The Consolidated Appropriations Act included several new relief packages for individuals and businesses. As we dissect the current bill, YHB is producing a series of in-depth analysis on the bill to help you take advantage of the bill. In this article, we will explore the FFCRA credits for self-employed individuals.
The new bill extends the time to take the FFCRA credit from 12/31/2020 to March 31, 2021. This credit relates to pay for employees who are on required sick leave. This sick leave includes:
- those subjected to a Federal, State, or local quarantine or isolation order related to COVID-19;
- has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- is caring for a child of such employee if the school or place of care of the child has been closed (including the closure of a summer camp, summer enrichment program, or other summer program), or the child care provider of such child is unavailable due to COVID-19 precautions; or
- is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
For Schedule C businesses with no employees, this credit is also available but cannot be claimed until 2021 when the business files it’s 2020 taxes. The new bill allows individuals to elect to use their average daily self-employment income for 2019 to compute the credit.
For example, a business’ Schedule C in 2019 has $60,000 of net income. The average daily income would equal $164.38 ($60,000 divided by 365 days). The business has no employees.
Here, if the owner was sick with COVID for 10 days, he would qualify for a credit of $1,643.80 ($164.38 times 10 days).
The max credit per day of sick leave is capped at $511.
A similar credit is available for family leave. This credit is calculated by taking the number of days the owner was unable to work times the less of 67 percent of the average daily self-employment income of $200.
Should you have any questions, contact a YHB advisor today!
Additional articles in this series:
- Congress Passes New Stimulus Bill
- Overview of Second Round of PPP Funds
- New Rules Relating to PPP Loan Forgiveness
- Major Changes to Meals Expense Deductions for Tax Years 2021 and 2022
- Additional Payroll Help from the New Stimulus Bill
- Change for Residential Rental Property Depreciation
- 2020 Tax Extenders
