What Is The FFCRA Tax Credit — Families First Coronavirus Response Act?

Get a tax refund for your sick days.

If you missed work due to COVID-19-related reasons, the government wants to pay you back—even if you were self-employed. You may be eligible for a tax credit from the Internal Revenue Service (IRS)—and this credit is available now, retroactively, for lost income/work in 2020 and 2021. 

The Family First Coronavirus Response Act, also called FFCRA, was signed into law in March 2020, and among other things, addressed paid sick leave and unemployment benefits. One of the many benefits of the FFCRA was that it provided tax credits to eligible self-employed individuals — including 1099 and gig workers— for sick days and family leave related to the COVID-19 pandemic. 

This tax credit is different from a deductible, as it directly reduces the total tax owed to the IRS. You can apply for this credit retroactively for 2020 and 2021, which means you could still receive a check in the mail if you haven’t already claimed it.

What is the FFCRA tax credit for self-employed individuals?

The FFCRA is widely known among employers with W-2 employees, as they can provide paid time off or sick leave to their workers based on specific circumstances outlined in the following section. However, many self-employed individuals, such as 1099 contractors or consultants, may not be aware that they are also eligible for this COVID-19 tax credit, and it can be applied retroactively.

How does the FFCRA work?

The FFCRA is a tax credit that allows employers to get reimbursed for time you weren’t able to work due to the effects of COVID-19. Here are some of the reasons you could qualify. They don’t all have to apply to you, but if one or more of these things happened to you, you are likely eligible. You should apply if missed work because you were:

1. Following a federal, state, or local quarantine or isolation order
2. Advised by a healthcare provider to self-quarantine
3. Experiencing coronavirus symptoms and were seeking a medical diagnosis
4. Caring for a child or other individual, who was subject to a government-issued or self-quarantine restriction, as described in #2
5. Caring for a child whose school or daycare was closed or unavailable
6. Obtaining a COVID-19 vaccination
7. Recovering from illness related to the COVID-19 vaccine
8. Seeking or waiting for the results from a  COVID-19 test

Note: Criteria 6-8 only apply from April 1, 2021, through September 30, 2021. 

If you were an employee on the W2 form in 2020 or 2021, your employer might have already claimed the maximum credit, making you ineligible. However, if you were both self-employed and a W2 employee, you could qualify for a tax credit under FFCRA, provided your employer didn’t already claim the maximum FFCRA tax credit.

How much money will I get from the FFCRA as a 1099 contractor or self-employed individual?

If eligible, you can receive up to a maximum of $32,220 in tax credits, which consists of:

For the period of April 1, 2020, through March 31, 2021:

10 days of emergency paid sick/family/medical leave

• Taking care of yourself: Claim the lower of either your average daily self-employment earnings or $511 per day
• Taking care of someone else: Claim the lower of either 67% of your average daily self-employment earnings or $200 per day

50 days of emergency paid sick/family/medical leave

• Daycare or school closure: Claim the lower of either 67% of your average daily self-employment earnings or $200 per day 

For the time period of April 1, 2021 – September 30, 2021, you may receive an additional 10 days of paid sick leave and 60 days of family leave. 

Am I eligible for the FFCRA credit? You might qualify if you:

1. Were a 1099 contractor or self-employed individual anytime between March 2020-September 2021;
2. AND Took unpaid sick leave to care for yourself or a family member;
3. OR Had to stay home to provide childcare due to a government-issued or self-quarantine restriction. 

How will I receive my COVID-19 FFCRA credit?

Most applicants will have the option to receive a direct deposit via ACH for 2021 tax returns. For 2020 returns, the tax credit amount will be delivered via a mailed check from the IRS. (Disclaimer: delivery method is dependent on not having any outstanding tax liabilities.

_{Information provided on this blog is for educational purposes only, and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strives to keep its content up-to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.}