The COVID-19 pandemic hit self-employed individuals particularly hard in 2020, causing widespread income loss and financial hardship. To help alleviate the burden, the government introduced the Self-Employed Tax Credit (SETC) as part of the Families First Coronavirus Response Act (FFCRA) and the CARES Act.

setc 2020 advice

If you’re a sole proprietor, independent contractor, or gig worker who missed out on claiming the SETC for the 2020 tax year, you might still be eligible for this vital tax relief. In this blog post, we’ll explore the requirements for SETC 2020 eligibility, guide you through claiming the credit, and offer tips on maximizing your tax relief.

Understanding SETC 2020 Eligibility Criteria

To be eligible for the SETC in 2020, self-employed individuals must meet the following criteria:

  1. Self-employment income: You must have earned self-employment income in 2020 through a sole proprietorship, independent contracting, or gig work.
  2. COVID-19 impact: You must have been unable to work due to reasons related to the COVID-19 pandemic, such as:
  1. Tax filing: You must have filed or will file a 2020 income tax return reporting self-employment income.

Calculating Your SETC 2020 Credit Amount

The SETC allows self-employed individuals to claim a refundable tax credit based on their average daily self-employment income and the number of days they could not work due to COVID-19.

To calculate your credit:

  1. Determine your average daily self-employment income by dividing your net self-employment earnings by the number of days you worked in 2020.
  2. Multiply your average daily self-employment income by the number of days you could not work due to COVID-19 (up to 10 days for sick leave and 50 days for family leave).
  3. The result is your SETC 2020 credit amount, which can be claimed on your income tax return.
FFCRA SETC Tax Credit

How to Claim SETC 2020 if You Haven’t Filed Your 2020 Tax Return

If you haven’t filed your 2020 income tax return yet, you can claim the SETC when you file by following these steps:

  1. Complete Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to calculate your credit amount.
  2. Report your SETC on Schedule 3 (Form 1040), line 12b, as “Credit for sick and family leave” and attach Form 7202 to your return.
  3. Submit your completed 2020 income tax return, including Form 7202 and Schedule 3, by the filing deadline.

Claiming SETC 2020 if You’ve Already Filed Your 2020 Tax Return

Suppose you filed your 2020 income tax return without claiming the SETC. You can still claim the credit by filing an amended return using Form 1040-X, Amended U.S. Individual Income Tax Return.

  1. Complete Form 1040-X, indicating the changes to your original 2020 return.
  2. Fill out Form 7202 to calculate your SETC credit amount.
  3. Include Form 7202 and any supporting documentation with your amended return.
  4. Submit your amended return by mail to the appropriate IRS address.

The deadline to file an amended return and claim the SETC for the 2020 tax year is April 15, 2024.

H2: Maximizing Your SETC 2020 Tax Relief

To maximize your SETC 2020 tax relief, consider the following tips:

  1. Gather thorough documentation: Collect medical records, quarantine orders, school closure notices, financial statements, and any other evidence demonstrating your eligibility and the extent of your COVID-19 impact.
  2. Explore other COVID-19 relief programs: Besides the SETC, self-employed individuals may qualify for Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loans (EIDL), and expanded unemployment benefits.
  3. Consult with a tax professional: A Certified Public Accountant (CPA) or Enrolled Agent (EA) can help you navigate the complexities of claiming the SETC and other COVID-19 relief programs while ensuring you comply with tax laws.
  4. Use your SETC relief strategically: Consider using your SETC funds to cover essential expenses, invest in your business’s recovery, or create an emergency fund to protect against future disruptions.

The Importance of Claiming Your SETC 2020 Tax Relief

setc 2020 calendar being torn

Claiming your SETC 2020 tax relief is crucial for several reasons:

  1. Financial support: The SETC can provide much-needed financial assistance to help you cover expenses and maintain cash flow during challenging times.
  2. Tax liability reduction: By claiming the SETC, you can reduce your overall tax liability and potentially receive a larger refund.
  3. Business recovery: The funds from your SETC can be used to invest in your self-employed business’s recovery and growth, positioning you for long-term success.
  4. Accessing entitled benefits: As a self-employed individual, you may not have access to traditional employee benefits, making it essential to take advantage of the tax credits and relief programs designed to support your unique needs.

Don’t Miss Out on Your SETC 2020 Tax Relief

If you’re self-employed and experienced income loss due to the COVID-19 pandemic in 2020, you may still be eligible for the SETC. By understanding the eligibility criteria, calculating your credit amount, and following the proper claiming procedures, you can access this vital tax relief and support your business’s recovery.

Remember, the deadline to claim the SETC for the 2020 tax year is April 15, 2024, so don’t wait too long to explore your eligibility and file any necessary amended returns. Consult with a tax professional to ensure you’re maximizing your tax relief and making the most of the support available to self-employed individuals during these challenging times.

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FAQs for Still Eligible for SETC 2020?

Who is eligible for the SETC in 2020?

To be eligible for the SETC in 2020, you must be a self-employed individual who earned income through a sole proprietorship, independent contracting, or gig work in 2020. Additionally, you must have been unable to work due to reasons related to the COVID-19 pandemic, such as being diagnosed with the virus, caring for someone with COVID-19, or experiencing a significant reduction in business due to government-mandated closures or reduced demand.

How do I calculate my SETC 2020 credit amount?

To calculate your SETC 2020 credit amount, determine your average daily self-employment income by dividing your net self-employment earnings by the number of days you worked in 2020. Then, multiply your average daily self-employment income by the number of days you could not work due to COVID-19 (up to 10 days for sick leave and 50 days for family leave). The result is your SETC 2020 credit amount.

How do I claim the SETC if I haven’t filed my 2020 tax return yet?

If you haven’t filed your 2020 income tax return, you can claim the SETC when you file. Complete Form 7202 to calculate your credit amount, report your SETC on Schedule 3 (Form 1040), line 12b, as “Credit for sick and family leave,” and attach Form 7202 to your return. Submit your completed 2020 income tax return, including Form 7202 and Schedule 3, by the filing deadline.

What should I do if I filed my 2020 tax return without claiming the SETC?


If you’ve already filed your 2020 income tax return without claiming the SETC, you can still claim the credit by filing an amended return using Form 1040-X. Complete Form 1040-X, indicating the changes you’re making to your original 2020 return, fill out Form 7202 to calculate your SETC credit amount, and include Form 7202 and any supporting documentation with your amended return. Submit your amended return by mail to the appropriate IRS address.

What is the deadline for claiming the SETC for the 2020 tax year?

The deadline to claim the SETC for the 2020 tax year is April 15, 2024. This applies to filing an original 2020 income tax return or submitting an amended return using Form 1040-X.

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