Credit for Sick Leave and Family Leave for Certain
Self- Employed Individuals (Form 7202)
Form 7202 is used to claim a Refundable Tax Credit for sick leave and family leave for Certain Self-Employed Individuals due to coronavirus on the 2020 tax return. This credit is available if you are an eligible individual who was unable to work or had to care for family members due to COVID-19.
Who is an eligible for claiming this credit?
- If you are conducting a trade or business as a self-employed individual
- If you would be eligible to receive paid sick leave under the Emergency Paid Sick Leave Act (EPSLA) if you were an employee of an employer, other than yourself; and/or
- If you would be eligible to receive paid family leave under the Emergency Family and Medical Leave Expansion Act (EFMLEA) if you were an employee of an employer, other than yourself.
How is the “qualified sick leave equivalent amount” for an eligible self-employed individual CALCULATED?
For an eligible self-employed individual who is unable to work because the individual
1. Is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
3. Is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
the qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in any trade or business for one of the three above reasons, multiplied by the lesser of $511 or 100% of the “average daily self-employment income” of the individual for the taxable year, or the prior taxable year.
For an eligible self-employed individual who is unable to work because the individual
1.
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.
2.
Is caring for a child if the child’s school or place of care has been closed, or childcare provider is unavailable due to COVID-19 precautions; or
3.
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,
the qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in any trade or business for one of the three above reasons, multiplied by the lesser of $200 or 67% of the “average daily self-employment income” of the individual for the taxable year, or the prior taxable year. In either case, the maximum number of days a self-employed individual may consider in determining the qualified sick leave equivalent amount is ten beginning on April 1, 2020 to March 31, 2021.
REQUIRED DOCUMENTS
Self-employed individuals should maintain documentation establishing their eligibility for the credits as a self-employed individual. That documentation should be similar to the documentation that employers claiming the credits for qualified leave wages under the FFCRA sections 7001 and 7003 should maintain under “How Should an Employer Substantiate Eligibility for Tax Credits for Qualified Leave Wages?”. This means you must have the required document for yourself as HR of any Employer.
What information should an Eligible Employer receive from an employee and maintain to substantiate eligibility for the sick leave or family leave credits?
If the employer receives a written request for such leave from the employee in which the employee provides:
1.
The employee’s name i. e. your name.
2.
The date or dates for which leave is requested.
3.
A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
4.
A statement that the employee is unable to work, including by means of telework, for such reason
In the case of a leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include:
- the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and,
- if the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.
In the case of a leave request based on a school closing or childcare provider unavailability, the statement from the employee should include:
- the name and age of the child (or children) to be cared for,
- the name of the school (or summer camp, summer enrichment program, or other summer program) that has closed or place of care that is unavailable, and
- a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
Example: A state government directive specifies that employees quarantining either because they have COVID-19 symptoms or have been directly exposed to COVID-19 are not required to provide their employer with a COVID-19 test result or a healthcare provider’s note to validate their illness or exposure and need for leave. A written request from an employee providing the name of the government entity and briefly describing the directive would satisfy the applicable substantiation requirements.
Source:
Special Issues for Employees | Internal Revenue Service (irs.gov)
HOW OUR TAX SOFTWARE CALCULATE
1.
Select the year either 2019 or 2020 to use the Self-Employed Income to calculate your 2020 Credit.
2.
Amount of Self-Employed Income_____________ (Schedule C, Line 31)
3.
Number of days you were unable to perform services as a self-employed individual because of certain coronavirus-related care (see box below) that you:
1.
Provided for yourself
2.
Provided for another individual
3.
Provided to son or daughter.
- You can only count the day once.
- Do not include the same day for both credits.
- A son or daughter must generally be under 18 years of age or incapable of self-care because of a mental or physical disability
4.
Amount of qualified sick leave wages you received from your employer.
- Wages subject to the $511 per-day limit_________
- Wages subject to the $200 per-day limit