 tax return(s).

If you're self employed, a 1099 contractor, a freelancer, or a small business owner and file a 1040 tax return with attached schedule C and your business was affected by the COVID-19 pandemic in 2020 and/or 2021, use this survey to calculate how much refund you could expect to receive from the IRS.

The Program Ends April 18th 2025 (or when the money dries up)

Self Employed individuals are those who engage in a business on their own behalf and meet the definition by the IRS. This could be a business owner, sole proprietor, gig worker, 1099 worker, and others.​

You identify as a self-employed individual (e.g., sole proprietors, freelancers, independent contractors, and gig workers). See examples below.​

• General Practitioners
• Personal Trainers
• Photographers
• Ride share and Delivery Drivers
• Real Estate Agents
• Social Media Marketers
• Veterinarians
• Website Designers and Developers
• Accountants and Bookkeepers
• Air-b-nb Hosts
• Amazon Resellers
• Copywriters
• Construction Workers
• Consultants
• Dentists
• Graphic Designers

Worth amending for: Credits for sick and family leave

Did you or your corporation claim the 2021 sick and family leave credits?

If not, you can do it now with an amended return(s).

Also, if you didn’t claim the 2021 credits, it’s likely you did not claim the 2020 credits. If that’s the case, it’s possible that you could claim all 2020 and 2021 available credits of up to $32,220 on your 2021 tax return(s).

You read that right: with at least $143,866 of 2021 net profits on Schedule C, or with the equivalent in W-2 wages from your corporation, you could qualify for up to $32,220 in refundable tax credits, as follows:

• Up to $15,110 under the 2020 rules, and
• Up to $17,110 under the 2021 rules.

The 2020 rules apply

From April 1, 2020, through December 31, 2020 (2020 tax returns), and

From January 1, 2021, to March 31, 2021 (2021 tax returns).

The 2020 rules also apply from January 1, 2021, through March 31, 2021, and you claim 

those credits on your 2021 return.

Key Point: The maximum total credits under the 2020 rules may not exceed $15,110. You could have some of the credits on your 2020 return and some on your 2021 return. Or you could have all the credits on the 2020 or 2021 return.

Let’s turn to the new 2021 tax credit using the self-employed taxpayer before looking at the corporation.

…with at least $143,866 of 2021 net profits on Schedule C, or with the equivalent in W-2 wages from your corporation, you could qualify for up to $32,220 in refundable tax credits…

With a self-employed net income of at least $143,866, you can qualify for a maximum credit of $511 a day for up to 10 days when—during the period from April 1, 2021, through September 30, 2021—you were unable to perform services as an eligible self-employed individual because of one or more of the following reasons.

• You were subject to a federal, state, or local quarantine or isolation order related to COVID-19.
• You were advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
• You were experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• You were seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19.
• You were exposed to COVID-19 or were unable to work pending the results of a test or diagnosis.
• You were obtaining immunization related to COVID-19.
• You were recovering from any injury, disability, illness, or condition related to such immunization.

Key Point: The above reasons give you far more ability to qualify for the up to $511 a day in credits for 2021 than the narrower reasons that applied in 2020.

In addition to the possibility of 10 days at up to $511 a day, you can qualify for up to 60 days at $200 a day if, during the period from April 1, 2021, through September 30, 2021, you were unable to perform services as an eligible self-employed individual for any of the reasons listed above. This is new for 2021 and far broader than what you had in 2020.

And of course, you also have the days not worked because of certain coronavirus-related care you provided to a son or daughter whose school or place of care was closed or whose childcare provider was unavailable for reasons related to COVID-19.

With Schedule C net income of $143,866 or more, your maximum 2021 tax credits for the period from April 1, 2021, through September 30, 2021, total $17,110:

• $5,110 under the 10-day category, plus
• $12,000 under the 60-day category.

With income less than $143,866, you qualify for less credit, but it still could be a healthy number.

You were supposed to claim the credit by filing IRS Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, with your 2021 Form 1040. You can still claim the credit by amending your 2021 tax return.

You do this by filing a completed 2021 Form 7202 with IRS Form 1040-X. If your spouse was also self-employed and qualified for a credit, you must each file a separate Form 7202.

Key Point: Your self-employed spouse can also qualify for maximum tax credits from 2020 and 2021 of up to $32,220, giving the two of you a maximum of $64,440.

You must file Form 1040-X within three years (including extensions) after the date you filed your original return for 2021. If you filed your original 2021 return early (for example, March 1, 2022), your return was considered filed on the April 15, 2022, due date. But if you had an extension to file until October 15, 2022, and you filed earlier, your return was considered filed on the earlier date.

Thus, if you filed your 2021 return anytime through the April 15, 2022, due date, you have until April 15, 2025, to amend your return to claim the sick and family leave credits. If you filed your return on October 15, 2022, you have until October 15, 2025, to file your amended return. If you filed your return anytime between April 16, 2022, and October 14, 2022, you have three years from the date you filed.

But don’t procrastinate. Get that money working for you as soon as possible.

You need not include with your amended tax return any proof that you qualified for the credit. But you should have documentation in your records.

If you operate your business as a C or an S corporation, you should be classified as its employee for tax purposes.

Now, here’s the good news: if your employer corporation paid you while you were not working because of COVID-19, your corporation may have qualified for sick or family leave tax credits.

The rules for qualification are the same as those that applied to the self-employed taxpayer discussed above.

You find the April 1, 2021, through September 30, 2021, corporate tax credits in two different tax code sections, as follows:

• Section 3131 for sick leave credits. (These can create up to $511 a day in credits).
• Section 3132 for paid family leave credits. (These are the credits of up to $200 a day.)

Child Needed: To qualify for family leave credits from January 1, 2021, through March 31, 2021, you use the 2020 rules where the employee must have been unable to work due to COVID-19-related school closures or childcare disruptions.

Child Optional: For April 1, 2021, through September 30, 2021, the credit was expanded to include all the grounds for COVID-19-related paid sick leave.

If the corporation qualified for the sick and family leave credits but did not claim them on the 2021 tax returns, it should file amended payroll tax returns using Form 941-X, which has special worksheets (worksheets 1 and 3) and several line items just for COVID-19-related corrections. You must file a separate Form 941-X for each quarter you are correcting.

There are two ways to claim the credits: the adjustment process and the claim process.

Adjustment Process: Your corporation claims the credit against the regular payroll tax due on its next Form 941 and files an adjusted return on Form 941-X to report the change. This is the fastest way to get your credit.

Heads Up: to use the adjustment process, you must file Form 941-X more than 90 days before the statute of limitations expires.

Claim Process: With the claim process, you file Form 941-X and claim a refund of payroll tax in the amount of your credit. It will take longer to obtain your credit this way because the IRS must process your claim.

You have a three-year statute of limitations for correcting payroll tax overpayments on Form 941-X. For these purposes, all four Forms 941 filed for a calendar year are considered filed on April 15 of the following year if filed before that date.

For example, the four Forms 941 for 2021 are considered filed on April 15, 2022.9 This means you have until January 15, 2025, to use the adjustment process to claim the sick and family leave credits and until April 15, 2025, to use the claim process.

To prevent employers from enjoying a double benefit, they must include the full amount of any family leave credit (and any allocable qualified health plan expenses and the employer’s share of the Medicare tax) they receive in gross income. The employer may deduct as a business expense the employee wages used to calculate the credits, plus allocable health plan expenses and the employer’s share of the Medicare tax. The deduction reduces some of the benefits from the credit.

Any employee wages taken into account for the COVID-19 sick or family leave credit on or after April 1, 2021, cannot be taken into account for any of the following:

• Paycheck Protection Program loan forgiveness
• Employee retention credits
• A grant under Section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act
• Restaurant revitalization grants
• Indian employment credits
• Differential wage payment credits
• Non-COVID-19 employer credit for paid and family leave
• Work opportunity credit

The 2020 sick and family leave tax credit rules apply to the period from January 1, 2021, through March 31, 2021. Thus, you could

• Claim all your 2020 sick and family leave credits on your 2020 return,
• Claim all your 2020 sick and family leave credits on your 2021 return, or
• Claim some of your 2020 sick and family leave credits on your 2020 return and some on the 2021 return.

For the period from April 1, 2021, through September 30, 2021, you have many more reasons to qualify for not only the sick leave credit of up to $511 a day but also the family leave credit of up to $200 a day.

Self-employed individuals who failed to claim the credit may still do so by amending their 2021 tax return. They must file a completed 2021 Form 7202 along with IRS Form 1040-X.

If you operate your business as a corporation and failed to claim the sick and family leave credits, you can amend your payroll tax returns using Form 941-X.

We hope that you now have some understanding of how to make the most of the available 2021 COVID Sick and Family Leave Credits. If you find yourself needing expert guidance to navigate the complexities of available tax credits and ensure you receive the financial relief you deserve and optimize your financial benefits.

No, but it’s getting close. Suppose you qualify for the tax credit but did not claim it by filing Form 7202 previously. In that case, you can file an amended return within a three-year period after filing the original, up until April 18, 2025. So for example, if you had sick or family leave that occurred between Jan. 1, 2021, and March 30, 2021, but you did not take advantage of this tax credit, you would need to file an amended return by April 15, 2024.

The recent surge in ads promising large tax credits for self-employed individuals related to Form 7202 is primarily driven by the availability of tax relief measures introduced in response to the COVID-19 pandemic.

These ads typically highlight the potential tax benefits available and may tout the ease of claiming the tax credits. They typically suggest that individuals are entitled to significant financial relief without fully understanding the eligibility criteria or documentation requirements.

While these ads can certainly seem enticing, you should approach them with caution. It is essential to thoroughly understand the eligibility criteria, documentation requirements, and compliance obligations before pursuing any tax relief measures advertised.

The complexities of IRS Form 7202 and the available tax credits require careful consideration. Understanding Form 7202 and the eligibility criteria is crucial for claiming tax credits accurately. Documenting the inability to work due to COVID-19-related reasons and ensuring exclusion from other compensation are essential steps in this process. By meeting these requirements and accurately completing Form 7202, you can access valuable financial relief to help overcome the financial impact of the pandemic.

In navigating the self-employed tax credit maze, we encourage you to seek professional assistance if you have any questions or concerns. Tax professionals can provide invaluable guidance and ensure compliance with IRS guidelines while minimizing the risk of audits or penalties.