The Sick and Family Leave Tax Credit is a financial support measure designed for self-employed individuals and 1099 workers, created under the Families First Coronavirus Response Act (FFCRA). This legislation enables eligible individuals (gig workers, 1099, small business owners, certain partnerships, etc.…) to claim a refundable tax credit. Since its creation, this historic tax credit was specifically aimed at providing relief for those unable to work or telework due to certain circumstances related to COVID-19.
Key aspects of this tax credit include:
(1) Qualified Sick Leave Credit:
It covers up to 100% of qualified sick leave equivalent amounts, subject to a maximum of $511 per day.
The calculation is based on the lesser of $511 per day or 100% of the individual's average daily self-employment income.
This applies to days when an individual was unable to work due medically recommended or government ordered quarantine and/or isolation due to COVID-19, personally experiencing symptoms and seeking a diagnosis, or caring for someone under quarantine or with symptoms of COVID-19.
(2) Qualified Family Leave Credit:
The credit also extends to qualified family leave, covering up to 67% of the average daily self-employment income, with a maximum benefit of $200 per day.
This is applicable for days when an individual could not work because they were required to care for a child whose school or care facility was closed due to COVID-19.
These credits were established as part of broader effort by Congress to provide financial support to those impacted by the pandemic, acknowledging the unique challenges faced by self-employed individuals and independent contractors.