The IRS recently released additional information on tax credits available for paid and sick family leave under the American Rescue Plan of 2021. The IRS did so by adding to its FAQs fact sheet earlier in the month with two new sets of questions and answers on form W-2c and self-employed individuals.
Introduction of the Plan
The American Rescue Plan Act was signed into law last March by President Joe Biden, amended, and extended some of the tax credits available to eligible employees providing paid sick and family leave from the Families First Coronavirus Response Act of 2020. The American Rescue Plan allowed self-employed individuals to be entitled to equivalent credits based on similar circumstances in which they’re unable to work.
Credit Availability
According to the IRS, eligibility for the sick leave credit is as follows:
An eligible self-employed individual is defined as an individual who regularly carries on any trade or business within the meaning of section 1402 of the Code, and would be eligible to receive qualified sick leave wages or qualified family leave wages that would have satisfied the requirements of the EPSLA or Expanded FMLA, as amended for purposes of the ARP, if the individual were an employee of an Eligible Employer (other than the self-employed individual) that would have been subject to the requirements of the EPSLA or Expanded FMLA, as amended for purposes of the ARP.
Eligible self-employed individuals are allowed a credit against their federal income taxes for any taxable year equal to their “qualified sick leave equivalent amount” or “qualified family leave equivalent amount.”
Wrap Up.
If you are self-employed and looking to take advantage of all that you possibly can during tax filing season, it would be in your best interest to give one of our experts a call to see if you may qualify.
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