The IRS has released Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, and that form’s instructions. Self-employed individuals will use this form to calculate the amount to claim on their 2020 tax return for qualified sick and family leave equivalent credits provided by the Families First Coronavirus Response Act (FFCRA, PL 116-127).
Background—FFCRA.
The FFCRA provided refundable tax credits to eligible self-employed individuals who were unable to work or had to care for family members for reasons related to the coronavirus (the “self-employed sick and family leave equivalent credits”). These credits are allowed based on a self-employed individual’s “qualified sick leave equivalent amount.”
The “qualified sick leave equivalent amount” is equal to:
(A) The number of days during the tax year, up to a maximum, that the individual is unable to perform services in any trade or business for a reason with respect to which the individual would be entitled to receive sick leave under the Emergency Paid Sick Leave Act (EPSLA) (Division E of the FFCRA);
(B) Multiplied by the lesser of:
- $200 ($511 in the case of certain paid sick time described in EPSLA); or
- 67% (100% in the case of certain paid sick time described in EPSLA) of the individual’s average daily self-employment income for the tax year.
Observation.
The Consolidated Appropriations Act of 2021 (CAA, 2021), extended the tax credits for qualified self-employed sick and family leave equivalent credits to March 31, 2021.
Form 7202 and instructions released.
Form 7202 and its instructions are used by self-employed individuals to calculate their sick and family leave equivalent credits. Form 7202 is then attached to the self-employed taxpayer’s Form 1040, Form 1040-SR, or Form 1040-NR.
Part One of Form 7202 is used to calculate the credit for sick leave for certain self-employed individuals.
Part Two of Form 7202 is used to calculate the credit for family leave for self-employed individuals.
To continue your research on refundable credit for sick leave for certain self-employed individuals during coronavirus (covid-19) pandemic, see FTC 2d/FIN ¶L-18430.
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