Self-Employed Family Leave / Form 7202 / What are the limits of Covid-related Family Leave?

[Science]

I have a sole proprietor consulting business that produces significant income for me. I typically work nights and weekends, since I have other (unpaid) projects during the weekday. I have an infant lacking access to other caregivers. Due the COVID19 pandemic, it was difficulty to find child care, especially during the nights and weekends that I work. Due to the pandemic, the family help I had expected was unavailable. 

I took parental leave from my (own) business immediately when my child was born, on Jan. 1. 2021. Three months later, a spot was available at a daycare for my child during the day. However, I was still unable to have reliable childcare at night, and was forced to continue leave from my consulting business for another 3 months to July 2021 until I eventually quit my daytime project. 

I am planning to claim Self-Employed Family Leave for at least the first 3 months prior to placing my child in daycare. Is it also possible for me to claim Self-Employed Family Leave  for the second 3 months of lost income? To be clear, the reasons for that lost income are two-part: no access to childcare providers at night during my consulting hours, and the fact that I had to work at night due to my daytime hours being dedicated to other (unpaid) endeavors.

Thank you very much if you take on this tough question.

[DianeW777]

Here are the rules for a self employed individual to qualify for the parental leave when child care is not available. Under the American Rescue Plan Act (ARPA) you are allowed for a maximum number of 10 days calculated by the lesser of a dollar amount or a percentage of income specified below ($10,000 maximum for both employee and self employed combined).

For an eligible self-employed individual who is unable to work because the individual is:

• caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
• caring for a child if the child's school or place of care has been closed, or child care provider is unavailable due to COVID-19 precautions; or
• experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor. The Secretary of HHS has specified, after consultation with the Secretaries of Treasury and Labor, that a substantially similar condition is one in which the employee takes leave:
  • to accompany an individual to obtain immunization related to COVID-19, or
  • to care for an individual who is recovering from any injury, disability, illness, or condition related to the immunization.

The qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in any trade or business for one of the three above reasons, multiplied by the lesser of $200 or 67 percent of the "average daily self-employment income" of the individual for the taxable year, or the prior taxable year.

In either case, the maximum number of days a self-employed individual may take into account in determining the qualified sick leave equivalent amount is ten.

• Note: The only days that may be taken into account in a taxable year in determining the qualified sick leave equivalent amount for the year are days occurring during the year and during the period beginning on April 1, 2021, through September 30, 2021.

109. How is the "average daily self-employment income" for an eligible self-employed individual calculated? (added June 11, 2021)

• Average daily self-employment income is an amount equal to the net earnings from self-employment for the taxable year, or prior taxable year, divided by 260. A taxpayer's net earnings from self-employment are based on the gross income that the individual derives from the taxpayer's trade or business minus ordinary and necessary trade or business expenses.

110. How is the "qualified family leave equivalent amount" for an eligible self-employed individual calculated? (added June 11, 2021) 

• During the second and third quarters of 2021 , the qualified family leave equivalent amount with respect to an eligible self-employed individual is an amount equal to the number of days (up to 60) that the self-employed individual cannot perform services for which that individual would be entitled to paid family leave (if the individual were employed by an Eligible Employer (other than the self-employed individual)), multiplied by the lesser of two amounts: (1) $200, or (2) 67 percent of the average daily self-employment income of the individual for the taxable year, or the prior taxable year.
  • Tax Credits for Paid Leave Under the ARPA of 2021 (It appears you may not be eligible for the qualified sick leave.) 
  • Special Issues for Employees (See Self Employed)

Enter your credit using the following steps:

1. Sign into your TurboTax account
2. Go the Deductions & Credits > Tax relief related to COVID-19 > show more > Self-employed family leave credit > Start/Update
3. Answer the questions regarding the credit.