When you’re self-employed, it’s easy to feel like it’s all on you. Whether it’s sales, marketing, bookkeeping, website maintenance, you know you’ve got to keep an eye on things to ensure your business stays afloat.
That’s why it’s no surprise to us at Madison Tax Group that so many self-employed people don’t know they’re missing out on one of the most valuable tax credits created for 1099 workers like you! So let’s cover the FFCRA and discuss what it is, how it works, and a few tips for ensuring you get the maximum refund possible.
The FFCRA Tax Credit refers to the tax benefits provided under the Families First Coronavirus Response Act (FFCRA). This act was implemented to support employees and self-employed individuals who were impacted by the COVID-19 pandemic.
To qualify for the FFCRA Tax Credit, you must be a self-employed individual or a small business owner with fewer than 500 employees. If you meet this criteria, you may be eligible for refundable tax credits equivalent to providing sick leave or family leave wages to your employees during certain COVID-19-related situations.
You can claim these credits on your federal income tax return against your regular income taxes. The amount of credit depends on factors such as whether an employee took paid leave, their wage rate, and the reason for taking leave.
By utilizing the FFCRA Tax Credits, self-employed individuals can benefit from financial assistance in supporting their workforce during challenging times caused by the pandemic.
If this is the first time you’re hearing about the FFCRA, it probably sounds too good to be true. PPP loans were complicated and hard to get and ERC tax credits weren’t available for independent contractors and freelancers. Why would this be any different?
Unfortunately, the truth is that you probably didn’t hear about it because, like other COVID programs, entrepreneurs weren’t considered when Congress was creating it. But thankfully, they realized quickly that the federal pandemic relief programs weren’t helping a considerable part of the economy.
The US Bureau of Labor Statistics (BLS) found that as of June 2023, 9.59 Americans earn their income as self-employed individuals. That’s a huge chunk of the workforce! Consequently, Congress updated language in the CARES Act to ensure the FFCRA would cover:
And many other types of workers who are categorized as self-employed.
When the CARES Act was amended, there wasn’t much press coverage about the changes, leaving many eligible candidates in the dark. That’s why we’ve made it our mission to ensure everyone gets the money they’re entitled to (but more on that later).
To be eligible for the FFCRA tax credit, self-employed individuals must meet certain criteria:
Remember: The FFCRA provides valuable tax benefits for self-employed individuals during these challenging times—take advantage!
When it comes to claiming the FFCRA tax credit as a self-employed individual, there are a few steps you need to follow. First, make sure you meet the eligibility requirements: you must have been unable to work or had reduced hours due to COVID-19-related reasons. Next, calculate your qualified sick and family leave wages based on your average daily self-employment income.
To claim the tax credit, fill out Form 7202—Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. Make sure to include all necessary information, such as dates and amounts of qualified leave wages. Once completed, attach this form along with your Form 1040 when filing your taxes.
Remember that documentation is crucial! Keep records of any documents supporting your claim in case of an audit by the IRS. This may include proof of canceled jobs or reduced hours due to COVID-19, medical certificates if seeking sick leave reimbursement, and other relevant financial paperwork.
Sounds like a lot of work, doesn’t it? We get it. That’s why we built Madison Tax Group, a powerful platform built by tax experts to ensure you get the maximum FFCRA funds you deserve.
Madison Tax Group takes care of the heavy lifting for you by calculating your refund, amending your tax docs, and submitting your claim to the IRS. We’ll even keep track of the progress so you can focus on what matters most: growing your business.
Click here to find out how much you could qualify to get back, it’s free!
Only employees working for a company are eligible for the FFCRA tax credit.
Reality: The FFCRA tax credit is also available to self-employed individuals who meet specific criteria. It provides financial relief to those who cannot work or need to take time off due to COVID-19-related reasons, such as caring for a family member or facing significant reductions in workload.
Claiming the FFCRA tax credit will increase my chances of being audited by the IRS.
The Truth: As long as you provide accurate and verifiable information, claiming the FFCRA tax credit should not raise your risk of an audit. However, it’s crucial that you maintain proper documentation and keep records of eligibility requirements fulfilled.
Using Madison Tax Group can help you navigate this process. Since it’s built by tax experts who have experience with the FFCRA, we’ll ensure your application is accurate and complete. Click here to find out how much you’re qualified to get back.
I can claim unlimited credits through the FFCRA on my taxes.
Realty: The maximum amount of paid sick leave that self-employed individuals can claim under the FFRCA is limited based on their average daily income from self-employment.
Remember, understanding how the FFCRA tax credit works and taking proactive steps is essential in unlocking its full potential as a self-employed individual!
Remember that understanding these common mistakes can help you navigate through the claiming process more smoothly, increasing your chances of successfully obtaining this beneficial tax credit.
Using Madison Tax Group can help you avoid these common mistakes and ensure the IRS processes your application quickly. It only takes 3 minutes to find out if you qualify, click here to get started for free.
