How it helps
Although independent contractors are not usually included in paid sick leave benefits (though some states may have laws that include them), the FFCRA entitles eligible self-employed individuals to a paid sick or family leave tax credit. This is independent of any connection to a specific contracting company.
The paid sick leave credit is available to you as an IC if you are unable to work or telework while under quarantine or are experiencing symptoms of coronavirus and seeking medical attention. You may receive a credit of up to $511 per day (up to $5,110 for 10 days) or 100% of your average daily income for up to 10 days—whichever is less.
A paid family leave credit is available if the leave is taken to care for a sick individual or child at home due to a school closure. The credit amount is either $200 per day or 67% of your average daily income for up to 50 days.
Note: Under this act, your daily average self-employment income is calculated as your self-employment net earnings for the taxable year divided by 260.
How to get it
If you meet the criteria, you can claim the credit on your returns for the 2020 tax year. However, if you need it earlier, you may instead be able to deduct the amount of the credit you’re eligible for from your quarterly estimated tax payments.
Get in touch with your tax preparer to find out more about how this works, and remember to keep all medical records, notices of school closures and similar documentation.
IRS paid sick leave FAQs for the self-employed