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What tax credits are available to self-employed workers affected by COVID-19?
November 30, 2022 Sacramento, CA
There are two tax credits available to self-employed workers affected by COVID-19: Sick leave and family leave. The sick leave credit applies to qualified individuals who were not able to work for a period of time due to COVID-19 or were caring for someone with COVID-19. You may qualify for the family leave credit if you had to care for another family member due to COVID-19-related circumstances and already maxed out the sick leave days.
After April 2021, the American Rescue Plan Act extended the credit and allowed self-employed taxpayers to claim it on their 2020 and 2021 tax return, too. This means that we have to file an amended tax return for 2020 and/or 2021 tax return, based on the 2019, 2020 and 2021 self-employed income amount. We have three years to do it, and please don’t listen to any other rumors that it must be filed by the end of this year.
Who is eligible for the tax credit?
Eligible self-employed individuals are those that regularly carry on a trade or business. This includes business owners with a traditional small store and contractors. Your part-time business or side gig can also qualify if your activities have a profit motive. This means that 1099 workers like UBER/LYFT drivers and Instacart/Doordash/Amazon delivery drivers can also claim the credit if they meet the requirements. You should always keep good records to prove your self-employment status and school or child care records if you are claiming family leave credits for your children.
A self-employed individual may be eligible for the family leave and/or sick leave credit if they could not work or telework due to:
- Providing coronavirus-related care for an individual or needing coronavirus-related care and were subject to a quarantine or isolation order related to COVID-19.
- Caring for a son or daughter if their school or place of care has closed. This can include the child care provider being unavailable due to COVID-19.
What is IRS Form 7202? Where can you find help in filling it out?
IRS Form 7202 is a tax form used to calculate your sick and family leave credits. The form is also referred to as Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. Families with two self-employed individuals will need to fill out a separate Form 7202 for each individual. If you have questions about your specific tax situation, you can reach out to the following individuals:
- A trained tax professional
How much time do we have to file an amended tax return?
The amended return can be filed for three years from the date you filed your original tax return.
Is it true that the IRS is currently not accepting Electronic Filing?
Yes, IRS is shutting down Electronic Filing on November 26 until January 2023, as they are performing annual maintenance in order to prepare the system for the upcoming Tax Year 2022 Filing Season.
Are you able to help new clients?
Yes, but not at this time. I am currently working on clients that filed their taxes with me for the last three years 2019, 2020, and 2021. As mentioned above, we have three years to submit theses amendments so I will schedule appointments for new clients or ones that only did one or two years with me starting April 20, 2023.
HOW TO CHECK THE STATUS OF YOUR AMENDED TAX RETURN?
Coronavirus Processing Delays
It’s taking us more than 20 weeks (instead of up to 16 weeks) to process amended returns. Do not file a second tax return or call the IRS.
Check the status of your Form 1040-X, Amended U.S. Individual Income Tax Return, for this year and up to three prior years.
- When to check…
- Your amended return will take up to 3 weeks after you mailed it to show up on our system.
- Processing it can take up to 16 weeks.
- What you need…
- Social Security Number
- Date of birth
- Zip Code
- How to find my amended tax return, click on link below…
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