Introducing the Self-Employed Tax Credit (SETC)
Everything you need to know about the IRS's specialized FFCRA tax credit refund for self-employed individuals - and how to claim it.
What is the Self-Employed Tax Credit (SETC)?
The SETC is a specialized tax refund to support to self-employed individuals affected by the COVID-19 pandemic.
On March 18, 2020, Congress passed the Families First Coronavirus Response Act (FFCRA) (Public Law No. 116-127) to help support independent business owners (sole proprietors, freelancers, and gig workers) affected by COVID-19.
It provides self-employed individuals with tax credits that reimburse them, dollar for dollar, for the cost of being unable to work due to COVID-related issues.
Who qualifies for the SETC?
Almost anyone with Schedule C income qualifies.
If you were self-employed in 2020 and/or 2021, you could potentially qualify for this credit.
This includes:
- Sole proprietors
- 1099 subcontractors
- Single-member LLCs
- Freelancers
- Gig workers
- Anyone with self-employed business income
If you filed a “Schedule C” / "Schedule SE" on your federal tax returns for 2020 and/or 2021, you likely qualify.
How much can you claim?
You can claim up to $32,220 in tax credits for the combined years 2020/2021.
The total claim amount is dependent on a variety of factors, including (but not limited to) how much tax you paid, how many days COVID disrupted your business, and whether or not you have any dependents.
Based on current data, people with dependents are seeing average successful claims of ~$25,000, and those without are seeing average successful claims of ~$15,000.
It is important to note that the SETC is not a loan; it is a refund of the taxes you already paid.
The IRS takes about 18-22 weeks to process claims and pays them out via check.
What constitutes COVID impact?
Anyone who experienced COVID-related disruptions to their business or ability to work could qualify for this credit.
This includes:
- Illness
- Symptoms
- Quarantine
- Testing
- Caregiving responsibilities
If the closure of your child's school or daycare forced you to stay at home and impacted your work, you could also qualify.
How to claim the SETC?
To claim your self-employment tax credits, you need to submit amended 2020/2021 tax returns to the IRS.
The refundable credits are claimed on a self-employed individual's Form 1040, U.S. Individual Income Tax Return.
It is highly recommended to get in touch with a tax professional, CPA, to assist you in completing the claims process.
There are some companies who will also process your claim for you online.
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Claim Online
If you wish to claim the SETC online, the best option remains Gig Worker Solutions. Since 2023 they've processed roughly 80% of all claims across the States and have successfully recovered over $500 million from the IRS.
Create a free account with them, enter your COVID disruptions, and after providing your tax returns their SETC-qualified accountants will handle the entire process from start to finish.
SETC Deadline
The deadline for claiming the full credit amount is April 15, 2024.
After this date, it is no longer possible to amend your 2020 tax return and claim the refund on your 2020 taxes.
To file for a refund on your 2021 taxes, you have until April 15, 2025.
People are highly encouraged to file their claim before April 15, 2024 if they wish to receive the full credit amount.
Submit Claim
Click the button below to submit a claim with GWS, trusted to recover over $500 million from the IRS