The “Act” provides a refundable income tax credit for sick leave of a self-employed person similar to the credit provided to employers for qualified Sick Leave. The credit first reduces a self-employed individual’s income tax liability and any balance is refunded. (The self-employed sick leave credit)
An “eligible Self-Employed Individual” is one who
1) Regularly carries on any trade or business within the meaning of §1402 of the IRS Code, and
2) Would be entitled to receive paid leave during the taxable year pursuant to the Emergency Paid Sick Leave Act had they been an employee of the business rather than the owner.
The maximum credit is $511 per day with a $5,110 overall limit for a self-employed individual directly affected by the virus and up to $200 per day with a $2,000 overall limit for an owner that is a caregiver. The credit is based on the number of days the individual is unable to perform services in any trade or business referenced to in §1402 when directly affected by the virus or the number of days when a caregiver and not able to perform services. (NOT MORE THAN 10 DAYS)
However, those amounts are decreased to the extent that the self-employed person has insufficient self-employment income determined under a formula or to the extent that the self-employed person has received paid sick leave from an employer under the Act. The credit applies to a period beginning April 1, 2020 and ending on December 31, 2020.