New IRS form available for self-employed individuals to claim COVID-19 sick and family leave tax credits under FFCRA

The IRS recently announced that Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, is now available for eligible self-employed individuals to claim sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA).

The tax credits will be claimed on the 2020 Form 1040 for leave taken between April 1, 2020, and Dec. 31, 2020, and on their 2021 Form 1040 for leave taken between Jan. 1, 2021, and March 31, 2021.

The FFCRA, passed in March 2020, allows eligible self-employed individuals who, due to COVID-19 are unable to work or telework for reasons relating to their own health, or to care for a family member to claim refundable tax credits to offset their federal income tax. The credits are equal to either their qualified sick leave or family leave equivalent amount, depending on circumstances. IRS.gov has instructions to help calculate the qualified sick leave equivalent amount and qualified family leave equivalent amount.

Who may file Form 7202

Eligible self-employed individuals must:

• Conduct a trade or business that qualifies as self-employment income, and
• Be eligible to receive qualified sick or family leave wages under the Emergency Paid Sick Leave Act as if the taxpayer was an employee.

Taxpayers must maintain appropriate documentation establishing their eligibility for the credits as an eligible self-employed individual.