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Self-Employed Individuals to Claim COVID-19 Sick & Family Leave Tax Credits on IRS Form 7202

AAFCPAs would like to make clients aware that the IRS recently released Form 7202 for eligible self-employed individuals to determine their qualified sick and family leave equivalent tax credits.

As a reminder, the Families First Coronavirus Response Act (FFCRA) provides small and midsize companies—as well as self-employed individuals—with refundable tax credits that reimburse them, dollar-for-dollar, for the cost of paid sick and family leave wages to their employees for leave related to COVID-19.  Read more: What Businesses Need to Know About FFCRA credits.>>

FFCRA credits should be claimed on self-employed individuals’ 2020 Form 1040 for leave taken between April 1, 2020 and December 31, 2020.

AAFCPAs has highlighted below some of the important aspects of Form 7202:

Who May File Form 7202?

Eligible self-employed individuals are entitled to claim qualified sick and family leave equivalent credits.  To be an eligible self-employed person, both the following must be true:

  1. You regularly carried on a trade or business within the meaning of IRS Code Section 1402; and
  2. You would have been:
    1. Eligible to receive qualified sick leave wages under the Emergency Paid Sick Leave Act if you had been an employee of an employer, other than yourself; and/or
    2. Eligible to receive qualified family leave wages under the Emergency Family and Medical Leave Expansion Act if you had been an employee of an employer, other than yourself.

Each eligible self-employed individual must file a separate Form 7202.  If married filing joint, and each spouse is an eligible self-employed individual, each must attach a separate Form 7202.

Taxpayers must maintain appropriate documentation establishing their eligibility for the credits as an eligible self-employed individual.

Part I of Form 7202 focuses on calculating credit for sick leave for self-employed individuals. Part II of Form 7202 focuses on calculating credit for family leave for self-employed individuals. These amounts are then entered on the taxpayer’s Form 1040.

As always, AAFCPAs will continue to monitor COVID-19 related developments and keep you informed as significant changes occur or provisions become clarified.

If you have any questions please contact: Christopher Consoletti, Esq. at 774.512.4180, cconsoletti@nullaafcpa.com; or your AAFCPAs Tax Partner.

About the Author

Chris Consoletti
Chris, in conjunction with AAFCPAs’ multi-disciplinary team of CPAs, investment & business advisors, provides effective tax planning and research, tax compliance, charitable planning, and asset protection solutions for trusts & estates, corporations and partnerships. Chris provides clients with corporate law analysis and recommendations related to entity formation, management and board structure, executive compensation, limited liability protection, and the applicable laws of relevant states and jurisdictions. He evaluates and assesses opportunities and risks associated with complicated tax challenges or controversies.