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Self Employment Relief Provisions

Self Employed Individuals May Be Eligible for Refundable Credits

Executive Summary

  1. Self- employed individuals may be able to claim refundable credits for lost work due to the impact of Covid-19. 
  2. Provisions include credits for up to 10 days of sick leave and up to 50 days for family and medical leave required to care for dependents. 
  3. Eligible credits are based on average self-employment "net earnings" for the year divided by 260 days, subject to daily maximums. 

Full details (as they are available) are provided below.  3/23/2020

 

Sick Leave

Certain self-employed individuals[1] who are entitled to sick leave due to one of the following reasons may be entitled to a refundable credit for up to 10 days. The credit varies based on the type of sick-leave taken.

If the sick-leave is due to:

  1. Federal, state, local quarantine or isolation orders
  2. Self-quarantine due to advice from a health care provider
  3. Showing symptoms of Covid-19 and seeking medical diagnosis

The credit is equal to the less of $511 or 100% of the average self-employment income for the taxable year.

If the sick leave is due to:

  1. Caring for an individual subject to a quarantine order or the illness
  2. Caring for a son or daughter home from school
  3. Other similar conditions

The credit is equal to the lesser of $200 or 67% of the average self-employment income for the taxable year.

In both cases, the average self-employment income equals the net earnings from self-employment for the taxable year divided by 260.

Emergency Family and Medical Leave

Self-employed individuals are also eligible for a refundable credit of up to $200 for up to 50 days for amounts that would be paid under the Emergency Family and Medical Leave Expansion Act (EMFLEA).  (Any eligible credits are reduced by sick leave earned for the same period.)

Time off that is covered under this section refers to the period of time that an individual is unable to perform services due to a need to care for a son or daughter under age 18 as a result of a public health emergency.

The amount of the credit is the lesser of $200 or to 67% of the average self-employment income defined as net earnings from self-employment divided by 260 times the number of days that the individual is unable to work due.

The average self-employment income equals the net earnings from self-employment for the taxable year divided by 260.

Self-employed Individuals who are also employees

If the individual is also an employee and receives:

  • Sick leave payments, the combined total benefit for sick leave cannot exceed $2000 or $5110, depending on the type of sick leave provided.
  • EMFLEA payments from an employer, the combined total benefit for EMFLEA payments is limited to $10,000.

Please note that these rules are continuing to evolve by the minute, and full interpretations have not yet been provided so be sure to consult with your tax advisor for full details and eligibility. 

[1]An eligible self-employed individual is defined as an individual who regularly carries on any trade or business and would be entitled to receive paid leave during the taxable year if the individual were an employee of an employer (other than himself or herself) that is subject to the requirements of the Act.