I'm self-employed (single member llc / sole proprietor) 2 kids & wife is stay-at-home mom. Am I eligible for the COVID family leave tax credit due to the school closures?

[brian84]

I had to take time away from work to help with the kids being home all the time (wife got the flu for some of it) during the school closures in Spring 2020. Kids were 2 and 4 at the time - so both were in preschool a few days a week.

[RayW7]

See below for information on Coronavirus Aid, Relief and Economic Security (CARES) Act and how it can offer help with self-employed tax credits.

While you'll find an overview of how these self-employed tax credits can benefit you below, for additional guidance on coronavirus relief, be sure to check out our Self-Employed Coronavirus Relief Center to get up-to-date information and tax advice.

Tax credits for paid sick and family leave:

The FFCRA provides two self-employed tax credits to help cover the cost of taking time off due to COVID-19. While most of the text in these laws apply to businesses with employees, it also applies to self-employed individuals.

The tax credit for paid sick leave applies to eligible self-employed taxpayers who are unable to work (including telework or working remotely) due to:

1. Being subject to a federal, state, or local quarantine or isolation order due to COVID-19.
2. Being advised by a health care provider to self-quarantine due to COVID-19.
3. Experiencing COVID-19-related symptoms and seeking a medical diagnosis.

If you meet all of the requirements, you would be eligible for qualified sick leave for each day during the year that you were unable to work for the above reasons (up to 10 days). The tax credit is worth the lesser of

• $511 per day or
• 100% of your average daily self-employment income for the year per day.

The only days that may be taken into account in determining the qualified sick leave equivalent amount are days occurring during the period beginning on April 1, 2020, and ending on December 31, 2020.

Under the expanded Family and Medical Leave Act (FMLA) provision of the FFCRA, you would be eligible for qualified family leave for each day that you were unable to work because

• you were caring for someone else impacted by COVID-19 (up to 10 days), or
• your child's school or child care provider was closed or unavailable due to COVID-19 (up to 50 days).

You can claim a tax credit for the lesser of $200 per day or 67% of your average daily self-employment income for the year per day.

How do I calculate and claim these tax credits?

"Average daily self-employment income" is calculated as your net earnings from self-employment during the tax year, divided by 260. You can estimate your available credit using our Tax Credit Estimator.

You can claim a credit for both qualified sick leave and qualified family leave, but not both for the same time periods.

You can claim both the tax credit for paid sick leave and the tax credit for paid family leave on your 2020 Form 1040 tax return. However, you don't have to wait until the next tax-filing season to benefit from these credits. You can estimate your credits using our Tax Credit Calculator, then simply reduce your quarterly estimated income taxes by that amount.

[brian84]

Thanks for the response. I understand all of that, but my main concern is whether I am eligible for the family leave tax credit even though my wife is a stay-at-home mom that primarily takes care of our kids. I don't see any language in the tax credit info that relates to this situation.

[ColeenD3]

Here is a further explanation although it still doesn't exactly fit your circumstances. You will have to determine if you qualify.

How is the “qualified sick leave equivalent amount” for an eligible self-employed individual calculated? (Updated January 28, 2021)

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

1. Is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
3. Is experiencing symptoms of COVID-19 and seeking a medical diagnosis,

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 $511 or 100 percent of the “average daily self-employment income” of the individual for the taxable year, or the prior taxable year.

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

1. 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;
2. Is 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
3. Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor,

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.