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Self-Employed Family Leave Credit

Sick leave to take care child

Tax Credit 4 of 4 – The Families First Coronavirus response Act (The Act) provides to the self-employed a refundable income tax credit (including against the taxes on self-employment income and net investment income) for family leave similar to the self-employed sick leave credit discussed in a previous post.

The leave generally is available when a self-employed person must take off to care for their child under age 18 because of a COVID-19 emergency declared by a federal, state, or local authority that either (1) closes a school or childcare place or (2) makes a childcare provider unavailable. Thus, a self-employed person is treated as both an employer and an employee for purposes of the credit and would earn the payroll family leave credit as if the self-employed person were an employee.

The self-employed person can receive an income tax credit of $200 per day, up to a maximum of $10,000. However, under rules similar to those for the self-employed sick leave credit, that amount is 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 family leave from an employer under the Act. The credit applies to the period beginning April 1, 2020 and ending on December 31, 2020.

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